CIP 129 - Grant to Build a Harberger Tax NFT Marketplace

Proposals (CIPs)
22

Thanks for the very detailed proposal

This can bring revenue to the DAO’s treasury. However, my concern is that the current NFT volume is quite soaring, and I’m not sure how long it will take for the investment to be able to generate revenue equal to the amount spent.

Additionally, I think more detailed market research is required as the market for Harberger Tax NFT is very new, and would be hard to predict if this would gain enough traction or not.

Instead of letting this marketplace be initiated by CityDAO alone, maybe we can raise funds with other major DAOs and protocol DAOs in the space? That way, we can easily bootstrap the ecosystem from those collaborated DAOs.

23

All he is saying is that someone should be representing CityDAO in an arms length manor in negotiating/determine these rates, royalties and cost shares. Not suggesting you aren’t being fair, but it creates a better appearance of there was a formal negotiation/agreement in an open meeting to terms.

2 Likes
24

I like the way this proposal could actually lead to a paradigm shift in what ownership means, and how it could be attempted with NFTs and DAOs, which seems to be a nice reconsideration of how Harberger Taxes are often considered only with land. I think this could be a practical implementation of a very valuable theoretical (and philosophical) idea about what it means to own something, to value something, and to participate in something.

I am a little confused on how it would actually work, though - in the sense that if I buy an NFT that involves participation, such as CityDAO citizenship, then the NFT is temporarily “owned” by me, and I could vote as a citizen. But at any time, someone else could buy it out from under me, and then I wouldn’t be a citizen anymore. There’s no permanence to my ownership of the NFT. While this is an interesting paradigm, is it something that people would actually want? Why not just buy it permanently from Opensea rather than buying it “temporarily” from this new website, where I will not fully own it and will also be taxed on my possession of it? There’s something I’m missing here.

Re. the above conversations about having someone negotiate on CityDAO’s behalf, that’s a good point. It does the question of whether that could / should be a designated role, or how to deal with making sure CityDAO is getting the best “deal” from each proposal.

2 Likes
25

Hi @chompk, thanks for your comments! It’s great to see new posts on forum. I think one of my favorite parts about this proposal so far is how many people in the DAO are coming to the table to discuss this and the future of CityDAO. It’s really great to see :slight_smile:

Could you clarify what you meant by this?

Some of the market examples that are relevant to this proposal are other NFT marketplaces, ovb Opensea is the most extreme high volume example but in general other NFT marketplaces are decent references.

Additionally, one perk this proposal brings to the table is the table is a revenue stream from facilitating the tax payments, this is something not even Opensea can currently do.

What sort of research would you be seeking? One of the tricky parts about asking for more research is that research can continue to infinitum, with more research coming after the research, on and on. The concepts of HT have been around for decades, two minor real world experiments already exist that I know about, and this proposal is to take a solid shot at being first to market in the NFT/DAO ecosystem.

Definitely! There’s no way whatsoever that the $250k in this proposal is anywhere near sufficient to do a mass level scaling and adaption. This proposal is aimed at getting the early stage real world momentum needed to get other DAOs, thought leaders, VCs, angels, media etc all to take us seriously in discussions. Part of my role will be to continue fostering and nurturing these connections and recruiting further support :mechanical_arm:

1 Like
26

Agreed! I’m intending/hoping that for this proposal, the daily AMAs and discussions I’m hosting -2hrs last Thursday, 1.5hrs last Friday, 1hr yesterday/Saturday, then 1-2hrs on-going every day this week at 2pm PST in townhall- will achieve that aim of formal negotiation/agreement in an open environment

Moving forward, there’s an interesting discussion concept on this topic over here, let’s maybe keep that discussion going over there →

27

Any community/organization etc who would mint their HT NFTs would choose from a list of variables and customization’s they’d like for their NFTs, things like;

Exemptions will some of the NFTs be exempt from tax for core contributors

Bad actor contingency will some NFTs be able to multi-sig force a specific NFT to open auction if the owner is found violating rules of the community

Protections for price fluctuations an auto price adjustment at -for example- a 1% price increase if someone else tries to make a purchase -think ebay auto-bidding-

Here’s a copy/paste paragraph from an interesting article on this topic (fourth paragraph in the article)

“Second, yes, under CHT, sometimes people would (be paid well to) lose their property. This would almost always be because someone else credibly demonstrated that they expect to gain more value from it. Even if owners strategically or mistakenly declare values too low, the feature I suggested of being able to buy back a property by paying a 1% premium would ensure that pricing errors don’t cause property misallocations. The highest value uses of land can change, and one of the big positive features of this system is that it makes the usage changes that should then result easier to achieve. In my mind that’s a feature, not a bug. Yes, owners could buy insurance against the risk of losing a property, though that needn’t result in getting their property back.”

imho the volitional opt-in to a HT based NFT/token community is in the mutual benefit of everyone who’s participating. I see it similar to the fundamental premise of the Bitcoin networks reliability, ie; it’s in everyones best interests to be honest and only validate true transactions in Bitcoin, and in an NFT community it’s in everyones best interests to have a growing treasury, high participation and authentic floor prices for entry

I think the question here can be explored deeper, for example;
a) Does the person want to be a part of a community where the treasury is diminishing, or one where the treasury is replenishing
b) Does the person want to be a part of a community where 90% of everyone is dormant and not participating, or do they want to be a part of a community that’s more active
c) Does the person want to buy their NFT at an artificially high price due to hoarding by flippers, or do they want to pay real market value as determined only by active participants

Because if someone wants to buy and own an NFT for a community that has a depleting treasury, low participation and artificially high floor prices, then yes buying a traditional NFT from Opensea would fit that bill

The theory here is, if a person wants to be a part of a community where the treasury is growing, people are more active and the buy-in price is more authentic, then a HT NFT community model seems like the more logical way to go

1 Like
28

I agree with this proposal and the roadmap, my feedback is that I would love to keep the actual implication of the tax policy as open and customizable from the research that the team does. There is a lot of really good thought leadership on how these could play out so I think we should take advantage of that as well as interviews with real DAOs that would want to implement to ensure that we fully understand the market so we can properly map a solution to the problem.

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29

Agreed!

I’ll incorporate this feedback into the official snapshot when it goes up this week. A couple people mentioned research/data related topics and I agree it’s an important subject so we know exactly which types of customizations should be developed and in what priority order

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30

Overall a great proposal, main comment I have is that there shouldn’t be a limit to the $ amount returned to CityDAO.

CityDAO is venture funding this project, that typically comes with an equity stake which does not have a capped upside. Not clear why we would agree to a capped upside in this case.

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31

This is a great topic, I’ve thought about this at length as well. Initially I was thinking to propose this as CityDAO having an equity stake exactly as you mentioned. I came up with 2 primary reasons to instead lean towards the royalty direction instead;

  1. I do not know to what extent CityDAO becoming a ‘fund’ triggers additional and potentially complex legal challenges/hurdles and I would not want to accidentally trigger a ton of expenses for the DAO on that front
  2. If CityDAOs primary benefit was indeed an equity stake, then based on general market norms the DAO would not see a return on that investment for somewhere in the 5-10 year mark, which would be the approx length of time required for the project to be acquired or similar
  3. Going for a Royalty structure has the potential to put revenue back into the CityDAO treasury in the shortest amount of time, regardless of the venture even succeeding long term or not, if the venture were to -for example- only generate a few million in revenues and then not succeed for whatever reason, then CityDAO would come out on top right away with a positive impact on the Treasury

Note also:
Based on community feedback combined with my own considerations as well, the version of this proposal which will be going to snapshot voting this week will include a 20% royalty up to $250k then an additional 5% royalty up to an additional $750k, the total will thus remain $1mil, but the length of time to capture it for CityDAOs benefit would be greatly reduced

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32

The fact that CityDAO will potentially get a 4x return already makes it a fund, albeit shorter term than owning an equity stake.

Don’t get me wrong. I love the idea of this startup. I just don’t like that CityDAO is giving away money and doesn’t get long-term benefit.

1 Like