I wanted to advance a discussion that’s come up in various forms regarding restrictions and rewards around Creator Coins. I’m breaking this up into two separate pieces with this first one looking at restrictions and will have a follow up regarding rewards. The intention is to start a discussion in each of these areas that can inform governance proposals around appropriate advancements of our design.
Current State
Creator Coin restrictions are currently spread across multiple parts of our tech stack with some inconsistencies between what is represented in the display and what is allowed by the system.
Existing controls:
- Flow control
- Initial version described at a high level here https://medium.com/rallynetwork/introduction-to-creator-coin-flow-controls-73bee3159249
- Creators associated with each coin are subject to a token bucket based limiting algorithm
- Max sell allocation = 0.25% of circulating supply for that symbol
- Conversion of creator coin to side chain RLY by the user under flow control deducts allowance from this sell allocation
- Any conversion of side chain RLY to creator coin adds allowance until reaching the max sell allocation at a 1:1 rate (1 CC minted = 1 CC added to allowance)
- Any conversion of creator coin to side chain RLY adds allowance until reaching this max sell allocation at a 10:1 rate (10 CC burned = 1 CC added to allowance)
- Any transfer of creator coin between side chain accounts adds allowance until reaching this max sell allocation at a 100:1 rate (100 CC transferred = 1 CC added to allowance)
- Compliance and risk based limits
- All users can redeem CC for mainnet USDC subject to a 300 USDC per transaction and lifetime cap
- Redeem to USDC is no longer available for a user once cap is reached
- Low limit intended to provide convenience for users without creating price risk or large arbitrage opportunities between sidechain and mainnet RLY
- Creator floor limits
- In addition to flow controls, creators are subject to a soft floor imposed by the UI
- Operates in conjunction with flow controls to restrict creator behavior
- Bridge limits
- Max bridge out per day across all users = 1MM $RLY
- Max bridge out per transaction = 100K $RLY
- Max bridge out per user per day = 100K $RLY
- These are intended as simple risk thresholds while we observe bridging behavior between mainnet and side chain
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Rally.io credit card purchase limits
- $100 max purchase on credit cards; no lifetime cap
- No cap on conversions from sidechain RLY to Creator Coin beyond creator centered restrictions
- Users and creators operating on a Creator Coin other than their own have no restrictions on conversions to/from sidechain RLY
Re-design Objectives
- Simplicity and consolidation
- Usage limits tend to be interaction specific and spread across the tech stack
- Better delineate which limits are appropriate at which layer of the tech stack
- Simplify overall description of limitations
- Support creator income use cases
- Current flow based limit would require a high level of interaction from creators at a micro scale in order to keep a regular income stream flowing from transactional use cases
- Ensure we’re able to support the income case with a more practical interaction schedule (i.e. monthly)
- Clarify creator floor
- Creator floor approach is an undocumented stop intended to minimize risk at launch that hasn’t been an issue yet based on high touch relationships with creators
- Ensure whatever is done here is documented and appropriate without assuming the same high touch relationships with creators
- Protect token holders from creator based manipulation
- Programmatic protection against creator’s use of genesis supply to manipulate economy
- Subjective protection from scammy tactics by a creator
- Protect token holders from user based manipulation
- Large, early purchaser can accumulate material percentage of circulating supply that rivals the creator
- Excessive price volatility (upside and downside) can make token less attractive for transactional use cases
- Encourage long term holding and transactional usage over short term value extraction
- Probably more appropriate for the follow on topic regarding rewards but including here to the extent some aspects of restriction design could help here
Proposed Changes to Restrictions
- Modify Creator flow control
- Increase max allowance to 10% of circulating supply
- Build to allowance based on time instead of community activity
- Allowance still subject to vesting restriction below
- Introduce Creator vesting of genesis supply
- Initial supply of coins unlocks for creator use over 12 months
- Unlocked supply still subject to flow restriction above
- Add flow control to all users
- No vesting based restriction for general usage but introduce flow based transfer and sell restrictions that mirror creators
- Add slip based fee for Creator Coin buy/sell conversions
- Tax all buys/sells of creator coin based on how far we move along the bonding curve with the transaction
- Fee is calculated in creator coin and transferred in full to creator
- Empower development team to iterate on specific parameters used for flow controls, vesting schedule, and slip based fees
- Clarify parameterized design and ranges within which development team can operate to optimize these controls
- No change to:
- Compliance and risk based limits for USDC redemptions
- Credit card purchase limits
- Risk based bridge limits