Draft: Mango Labs

Draft: Mango Labs

tldr - I am requesting $1.5m for 6mo and 100m MNGO locked for 4 years

Hello members of the DAO, I’d like to introduce Mango Labs and a request for funding. I’ll describe some of the motivations behind it and the structure. I’ll also go on a long rambling essay about my thoughts on a lot of different but related subjects. Apologies.

Motivation

The first motivating problem is around financial security for developers. While the initial squad of developers were willing to work for governance tokens, it’s not a model for sustained development. Many developers working with us have constant USD denominated liabilities and need some constant source of income. Because of this, they’re unable to quit and do Mango full time.

Another problem we face currently is lack of consistency/reliability. There are a lot of part time devs who contribute great work. They should and will be rewarded, but most of these can only be one-off contributions. For the highest value tools, it requires some sort of maintenance (at least in the beginning, until they are further decentralized). If we can’t rely on someone to be here tomorrow to answer questions about the tool, we can’t plan as effectively.

Finally–and I think this is the most important point–is the issue of good decentralization. It is critically important that voting power is spread among a diverse group of users and contributors. In our original litepaper, we wanted to get 2bn MNGO outstanding with 1bn being held by the foundation to develop the DAO and do liquidity incentives. Since the tech for the DAO existed in August, we decided to ditch that plan and go full DAO from the beginning.

But I think the 2bn MNGO is still a good target. We shouldn’t just dump it all in liquidity incentives in a rage of short termism. We also shouldn’t just distribute another 1bn MNGO for no reason at all. I think we should hand it out to people who have demonstrated their commitment to our protocol and shown an understanding of some big part of it. The tokens should also be locked such that the owner cannot sell but can still vote.

In my view, decentralization is primarily about censorship resistance. We should be extra sure that if the founding devs were hit by a bus or kidnapped by a malicious actor, the Mango DAO can just shrug it off. A big part of improving that kind of decentralization is having multiple people who have an intimate understanding of the code base.

I believe Mango Labs ameliorates all these issues. The organization can provide financial security for developers such that they can make Mango their career. It can provide accountability. And finally, it actually helps us decentralize by allocating MNGO and replicating the implicit knowledge in the minds of more people. This, along with Mango Labs’ commitment to decentralization and open-source, should help Mango become censorship-resistant.

Proposal

I’m asking for funding of $1.5m for the next 6 months to help develop Mango Markets. After the 6 months, I will request a performance review of Mango Labs. None of the funding will go to me or Tyler (a cofounder in the project). None of the MNGO will go to us either.

The 100m locked MNGO is a very rough number. By default I’m inclined towards a 4 year locking period with an unlock every year. I could use some advice on this front.

Below are some proposed activities of Mango Labs. I am not saying we will accomplish all of these.

  • Premier User Interface
    • Easy onboarding to DEX world
    • mobile app
    • Allow users to trade on Serum dex using Mango’s MSRM
  • Liquidity
    • Build good market making tools that will be open source and which we will use to provide liquidity to new markets DAO lists
    • Help other market makers who are not used to dexes
    • liquidator + market maker combo for capital efficiency
  • Mango v4
    • Have capacity for an arbitrary number of markets
    • Decentralized keepers
    • Oracle based, adjusting interest rates

This is a draft. So if you have suggestions on how to improve this plan, please chime in. This is not intended to be the only way to fund improvements to Mango. I think Max’s idea is also a good one. There are probably even better ideas we have to experiment with and tinker with to get the winning combo.

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This sounds like a great proposal. Assuming that there are periodic reviews, the funds are released in tranches and the mango dispensed to devs is locked from the time it is dispensed (and any unused mango eventually sent back to the DAO).

The point of DAOs, as they are now, is to experiment with different ways of funding work maintaining and developing protocols. Daffy has proved himself well enough in the past that this seems like a pretty reasonable request for an experiment with a relatively small proportion of the overall treasury.

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I think this is a reasonable path forward, and likely a more simple process operationally than what Max has proposed, though I think that is an interesting idea as well.

Maybe some combination could be implemented, with Max’s proposed model (or a simplified versin) used more for ad hoc or smaller scope projects, still empowering core contributors to reward and incentivize members of the community to help work on things - where Mango Labs could be focused more on the long-term, bigger projects and goals.

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Hey Daffy,

Rephrasing, to make sure I understand: you suggest a separate organization, which will handle its own funds without having to go through DAO voting, and which will get assigned a treasury of 100M MNGO to manage for whatever actions they deem necessary to further Mango Markets.

Is that correct?

The tokens should also be locked such that the owner cannot sell but can still vote.

Absolutely agree. One of the things that brought me to Mango was research spurred by the Uniswap “DeFi Education Fund” fiasco.

Having said that…

I believe Mango Labs ameliorates all these issues. The organization can provide financial security for developers such that they can make Mango their career.

[…]

The 100m locked MNGO is a very rough number. By default I’m inclined towards a 4 year locking period with an unlock every year. I could use some advice on this front.

Does that mean then that the expectation for Mango Labs would be to pay its people out of the $1.5M for the first year? It doesn’t seem like it could pay them out of the 100M MNGO until after the first unlock.

I bring this up because the ideal developer compensation is likely a mix of USD, so they don’t have to worry about their income, with a sizable portion of locked MNGO - that way you align their incentives with the protocol’s.

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Rephrasing, to make sure I understand: you suggest a separate organization, which will handle its own funds without having to go through DAO voting, and which will get assigned a treasury of 100M MNGO to manage for whatever actions they deem necessary to further Mango Markets.

Correct, you have the right idea. I’m trying to create an organization that is quick, but is accountable to the DAO. The 100m MNGO treasury doesn’t need to be entirely distributed out and I think the larger USDC comp someone receives, they will receive less MNGO.

Does that mean then that the expectation for Mango Labs would be to pay its people out of the $1.5M for the first year? It doesn’t seem like it could pay them out of the 100M MNGO until after the first unlock.

correct.

I bring this up because the ideal developer compensation is likely a mix of USD, so they don’t have to worry about their income, with a sizable portion of locked MNGO - that way you align their incentives with the protocol’s.

agreed

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Gotcha. Then it seems like a first tranche of MNGO should be immediately available, instead of waiting a year for it to unlock - that way the Labs org can pay anyone who’s willing to take MNGO in compensation.

It is this MNGO that is paid out to contributors that should be have multi-year locking period with yearly unlocks, but that would depend on the agreement with the individuals (including when they started). The approaches that other orgs follow (eg. web3 foundation grants) are likely a good starting point here.

Well, I was thinking compensation is in USDC and MNGO is only given locked. The thing is, we have a lot of excess USDC (USDC that doesn’t need to be in insurance fund), and a lot of devs prefer a consistent USDC income because that’s what their liabilities are denominated in. Also, with the USDC, they definitely could just buy MNGO (only costs 9bps taker fee on Mango).

Edit: Also, giving unlocked MNGO has some nasty tax consequences and induces forced selling of MNGO. And if they forget to sell and MNGO goes down, that’ll be very stressful. Giving locked MNGO has much less harsh tax consequences (I believe–but I’m not a tax lawyer).

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I think we might be saying the same thing here…

To clarify: given locked to Mango Labs, or to the devs Mango Labs hires?

I agree that devs should only get locked MNGO, but your initial write-up seemed like Labs would also have its MNGO locked for at least a year.

If Labs wants to be more nimble than the DAO, then it seems like it needs to have some unlocked MNGO to assign in locked compensation from the get-go.

Sure, but locked MNGO for devs adds a compensation dial you can turn. USDC is not delayed compensation, locked MNGO is. Someone willing to bet on Mango long-term could be offered a higher current USD value of (MNGO+USDC) as compensation if the MNGO is locked, than if they were just offered USDC by itself.

Given in the proposal Labs is getting only a fraction of USDC value than it’s getting of MNGO, I’d have thought that there’s an interest in using the USDC for people who don’t have an interest (or less of one) in MNGO.

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Sorry Labs is not receiving any locked tokens. The locked tokens are for the devs. If we want, I can individually request locked tokens per person and we can have a vote. In any case, locked tokens are not yet available and I’m guessing won’t be for another month at least.

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Good proposal. I think distributing the MNGO as locked -but usable for voting- among all Mango Labs members would also ameliorate the problem with not reaching vote quorum. I kinda pained me to see daffy not getting reimbursed his MNGO which he used to deliver the liquidity mining program more quickly to the community. Probably wouldn’t have happen if enough engaged DAO members were holding MNGO.

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Cool, we were saying the same thing here. :slight_smile:

Ugh, I missed that one hadn’t gone through purely through lack of quorum. I don’t hold enough MNGO myself to have made a difference (Johnny-come-lately), but DAO voter apathy was one of the concerns I noted when doing my research.

Definitely agree that getting more MNGO in the hands of devs who are committed to seeing the project grow is a good idea.

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