IMPORTANT - options for upcoming G-UNI spinoff vote

Hello Gelato Community,

For those of you that have been paying attention, to say the least, the past couple of days has been eventful. A G-UNI spin-off (Arrakis Finance) plan was first presented in a proposal by the Gelato team, and somewhat expectedly, the community has reacted with concerns.

As a result, a voluntary working group with open invitations was formed, consisting of community members that would like to contribute to a counter proposal that can reasonably represent the best interest of liquid GEL holders, while still keep it as realistic as possible for all parties concerned, meaning Gelato team members / private investors, liquid GEL holders, G-UNI early LPs, future Arrakis team / private investors, projects that are incentivized to participate in Arrakis, etc.

The major concerns from the community towards the initial proposal include

  1. Excessive lockup time for liquid GEL
  2. Insufficient SPICE allocation for liquid GEL holders (note that the initially proposed allocation is pro rata over all GEL holders, i.e. both liquid and vested)

Therefore, the goal of any counter proposal by the working group is to reduce the lockup time and increase the SPICE allocation for liquid GEL holders. Subsequently, a counter proposal was quickly made by the working group and presented publicly, with the expectation of certain pushbacks to be received.

Meanwhile, the Gelato team also conducted internal discussions with team members and private investors. It is clear and understandable that they also want their voice heard, and it is likely that many individuals will be voting on the proposal with their vesting GEL tokens. The Gelato Team and private investors is a large diverse group rather than a monolithic block, and it’s only natural to assume that everyone will want to vote in a way according to their unique situation. The Gelato team and private investors deserve benefits from the Arrakis spin-off with their GEL allocation just like the GEL community, and the counter proposal from last week would dilute their share in the original proposal by 1.3%.

With these concerns from different team members and knowledge of their intention to vote, a Gelato team member then joined the working group and discussed with us for a long time over the weekend, to elaborate the perspectives of different team members’, and see if we could develop a middle-ground option that aims to make the counter proposal more reasonable for vesting GEL holders to potentially vote for it. After the talks on the weekend we settled on putting these options below onto the ballot:

Original SPICE allocation for Liquid GEL Holders vs. Vesting GEL Holders

Counter proposed SPICE allocation for Liquid GEL Holders vs. Vesting GEL Holders

Please read through this carefully and feel free to ask any questions. Notice that BOTH the original proposal and the counter proposal have been tweaked. A few differences are noted below:

Original Proposal Updates:
The original proposal laid out to provide every GEL holder, regardless of being liquid or still vesting, with an equal pro rata share of upcoming SPICE airdrop.

Many community members were concerned about the GEL lock time and would like the lock time to be shorter. So the original proposal itself has reduced the GEL lock time to 3 months, for liquid GEL holders that want a SPICE airdrop. All liquid GEL holders would have ample time to lock their GEL in a specified contract.

Counter Proposal Updates:
The counter proposal by the working group laid out that liquid GEL holders should receive a higher pro rata share of the upcoming SPICE airdrop than vesting GEL holders.

The new version of the counter proposal would still increase the liquid GEL share by 2.5x (from 1.2% to 3%) but dilutes the Gelato team and investors allocation by less. Also the lock-time is the same as the new initial option since everyone seems to be happy with a three month liquid GEL lock time in all cases.

The vote was supposed to start today but these back and forth discussions with everyone all took significant time. And it’s only logical to get a temperature check with the broad community on the forum first. So the team has suggested that vote be pushed back one final time to later this week, starting earliest on Thursday March 24th.

Note: every individual who has GEL is able to vote, regardless of being liquid or vested.

Thanks everyone for the patience and hard work in this process! Please answer the temperature check poll below on these final proposed options for the vote this week:

  • Yes, lets vote on these
  • No, I am still not satisfied with the options

0 voters

Let’s vote and find out the collective will of the GEL holders in the following snapshot vote, and respect the results!

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Thanks @btt & other Gelato community members for coming together and crafting out this counter proposal.

Irrespective of the outcome of the vote proposal I would like to give special thanks to @kassandra.eth for demonstrating positive attitude & patience during times required. I am sure everyone will duly appreciate it. Also, thanks to wider Gelato Team members for listening to its community.

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Congrats to all the participants of the counterproposal, Gelato team and Kassandra for getting together and planning this changes!
Only thing I would change, as I said in Telegram, would be the airdrop conditions. I think it should be airdropped to everyone who used G-UNI prior the first Arrakis announcement. So this conditions should change from “before january 1st 2022” to “before march 13th 2022”.

This would be totally fair for everyone because there would be no sign of a gameable airdrop (before march 13 no one knew anything related to this, maybe except team members obviously). Also with this conditions we would include everyone that genuinly used G-UNI (DAI/USDC, Olympus Pro bonds, Optimism implementation, etc.).

What do you think about this? Thanks in advance.

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Thanks for organizing the working group for liquid $GEL holders and putting a constructive proposal forward to the community @btt!

I strongly believe that regardless of the outcome of the vote, $GEL holders (liquid ones or non liquid ones) will benefit greatly from going forward with the spin off. Some liquid $GEL holders may feel like the $SPICE allocated to them seems low, however it is important to understand that this airdrop might still be very attractive in terms of $ value even if the original proposal passes given the potential that Arrakis has.

To manage expectations here a bit, I would like to make a couple of points clear of why someone from the Gelato Team and Private Investors might vote for the original proposal #1 instead of the counter proposal #2:

  • It rewards every $GEL holder with an equal amount of $SPICE pro rata, which seems to me like the fairest method
  • To still make this more juicy for liquid $GEL holders, they will receive an instantly liquid $SPICE airdrop and only have to lock their GEL for 3 months
  • Vested $GEL holders will not have to increase their existing cliff, but on the other hand only receive $SPICE which vests linearly between 2 - 4 years and is not instantly transferable. This forces vested $GEL holders to be long-term aligned with $SPICE, which is not the case for liquid $GEL holders

Let’s illustrate how counter proposal #2 would impact smaller Gelato team members and private investors with some real life examples:

  • Private $GEL investors, which are mostly small Angels that contributed like $15k to buy $GEL one year ago & which have helped Gelato tremendously over the past few months, would receive less $SPICE pro rate than liquid $GEL holders given that proposal #2 wins. Note that they already have to accept a long vesting schedule for both their $SPICE airdrop and $GEL investment compared to liquid $SPICE and $GEL holders.
  • Same holds true for smaller $GEL holders within the team, they also get treated as “less important”, even though they might even have a smaller $ position than some of the liquid $GEL holders

This raises the question that I already repeatedly asked in the community chat, which has still not been answered to this day by the parties which created the counter proposal #2:

“Why should liquid $GEL holders receive a higher pro rata share of the $SPICE supply compared to e.g. a small private investor or a Gelato team member? What are the reasons why they deserve it more?”

In my opinion the only reasoning I see is:

  • Liquid $GEL holders are incentivized to maximize their own profits from this airdrop, which of course is not a valid concern for the Gelato Team or Gelato private investors to vote for Proposal #2.
  • One could potentially argue that this would create some buzz around $GEL in the short term, which I would then classify as marketing, however such increase in attention would also most likely be rather short lived.

I think it might be worth if some individuals from the working group take a moment and try to pitch to the Gelato Team and private Investors why they think proposal #2 is actually the fairest proposal to vote on.

Remember that the Gelato Team Members and Private Investors are the ones who will ultimately make the call here as they hold the majority of the $GEL, so if they don’t receive arguments which will convince them, then the likelihood of proposal #2 passing is quite low.

Thank you @hilmarx for the thoughtful response.

Please note that the content of this post has been reviewed by the community members from the working group that were available at the time.

The points you laid out in my opinion are valid, and honestly if I put myself in the shoes of the Gelato team and private investors, I can understand why some team members and investors think this way.

As it’s becoming evident that the matter in discussion here is quite complicated, and each party still has a certain level of bias due to their own vested interest, regardless how objective they try to be, please don’t be offended by the reasoning below from the community’s perspective.

First of all, many discussions revolve around the question who benefited more from Gelato’s fundraising, i.e. private VS. public. There is obviously a trade-off between price and vesting. As much as having liquid GEL is an important advantage, from a probability point of view, the private investors have a lot more upside and less risks due to their much lower entry point and higher allocation. It’s hard to quantifiably argue whether the lower price but longer vesting period can offset each other or to what extent. A simpler mental experience is to ask the private investors if they would like to give up the investment opportunity and market buy GEL to avoid the vesting, or the same question but the other way around to liquid GEL holders. If the answer is No and Yes respectively, we can have an indication at least who is generally perceived to have gotten the better deal of the bargain. And this I believe is the root cause why liquid GEL holders generally think that private investors have already gained a lot more.

Secondly, a pro rata distribution between private investors and liquid GEL holders will only magnify the gap between these two groups, hence the saying “the rich only get richer”. This is also besides the fact that a private investor for Gelato has a much better chance at becoming a private investor for Arrakis than an average liquid GEL holder. Please note that the original GEL allocation to public sale is 4%, as opposed to the counter proposed 3% SPICE allocation to liquid GEL holders.

Based on the SPICE tokenomics, the initial float of SPICE is rather low, and liquid GEL holders will be one of the few Arrakis governance participants. The majority of the governance power will be in the hands of projects that receive airdrops. As an important driver for Arrakis governance to take off, these projects deserve airdrop incentives. But the much larger amount of liquidity they can bring paired with the boost from xSPICE they received as airdrop, the presence of other participants is very likely to be diminished, and as a result, the overwhelming majority of SPICE emission is going to be taken by these projects as well. A bigger airdrop allocation to liquid GEL holders can pull the already tilted scale back a little to allow meaningful participation of the retails, and such balance can go a long way for Arrakis governance to also be viable and appealing to the individuals. Making use of the existing Gelato community seems to be the easiest way to achieve that. One can even argue that this extra allocation for liquid GEL holders may better come from the projects airdrop rather than team and private investors, given how much leverage the projects already will have.

The last point is to protect, grow, and engage the Gelato community. GEL is yet to have utility, and still faces a thin liquidity issue. Locking up GEL for SPICE can arguably act as a “utility” for people to buy and hold GEL, and improve the liquidity situation all at the same time. Additionally, the past couple of days seems to have shown that the number of existing engaging community members is still limited (the amount of people that were willing to join our working group can be an indicator). An extra airdrop allocation can be a catalyst to bring in more attention to Gelato as well as to Arrakis, and hence more future community growth. Because of the history and intertwined connection between these two protocols, we can envision a future where two communities are converging into one.

The success of Gelato and Arrakis as a product, hugely relies on the competence and dedication of the team. Gelato team has abundantly demonstrated it, and we believe Arrakis will be the same. Although, there is still a certain level of truth to the saying that “Crypto is not ALSO about community. Crypto is ONLY about community”. Community are the product testers, the protocol promoters, the project supporters, and more importantly, the backbone of the DAO. An extra incentive is for the current community, and also a signal for the future community.

As to an important note mentioned in @hilmarx 's post, individual situations of team members are also different and important. Some team members may have a small GEL allocation to start with, but also have contributed tremendously. The same applies to liquid GEL holders as well, i.e. the holding size doesn’t necessarily correlate to contribution to the community. In such situations, we hope there may be possibilities to handle it on an individual basis. After all, their decisions on how to vote will be respected.

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Why Vote for Proposal #2?

  1. Gives more active Gelato community followers/participants/holders more power in shaping Arrakis. (An engaged and rewarded community is just as important as having extremely talented devs and a great product imo)

  2. Gives more utility to buying, holding, and locking $gel today. This helps literally everyone involved with gelato.

  3. Gives a reason for new users/community members to get engaged with the gelato ecosystem. Having new, talented people join our community is very important

  4. Distributes voting power more effectively between community, team, early investors, projects, and users. Trying to balance the powers of these groups will make for a more decentralized protocol. Proposal #2 was created with this in mind.

Aligning incentives for community/private investors/gel team whilst simultaneously attracting new blood to gelato ecosystem is extremely important. Giving liquid gel a little more allocation does this more effectively for the reasons listed above, not to mention that team members and early investors are afforded the exact same opportunity to add more gel to their positions, increasing their already large allocation of spice shown in tokenomics section.

At the end of the day it is impossible to please everyone. All we can try to do is look at the proposed token distribution and and base our decisions on the numbers. Based on proposal #2, you can see that there is better balance between all stakeholders. Proposal #2 creates more reasons/opportunity for newcomers to get involved with gelato whilst also ensuring long time private gel investors essentially get a free, 4x larger allocation of spice.

It is crucial that Arrakis is able to grow an engaged, incentivized, and talented community. Proposal #2 opens the door for this to happen.

Thank you

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With regards to the above discussion, I would like to put a note as well in addition to the points put forwards by @btt & @0xwives and other team/community members.

In my opinion, I believe that increasing the liquid GEL reward rate from 1.2% to 3% would garnish and cultivate a strong sense of bonding and ‘community first’ sentiment among the Gelato team/community members.This in fact will boost several community member’s trust and confidence who might have been left behind (not intentionally) for not been able to get short listed for gelato whale token sale event even though they might be early sorbet finance adopters. With such engagement and further rewarding members with extra spice incentive would create strong bond among team/community and essentially would build a sense of ownership towards products/protocol the team is building eventually laying a strong foundation of long term GEL & Arrakis believers & supporters. The feeling of coexistence and mutual respect among old and new members with team playing a vital role would be welcoming and have value added proposition which in a way makes strong statement.
Hence, Proposal 2 is proposed by the community.

PS: We all gelato community members have strong conviction in Gelato. We believe in people at Gelato @gitpusha @hilmarx @Dan @kassandra.eth and wider team. There’s no doubt and we stand strong and support. With Arrakis we believe it will only achieve new success heights when the beast is unleashed.

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Thanks a lot for your comments @btt @0xwives and @Pats_Hardi! Definitely very valuable for the team and private investors to consider when making their decision.

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Awesome to see some OG Gelato Community members working together to formulate a such a well thought out and detailed counter-proposal. Well done to @btt @Pats_Hardi @George @0xwives and all the others involved!

Tomorrow we vote :icecream:

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