Proposal: Update to Network Rewards

With the RLY Network Decentralization proposal passed on 8/25/2021 and the formation of the RLY Network Association, I have been engaged by the Association as an independent contractor to advance their post-decentralization reward design.

My background: Previously a founding PM for Rally responsible for launching and maintaining both Rally.io and its NFT platform. With years of experience at a pre-decentralized Rally.io and extensive knowledge of the platform I believe I have the right toolset to be able to contribute value to the Association that can result in benefitting both the RLY network and the applications built on top of it.

The new network rewards will take from the existing community approved network rewards and redesign it with the following goals:

  1. Decouple the current network rewards design that is structured around a single application (Rally.io)
  2. Uninterrupted distribution of legacy network rewards to live applications (Rally.io)
  3. Ability to support rewarding multiple applications
  4. Use network metrics to programmatically determine network reward emissions and allocations to applications in proportion to their network contributions
  5. Fund new and emerging applications built on top of the RLY protocol in order to bootstrap growth and adoption
  6. Allow applications substantial freedom in determining reward allocations at the user level within high level network allocation constraints

I believe the following proposal starts us off on the right path. I will continue to iterate and make improvements based on learnings, data, and the community. I’m looking forward to your thoughts, comments, and feedback before finalizing a decision at the RLY Network Association level!


Network Rewards Program Initiatives

The RLY Network Association will distribute network rewards to applications in order to incentivize growth and adoption of its ecosystem and protocol. The program targets both applications that are live and applications that are under development.

  1. RLY Rewards
    1. Live applications receive network rewards in proportion to their contribution to the network
    2. Network rewards distributed at time based intervals
  2. RLY Funds
    1. New applications that are in development granted RLY to encourage timely releases, UA, retention, and growth
    2. RLY distributed based on milestone delivery

RLY Network Phases

The Association’s goal is to reach maturity by working towards programmatically distributing network rewards. Until then, the network is considered to be in its bootstrap phase.

  1. Bootstrap (current phase)
    1. Network rewards are determined both subjectively and objectively
    2. Distribution of network rewards is executed manually on a weekly basis
  2. Maturity
    1. Total network reward emissions determined programmatically
    2. Allocations of network reward to applications from the emissions pool are determined programmatically
    3. Distributions of network rewards to applications are executed automatically
    4. Additionally, network maturity is split into two phases:
      • Phase 1: 1st party and 2nd party application ready
      • Phase 2: 3rd party application ready

Proposal: Network Bootstrap Phase

  1. RLY Rewards

    1. Rally.io will continue to receive the legacy amount of 350K RLY a day
    2. Significant changes in positive contributions to network (RLY supply) within individual applications in this phase will have their RLY Rewards updated
    3. RLY Rewards will be distributed by the Association to the designated developer wallet weekly
    4. New applications are eligible for RLY Rewards when they have completed all milestones and have received their RLY Funds in full. They may not participate in both during the Network Bootstrap Phase. New RLY Reward allocation will be based on the inflation rate of .7% from their RLY supply. This figure is based on Rally.io’s current inflation rate (350K RLY a day / 50M RLY supply = .7%)
  2. RLY Funds

    1. In-development applications are eligible to participate in RLY Funds. Individual applications will have their own individual allocation of RLY Funds
    2. New applications will be calculated at a base rate of 5K RLY a day with the exception of Unite.io
    3. Unite.io’s base rate will be calculated at 50K RLY a day as Rally.io has shown product market fit and can contribute experience and knowledge to Unite.io
    4. Future applications that present a case to warrant a higher base rate will be taken under review
    5. RLY Funds will be distributed in a lump sum to an application upon completion of target milestones
    6. Design
      1. Completion of RLY Funds milestones are projected for approximately 6 months and the Total RLY Fund amount is reflected accordingly.
      2. Base rate RLY a day * 6 months = Total RLY Fund
      3. Applications that complete all milestones in less than 6 months will still receive the full 6 months value of the RLY Fund
      4. Predetermined amounts from the total RLY Funds will be distributed in a lump sum to an application upon completion of target milestones:
        1. Launch (30% of RLY Fund)
        2. Target RLY Supply milestones (30%)
          1. Milestone 3 (10%): Determined by projected RLY supply in 6 months (Base rate RLY a day / inflation rate)
          2. Milestone 2 (10%): Half of milestone 3’s RLY supply
          3. Milestone 1 (10%): Half of milestone 2’s RLY supply
        3. Target Wallet milestones (40%)
          1. Milestone 3 (10%): RLY supply Milestone 3 / 1000*
          2. Milestone 2 (10%): RLY supply Milestone 2 / 1000*
          3. Milestone 1 (20%): RLY supply Milestone 1 / 1000*
          4. *1000 is determined by the current Rally.io’s RLY supply to wallet ratio
      5. Design values

Proposal: Network Maturity

Phase 1 (1st party and 2nd party application ready)

  1. RLY Rewards
    1. RLY emissions
      1. Emit a predetermined amount of RLY daily that live applications are eligible for
      2. The daily emission amounts will be based on the total RLY supply of combined applications
      3. Total emissions per day is determined by the current milestone RLY supply .7% inflation rate. For example:
        1. Combined supply of 50MM RLY = 350K RLY / Day
        2. Combined supply of 250MM RLY = 1.75MM RLY / Day
      4. Milestones at every 10MM RLY. Emissions will not be reduced if the supply drops to a previous lower milestone
      5. The maximum daily RLY emission is capped at 2.5MM RLY a day
      6. Emissions will discontinue when the starting RLY Rewards supply of 7.5B RLY is exhausted
    2. RLY allocation to applications
      1. Apps that are contributing to the total circulating RLY supply are eligible, including apps that are currently participating in the RLY funds program
      2. Eligible apps will be allocated RLY in a daily basis from daily emissions pool based on their measurable network contributions for that day
      3. Currently the two metrics that will be tracked are user wallets and RLY backing coins supply within the individual application:
        1. User wallets: 60%
          1. User wallets: 20%
          2. User wallets that hold at least one asset: 20%
          3. User wallets that have purchased/bridged in: 20%
        2. RLY backing coins: 40%
      4. Using a weighted sum (per column) formula, applications will be allocated RLY from the daily emission in proportion to their contributions
    3. RLY distribution
      1. RLY allocation will be programmatically distributed to app-specific developer wallets on a daily basis
  2. RLY Fund
    1. Currently no changes are planned. Will make adjustments as needed.

Phase 2 (3rd party application ready)

  1. RLY Rewards
    1. RLY emissions
      1. Currently no changes are planned. Will make adjustments as needed
    2. RLY allocation to applications
      1. Redefine allocation parameters to include identity/connectivity protocols with the goal to be more sybil resistant (TBD)
    3. RLY distribution
      1. Currently no changes are planned. Will make adjustments as needed.
  2. RLY Fund
    1. Currently no changes are planned. Will make adjustments as needed.
2 Likes

Really cool proposal and one that I’m in favor of. Fostering the developer ecosystem will grow Rally’s reach and allow 3rd parties to create applications that improve the creator experience at an exponential rate.

That said, can you provide some examples of potential applications (real or hypothetical) that would be rewarded in this system? I think that would help me better contextualize the proposal. You mention unite.io but I’m not familiar and the link seems to be dead.

Thanks!

All applications that are built on top of the RLY protocol are eligible for network rewards! Currently the RLY protocol supports 1st party applications (Rally.io & Rally Asia’s project) and 2nd party applications (SuperLayer incubated projects) with plans to support 3rd party applications in the future.

A solid structure! To summarize, this doesn’t speak to sidechain rewards distribution algorithm (ie Creator Coin rewards), but rather creates a means for other apps on the $RLY ecosystem to participate in the rewards distribution. Rally.io is but one such app, others being SuperLayer projects and such. Do I have that right?

That’s spot on! Network rewards will be used to provide benefits to applications that are participating in the RLY ecosystem and contributing to the overall network. Application level reward programs are up to the individual application.

Could you elaborate how you determine Network rewards in proportion to their network contribution. How is that programmatically possible? There are so many exploits I could just build a game that uses a bunch of random transaction to operate. Real value from applications is not captured by network activity. I am not really sure why we should reward live applications(maybe in the beginning). A final product should have a healthy long term business model so that it can stand on its own two feet. It also creates a artificial competition between the different applications based on network activity. If we fund projects that need additional incentives after there release then we simple funded the wrong project. We should be really careful here then the goal should be to create a ecosystem that can also operate without the rewards someday.

I believe it makes more sense to approach the proposal using the following lens: network rewards are provided by the RLY Network Association for the purpose of encouraging growth of the network/ecosystem. Therefore it maintains consistency that the Association rewards applications based on their measurable contributions to the network.

The above proposal mentions that network contributions for Network Maturity Phase 1 (1st and 2nd party applications built by Rally and SuperLayer) are determined by wallet count and RLY supply, rewarding user growth and collateralization. In Network Maturity Phase 2 (3rd party applications ready) we will introduce additional parameters that will discourage exploits and abuse.

Ultimately, the ecosystem will operate without rewards when the network rewards pool is exhausted. Until then, it will be used to encourage adoption, drive growth, and reward contributions to the network/ecosystem.

All I can say is that you need a lot of resources to secure a frequent reward system based on the metrics you mentioned especially with 3rd parties. The complexity will grow with every additional metric and also we have plans to integrate into second layer Ethereum and other blockchains. Just look at the measurement Rally had to take the last few months just to prevent bots from trading CC. Also nobody in the Community can really validate it because we use a private chain. We should take a approach that fits our current situation and recognize value in a flexible way.
What if a application captures Value in a way that we currently not thinking about? We are so early in this space that nobody can really know which metrics are suited for this.
I have nothing against rewarding applications in the beginning but we should slowly encourage them to become self sustainable. Otherwise this will not work out long term.
Also we end up with more rewards for a variety of projects. Diversification is the key I don’t believe that you need additional frequent incentivize in Token for projects that have a vision and goal in mind.
You want to attract the kind of people that are eager to build something long term. Look at EOS 2019 in May after they burned the saving account to fund and reward developers a lot of projects just disappeared afterwards. In comparison Ethereum Dapps Uniswap or other successful ones they are not getting any rewards from the Ethereum foundation.