CIP 182: t0wn reallocating STAGE ONE funding from R&D to building two apps

Proposals (CIPs)
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This proposal allows the t0wn team to reallocate the resources from Stage 1 of the t0wn project specifically toward building two apps that will more immediately and concretely benefit the t0wn project and CityDAO as a whole.

OVERVIEW

The t0wn team has been meeting weekly for months. We’ve had several meetings with the Próspera team about possibly acquiring real estate in it’s first tower as a first physical hub for t0wn. Those discussions remain ongoing. We’ve had all sorts of contact, discussion and meetings with potential member DAOs. Our aim is to reallocate the remaining funds toward building apps that will help push this project forward.

As of today, a little over $54,000 remains in the t0wn treasury. Our initial CIP called for $32K in comp and $20K in discretionary funds. $1K has been paid out in comp per member and no other money has been spent. Based on our internal weekly discussions, meetings with other DAOs and projects, Twitter spaces and independent research, we are clearer on how we think the discretionary funds should be spent. For transparency, we are asking the Citizens of CityDAO to allow us to reallocate these funds.

FUNDING

We would like to reallocate the remaining funds toward:

  1. A dominant assurance smart contract
  2. A identity verification app that KYCs individuals to global banking standards and ties the verified individual to one and only one ETH address with a soulbound token. This app will consist of two components:
    a. KYC functionality - for example, a custom front end that utilizes the API of a third party KYC service like Plaid.
    b. A NFT smart contract employing the ERC-5484 standard for soulbound tokens.
  3. Legal costs relating to analyzing the appropriate DAO structure

The t0wn team also requests $9,900 in additional funding for:

  • Assurance contract “prizes” associated with t0wn’s deployment of the contract to secure funding from DAOs for our first “hub”
  • A subsidy for CityDAO Citizens to use the KYC app for free up to $3K

PROJECT DETAILS

Assurance contract: Our initial t0wn STAGE 1 plan was to have DAOs sign LOIs stating their intent to contribute to a t0wn treasury to buy land for a “DAO hub.” We decided it would not only benefit t0wn, but also CityDAO and the web3 community at large if we figured out how to program the essence of an LOI into a smart contract. Utilizing Alex Tabarrok’s Dominant Assurance Contract idea, we will create a smart contract where entities can pledge money toward a public good (like t0wn). If the funding threshold is hit by a certain deadline (which is programmed into the smart contract when it is deployed), the project gets funded. If the threshold is not hit by the deadline, everyone gets their money back and those that contributed the earliest get a small monetary “prize” for having been the first movers / believers. Details around the prize mechanics will be sorted out during development, one key component being the prize is big enough to incentivize early contribution but small enough to disincentivize entities wanting the project to fail.

Building a dominant assurance smart contract will not only be a boon to t0wn and CityDAO, but also, as we will make it open source, to anyone who wants to fund a public good on the blockchain without using methods such as Juicebox that take a significant percentage of funds.

Identity Verification: Part of having a community is ensuring that people are not sybils, that identities can be verified. Rather than using a method such as NFT + Gitcoin Passport or Proof of Humanity, we would like to offer individuals the ability to KYC to global banking standards, verify ownership of a wallet address, and then marry the two with a soulbound token. We will use the ERC-5484 standard for soulbound tokens which allows both the issuer and the holder to burn the token - the former being necessary in case of identity fraud and the latter being necessary in case the holder wants to disconnect or move their identity to a different address. Once the app is built, KYCs can be conducted at a cost of $2.15 per individual, and that price will go down with higher volume.

RELATIONSHIP TO THE ORIGINAL t0wn CIP (IPFS #QmWXdW6)

This proposal augments STAGE ONE of the original proposal by allowing additional uses of the funding allocated by that proposal. It also adds an additional potential STAGE TWO trigger—a deployed assurance contract that successfully raises at least $750k will automatically trigger STAGE TWO. The t0wn team will determine which avenue to pursue (ie signed LOIs or raising via assurance contract) following development of the latter.

BENEFITS TO CITYDAO CITIZENS

  • All the benefits outlined in the original t0wn proposal remain.
  • Should the KYC app subsidy be approved as part of this proposal, CityDAO Citizens will be able to use the app for free until the subsidy has been exhausted. Thereafter, CityDAO Citizens will be able to use the app at cost for a period of one year after the app is launched, subject to reasonable volume of usage and our team’s ability to handle such volume. We will make best efforts to allow CityDAO Citizens to use the app at cost for longer than one year, again subject to reasonable volume of usage and our team’s ability to handle such volume.
  • Open use of the dominant assurance smart contract and the ERC-5484 soulbound token contract.

OWNERSHIP OF WORK PRODUCT

  • The dominant assurance smart contract and the ERC-5484 soulbound token contract will be open source.
  • The rest of the KYC app will be owned by the Friends of Town Foundation corporation.
22 Likes
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  • I think the assurance contract idea is 10x better than LOI’s, they’re on chain, they represent real interest and not handshakes. I can understand that being a reasonable thing to build.

  • The idea of the t0wn group managing the building of a KYC app is a stretch for me. I have no doubt you could find some people to build it, but it’s a very serious endeavor and not something achievable with these resources. There are also a LOT of people working on these things. I am not confident the t0wn team can deliver on these promises.

  • https://kycdao.xyz/ (not a DAO, poor name imo, but they have a package and docs for integrating into sites) I believe is doing most of what you suggest. I’ve had a few conversations with them before, they always passed my sniff test, and they’ve been at this for over a year.

  • CityDAO citizens being able to use the kyc app feels odd tbh and not much of a perk, they’d only want it in so far CityDAO implements something that forces them or they need it to access another project.

  • Additional 9,900 USDC for ‘prizes’ and a subsidy to use the kyc contract— not sure how the prizes are envisioned, i wouldn’t rely on prizes for devs as you need well audited code. or prizes to DAOs who contribute first feels like an odd incentive. — the 3k subsidy means that money goes to the t0wn corporation (or third party kyc fees), and at a couple bucks to kyc you’ll spend more in gas.

  • this is the 3rd time the big parcel/t0wn/CIP 182 has proposed for money and room to do something, i think delivering small wins would go along way to build momentum.

  • i understand there’s lots of meetings/discussions etc, but building in public would help. the t0wn server has no public activity for about 3 weeks and updates are meetings were had.

  • somewhere in it’s core, prospera is a development company and will always be excited about someone buying property, without more info I have a hard time thinking that’s a big win thus far.

  • I can see the assurance contract being necessary for the success of t0wn in how it’s goals have been described thus far.

  • Beyond stating that having a community means not having sybils, I don’t quite see yet why this form of identity verification is necessary for the success of t0wn’s stated goals. Identity verification does play a part in raising funds, but I have a really hard time believing there is no tool that already exists that you can use for compliance. If it’s for community reasons, that also means the t0wn community exists on a platform that is gated based on this verification, something which discord, telegram, and discourse can’t do (I guess they can, but this is all for a sybil resistant discord chat?). Which means there’s another novel tool in the works or is needed in the future.

I would love to see a small win before changing course for the third time.

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Thanks @alexthims for your detailed comments. Some responses:

It’s actually quite simple to build. I’ve met with Plaid and with devs, and it’s absolutely doable with the resources we already have in our treasury. As far as safely managing data, our hope is anything and everything sensitive would live with a third party (like Plaid) but we are still investigating that part. Please know it’s something we take very seriously.

As I explained to you private in response to this exact block of text, KYCDAO does something different. They are “a network of trusted anons.” We are taking anonymity out of the equation and tying real people (real names) to Eth addresses with ERC5484 souldbound tokens so people may “disconnect” their identify from their address should they so choose. From Proof of Humanity, to Bright ID, to Gitcoin Passport, no one I’ve come across is doing exactly what we’re proposing.

For one, I think every member of the multisig should have to KYC, and they could use our app to do so. Beyond that, CityDAO could integrate any number of gated features or privileges that require a t0wn Identity Verification Token to access.

Prizes are not for devs. They are inherent in the assurance contract structure. You can read more at the link in the proposal. The subsidy would only be used to pay 3rd party fees; the t0wn corp would not profit from these funds.

So what?? This is an experimental space, we initially set lofty goals, and we are pivoting as we come across more compelling (and more achievable) ideas. If anything, we should be appreciated for proposing spending this money on actionable, useful items as opposed to paying ourselves $12k each ($48k total) for R&D, to which the initial proposal entitles us.

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I’m hesitant when people say something is quite simple to build.

If you were to build it exactly how you envision, what is the main use for t0wn for tying real names to eth addresses? Would tying your real name to an eth address be the only way to participate in t0wn, and if so, is there a feel for how many people would actually participate in that?

Names alone aren’t enough info to be unique, you can have two people with the same name. Why do we need to know the legal name of someone?

CityDAO could just use KYCDao or another provider for multisig signers.

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I’ll concede on the first line… As a lifelong producer I understand that projects often don’t go exactly as planned. I will say that from initial research, a working version of what we envision can be achieved for 25 - 35k. It helps that one of our team members is a brilliant designer and a budding UI/UX engineer, so that work is baked in.

I don’t know exactly how it would be used. It’s just a product we want to build, for which we see a multitude of use cases directly relating to t0wn and CityDAO’s overall directions. We could one day insist on being a “digital community of real people.” We could insist that anyone who visits the first t0wn hub is KYCed. We could use the KYC as an initial step toward verifying accredited investor status should we opt to raise money that way. I also think that by using Plaid we stand to be more trustworthy than what’s out there now.

As far as what info is publicly displayed as part of one’s verification with our service, we are still figuring that out. It will probably require some “customer” conversations to see what ppl are comfortable with. Also there may be a way to verify uniqueness of folks with the same name. You’re touching on one of the major challenges, which I appreciate.

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To me, this reflects the nation state idea. If we really are seeking a community of DAOs in t0wn, then we need an identity card or passport that is more than just buying an NFT. Instead, if we have an identity platform that provides industry-level verification of someone’s true identity and then this is used to confirm and generate a soulbound token, we can be more sure that this is a citizen and not a sybil. And with zk-snarks, it should be possible to even verify certain things, like age or location data, without needing to verify anything else. This technology could be useful across various web3 platforms.

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So really appreciate the feedback and positive response on the assurance contracts. I will weigh in on this. At one level of course they are excited to sell property, yes, and do have a arm that is simply a development company. But, they are more than that at its core. It goes back a long time and has some huge backers. The goal is not just to sell real estate, it is to develop a city on par with Hong Kong and Singapore which will alleviate poverty through job creation. Not saying they will do that, but just it is their mission. That said, you are correct though, they of course do want to sell real estate. That’s nothing special, and not a win in and of itself, agree there.

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Our initial t0wn STAGE 1 plan was to have DAOs sign LOIs stating their intent to contribute to a t0wn treasury to buy land for a “DAO hub.” We decided it would not only benefit t0wn, but also CityDAO and the web3 community at large if we figured out how to program the essence of an LOI into a smart contract

Question: Is having smart-contract based LOI a blocker for DAOs signing a LOI for t0wn?

If it is, then this project could make sense. If it isn’t, then it could be a distraction, or worse, completely wasted effort.

Actually, it would be great to hear more detail on how close you think you are to getting 10 LOI and in general what the response is so far!

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It is a bit of a blocker yes. When we started we figured they were good enough, and while they could work, it is very hard to get commitment from so many different orgs while things are changing at the same time. The idea of Dominant Assurance Contracts is to solve coordination issues. What we find is many want to wait to see more detail and see who else is in the project. if everyone thinks this way no one moves. It isn’t an insurmountable problem for the contracts offer an incentive to commit and move first. It also offers an on-chain method to raise money. Another plus.

As a side note, none of this is new. Many start up ventures suffer from the same issues. Kickstarter has used assurance contracts along with others. The dominant assurance contract offers an even better version of this that is tailored to Web3.

Well, we aren’t looking for LOIs at this point as the assurance contracts will replace them. But we have had really good conversations with a few big-name DAOs.

Appreciate the questions.

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Hey @ScottA thanks for the quick reply!

From your response it doesn’t sound like the lack of a smart contract based assurance contract is the main blocker.

As an alternative, if a DAO was truly interested, could they not pass a snapshot of the following form:

  • we commit to become a founding member of t0wn at a token price of greater than or equal to $75k as long as X other DAOs make the same commitment by date Y

Would that work?

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I like the idea, and yes, I think it would work, but not better than the assurance contracts. There are a few points.

  1. It is still in DAOs best interest to not even vote on this to even committed that far. They could still just wait and see who is in and how much is contributed.
  2. The DACs have never been done, so it is worth exploring the development regardless.
  3. For 2 mill or so raised, it is worth 10k ish to just make the whole process streamlined. It basically takes what you say but makes it even more straightforward.
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Thank you for the thoughtful responses @tyro.eth! The idea of an LOI backed by a Snapshot vote was our original plan when we first created t0wn. The problem was that it has ended up being duplicative to have a DAO vote on an LOI stating that they “commit” to contributing $75K and then a second Snapshot vote actually allocating the money.

We might end up with 10 DAOs “agreeing” to send the funds because those votes passed, but none of them passing the second Snapshot that actually sent the funds. It made more sense to have only one vote - but the funds need to be sent somewhere that still provides the “if and only if x number of other DAOs join” part of the agreement. Again, thanks for your input!

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Thanks for the replies.

The problem was that it has ended up being duplicative to have a DAO vote on an LOI stating that they “commit” to contributing $75K and then a second Snapshot vote actually allocating the money.

I don’t think they would need a second snapshot in this case?

  1. It is still in DAOs best interest to not even vote on this to even committed that far. They could still just wait and see who is in and how much is contributed.

Isn’t the same is true with the smart contract approach? The level of commitment feels the same for both.

  1. For 2 mill or so raised, it is worth 10k ish to just make the whole process streamlined. It basically takes what you say but makes it even more straightforward.

Maybe I’m wrong here, but I thought that only $60k has been raised so far, from CityDAO? If other DAOs commit $2million fair enough, but there’s no strong evidence they will at the moment.

I’m still not convinced that reaching milestone 2 of t0wn requires either a) the creation of a dominant assurance smart contract or b) an identify verification app. Both would be complex, take significant time and effort, and could reduce the focus on reaching milestone 2.

Don’t get me wrong, I think the assurance contract is a great idea and I’d love for it to exist, however it doesn’t seem necessary for this project to succeed.

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This is great feedback, again much appreciated.

So the idea is that t0wn would be the intermediary to crowdfund money from CityDAO and a bunch of other DAOs/Web3 Orgs to buy a co-working/co-living/living space. So the plan was always for a commitment from external entities. The 60k was always to work toward that, not money to commit to it per se. This CIP is essentially the groundwork we want to get done to set up the crowdfunding campaign.

As for as no strong commitment, that is basically the idea of the assurance contracts. It is difficult to get commitment in the form of LOIs that require votes etc. This is a simple method such that they either put money in or don’t. Solve a lot of the coordination issues. Instead of us needing to coordinate all of it, we simply reach out to them, and give them the option to contribute or not. I guess time will tell how much interest there is. But, personally, just the attempt is really bold and going to be exciting.

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Hi @ScottA,

Thanks for the reply, but I think you’ve misunderstood my points.

This CIP is essentially the groundwork we want to get done to set up the crowdfunding campaign.

I’m aware that the plan was to get commitment from external entities. My point was that this hasn’t happened yet, so the comparison of 10k vs 2million feels a bit premature.

As for as no strong commitment, that is basically the idea of the assurance contracts. It is difficult to get commitment in the form of LOIs that require votes etc. This is a simple method such that they either put money in or don’t.

This bit I’m not following. Are you suggesting that other DAOs wouldn’t require votes if they used the assurance contract? That doesn’t make sense to me. I’d imagine that in either scenario (smart contract or otherwise) they’d require a vote to allocate any funds. Happy to be corrected on that.

As mentioned before, I think this is a cool idea, but there seems to be 0 hard evidence that it’s a blocker for milestone 2.

e.g. Has a single DAO said ‘we’d commit if there was a smart contract to do so’? Or even 'we’re significantly more likely to commit if there was a smart contract"?

Sorry I feel like a dick for pushing back, but also, I want t0wn to succeed, and to do so, I think it’s important to stay focused on hitting milestone 2 and not get distracted.

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So you are right in the sense that there is no big evidence. It is more my theory and pet project so to speak. I want to coordinate things and also just invent a tool that would make coordination easy across Web3. I think it can be lost, but one thing I think Web3 lacks is the ability to signal high-quality projects. And for similar projects to have an incentive to not crowd each other out. This establishes that. It is really the signal that tis most important.

I think something that may be missing is just the desire to kill two birds with one stone so to speak. The regional plan called for 2 phases, this is a 1 phase money raise. It is step 2 into step 1.

No worries about being a dick, for real this is what this should be like. Constructive feedback is the most important thing!

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I gave this a like, happy to approve funding intended for retro-active compensation to go towards build a prototype, however tentative, of software.

Adding the $9k additional funding seems opportunistic and not necessary for the goals.

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Thank you @konrad. This is a totally reasonable stance and one we will discuss. Back to you soon…

I will add, the intent was certianly not to be opportunistic. We scoped the projects internally and the extra $9k simply increases our chances of hitting our goals, so we don’t need to take assurance contract prize money out of our build budget. As you know startup-y projects need time and time needs cash. That said, we are going to discuss ways to potentially bring down the budget so we don’t have to ask for any additional funding.

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@konrad we have decided as a team to eliminate the request for any additional funding. The final version with the amendment will go up on Snapshot shortly. FYI also @alexthims

Thanks everyone for your feedback.

1 Like