Tocken Value Accrual Framework

Yeah, thank you everyone that joined late in the day I can see it so you really are the people that are left Thank you so much for joining So yeah today. I just kind of want to talk about value accrual the idea of value accrual obviously is you have a token What does your token do if you took and does nothing that's obviously no great right like so that's how we were kind of getting to the value accrual topic just small questions Based on the people that are here are you here because you're interested in launching a token are you here because you're interesting Interested in or maybe we'll do like a hundred who's here because they're gonna launch a token Awesome who's here because they're kind of looking for better models for their tokens existing Who's here because they're an investor and care about that at the sort of things? interesting and something else It's something else excellent well all right, let's start with a simple question that can implicate the audience What is? Method of value accrual that you've seen for tokens that actually creates value for tokens, and I would say Governance of these tokens have you seen anything in the wild where you've been like oh that works really well That has shown to transfer some of the value that the protocol or the project is created to their token holders Any of the options that's great example actually and if you options and then the proceeds go to token owners who's doing this Hey there That's pretty that's a pretty good idea That does help I do think MEV is a huge Yeah, yeah with flash votes It's definitely a very interesting. I've been reading more about like how MEV is this driver value for change I do agree that there's definitely something out there.

It's funny how the thinking has evolved from MEV is a problem We have to solve to MEV is actually a value creation tool for change any really bad Incentive alignments between tokens and projects that you have in mind Definitely a bad value model anything else So Kind of the reason I'm here is that at Aragon we've been building these solutions around Governance and around tokens for a long time you know ever since 2017 we've been building from very infrastructure centric things to more like coordination and tooling software and Something we've we've obviously noticed is that you can create great coordination tools, but if you don't create Token mechanisms that make sense nobody wants to coordinate this pile of worthless governance tokens So we've realized if we actually want governance to matter We need tokens that make sense and tokens that make sense are tokens that somehow align the interest of stakeholders and In some way accrue value to those token holders, and I think there's different ways of doing this This last point makes a lot of sense I think a lot of time we're seeing governance failing and people losing faith in governance Not really because the project doesn't make sense or it doesn't have traction, but because the tokens don't work to Actually support the people that are buying those tokens right so You can have two sides to tokens you have a demand side and a supply side the supply side is obviously people who are Who bought your token way before your token ever existed whether it's with that time and effort through like a team or whether it's through Investing and this would be like your VC's and then your demand side is the people that are actually interested to buy your tokens for intrinsic reasons What are those reasons the main one The main reason why tokens exist actually this is a great audience question But what do you think is like historically the main reason tokens exist? For founders to make money another way of saying that would be I'm crazy. Yeah, I Think honestly if we're looking at the crypto industry over the last 10 years the main reason tokens have existed is capital formation It's saying we're pulling our resources together Maybe these resources are our time and effort maybe their actual money And we're going to create something together And if you're looking at like the projects that are still doing it today And there are you know in many different ways like in this funded fund in this slide It is obviously not the same thing as echo or coinless But in both ways there ways to form pools of capital together based on a common enterprise This enterprise can be as me me as you as you think but it could also be like extremely Valid and and make sense long-term So if you're if you're looking at like historically How we thought about tokens I think obviously in 2013 everyone sort of thought about tokens as money right like this was Bitcoin type era when you have You know this is when stuff like litecoin started, and we thought alright tokens are money that we're going to exchange them on blockchains interesting This is good by the way and to capture a very very interesting website. They're doing cool work and 2017 is when we started thinking of Tokens that as methods of payments, that's when like stuff like dogecoin started happening but obviously tokens as payments make little sense in today's world for too many reasons way too volatile and Not enough throughput to actually support any kind of real world you feel especially in 2017 Maybe this is changing that in 2019. That's when we invented what the industry that Aragon has been for so long which is governance tokens and the main idea of governance tokens is You have this claim on the future direction of the project.

You don't have like a clear financial Claim on the future of that project, but you do have a very serious Claim on on where it's going to go based on the proportionality of the tokens that you hold yourself And then in 2034 I think that sadly that model sort of breakdown broke down And I think the main reason is because we never actually Finished at the promise of these governance tokens, which kind of was to own a financial Interest because that of the previous day where we were talking about like capital formation the goal of capital formation I'm only going to put money in it if I think that I will have upside in the future of this It didn't really happen And now we have stuff like the for those of you who've seen the recent Zora token launch What did Jenny say this is a mean coin? There's a mean coin, but actually like investors are getting a certain percentage of this team members are getting a certain percentage But the team is razor focused on saying it's an inkling and to give you an idea like even DM My friend in Zora and after like what if I can do this? No mean coin. No more comments like No more comments, but like and we kind of brought this on ourselves, right? I think it's based on regulations It's not all based on the crypto industry Yeah, we we've just not done a good job of Completing the promise of this capital formation thing Why I Think that's a big reason is that governance is not the demand driver that we thought it was We thought that actually having a stake in the future of the protocol that you're on It's sufficient for you to want to buy this but obviously it's not right And I think part of it is because we thought that people that buy into like let's say what's your name?

It's annual the people that buy into its annual chain do it because they want to decide where its annual change is gonna go But actually I'm not sure that's true anymore I think that people that buy into your chain that are businesses that are creating things on top of your chain They sort of want to know where it's gonna go Yeah, but it's sort of also trust the team to make the right decision there. They've been building its annual chain for ages So what they care about is protecting themselves from getting de-platformed and this is something we've been talking about for ages, right? It's a classic like Facebook Example with Farmville. Well, like the publisher of Farmville got de-platformed and he couldn't do anything about it. I think It's something Protecting yourself from getting de-platformed is something but then it kind of puts you into this weird formula where the value of governance is basically the value of The risk that you're going to get de-platformed plus the switching cost that it would take you to go All right, and I'm not an optimist anymore.

I'm gonna move to VK think and that's gonna be fine so for me building an app on top of his annual chain the Real value that I'm putting into the governance tokens that I'm buying is Equal to how much of a pain in the ass it would be to switch chains and that's not enough, right? Like especially because now we're talking about like its annual chain a well-respected l2 That has like billions of TVL. But if it's Carlos chain that just started and has like a hundred K on it The switching costs are so low and ridiculous that why would anyone buy this in the first place, right? Which we don't want to see happen because we don't want to see all new tokens or new project when you change be worth nothing until they reach a certain amount and then Obviously, I think a bad way of thinking about governance is I'm gonna buy governance tokens So I can see how much I can fund it out from the common Treasury in terms of like grants or service contracts Obviously terrible right like that cannot be the goal of governance So, how do we make governance? Sort of valuable.

I heard that people love beautiful quotes in black and white So there's a beautiful quote in black and white we make better incentives. It has to be better incentives There has to be better incentives to hold tokens than what we currently offering So let's do a mini exercise and we're not that many so I think we can kind of like join up and think about it jointly And maybe this is too long especially a thing like the crowd that we have right now but try to think about One project which is either your own project or project you care about a lot and try to sort of differentiate the different like stakeholders that are part of that project and See what they need from each other and how the token of your project is facilitating these links, right? One one example that I think is very clear and on that They've made like a really nice triangle on their website is velodrome where they said all right, we have like traders liquidity providers and we have Token holders. What do they want from each other? The token holders are buying the token making the token more valuable Which means that the rewards that are going to the liquidity providers are worth more money So liquidity providers are likely to put even more money in terms of liquidity provision Which makes it a much better experience for traders so traders trade more create more fees More fees go to token holders That's the sort of thing and obviously a DEX is much easier if we're going to go talk about like Arbitrum For example, it's gonna be a very different idea because a chain is a much more complex ecosystem than a decentralized exchange Right, but I think it's interesting to sort of think about it for like a minute.

So maybe like Write down either in your head or on a piece of paper what you actually think are the different Like key stakeholders of a project you care about deeply and how do they relate to each other? I'll give you guys 30 seconds Does Anyone that go first and these stakeholders and what they want from each other So what are you doing Like we are trying to build strategies that kind of like make a piece Profitable or more profitable like not just the automation tools, but the actual strategies It's kind of like it's a platform that allows others to create strategies and then others to deposit into it and pay performance fee Very interesting. So the key stakeholders is basically like the strategy creator on the one hand the depositors the user of the strategy on the other hand and we believe also like that token projects for whom we are making the market to like Actually Like replace classic market makers, but more like a piece that are profitable out of the community to make Sustainable liquidity. So that's a three stakeholders and like the value for each of the stakeholders like the piece increase their profits or become profitable while they have not before the strategy creators to earn a performance fee and Token treasuries to get most attainable liquidity. Okay, and how might Governance token Make like kind of lubrify these relationships between your stakeholders we are kind of like so some of the revenue will accrue outside of the Or not on chain and we're making like to distribute part of the revenue buyer token back on chain Okay, how would the revenue and not happen on chain?

Like for example, what we want to do is like capture arbitrage From these LP pools that otherwise excellent arbitrageurs would capture and like bring it back to the piece Interesting and that not always happens on chain But it happens also between centralized and decentralized exchanges and if we accrue that let's say with a company on a centralized exchange We would need to get it somehow back to the LPs. Okay, so who's gonna buy this token? Which stakeholder is the one where you think that he has like a direct incentive to buy this token I Mean like very early but initially ideas are like basically buying back the token ourself with the brand of revenues We are generating and then giving it to stakeholders Okay, interesting. Yeah, I think buybacks are definitely one way of doing this Like a portion per day and each of the chains that they operate and basically No, sir. It's a bonding curve, but I think it is a bonding curve or reverse.

No, it's a reverse The price goes like you have like startups Seeming and the price of all you order goes down for time or whenever you see a price as you like you buy With some of the fees you buy oiler or something like that. No, they buy your oiler with the fees that they are generating. And it sort of works a little bit like price discovery but at the same time a way to sort of like get more oiler for themselves and create a value for that token. Interesting. Yeah, that is definitely a way And what I like also about it is that it's automatic, it's programmed and it's going to be running for a long time That the fees that generate, that they generate, a percentage of fees automatically buys oiler So there is some buyback automation that I think it makes a lot of sense in the long term Because you know that it's still going to be there in one year down the line or whatever Yeah, I think it's interesting.

I think it goes to show like when you are actually thinking about like how to make a token valuable There's sort of two ways around it. Either like give it utility. So this could be, you know, because you hold that many tokens, you're paying less fees on my platform Or it's giving it less speculative value. Buy this token because I'm going to buy it back from you in the future for more money What do you think the token you're describing is? Would you rather put it in the utility category or in the speculative category?

I think it can be both. Like it was just the first idea kind of like before we bumped into the problem that we probably will generate revenue By taking kind of like advantage of the APs because we want to do it like instead of someone else doing it and then find a way to give it back That's kind of like what triggered it in the first place but could be something like adding utility at some point But yeah, that was actually only triggering the idea of getting a token. Otherwise we probably would not need it Okay, super interesting. Anyone else want to try to? You don't want to do it for the ARP token?

No, no, no No worries. Anyone else wants to give it a try? Go for it So some time ago I was working on this thing called RevenueDAO and the idea was that we were supposed to like pool money This would be then reinvested into like businesses that need money for like we were thinking about gaming And the reason why is that freemium gaming is a very simple business. You pool money in, it gets invested into ads And it's easy to model the future streams and also it's predictable The only complicated thing was to plug off the additional funding So we were thinking about creating a token that would be controlling the revenue stream from those investments So let's say that we pool $100,000 for this investment And this $100,000 was supposed to bring back in revenue something like $250 in 2 years And basically the structure was that with your token you could cash in every time The pool was collecting the revenue from those investments And every time you could either rage quit by burning your tokens and getting your share of the existing pool But you were decreasing the amount of tokens in the circulation Or you could sell it to another person for the premium coming from the future revenue streams So that was what we were thinking about Interesting. So here people would buy the token again in the expectation that it's going to be re-bought later Either re-bought later or you had this fundamental value of your share of the existing treasury The expectation was that at the end all the tokens would get burned for the remaining treasury Interesting.

I like the idea. It's good to link the treasury to the token And if you have enough decentralization properties it's actually something you can do pretty clearly Regularly speaking, which is obviously a big theme of how do you accrue value to your token Super interesting. Does anyone else want to go? I would say one stakeholder that we haven't mentioned but I think it's important Is the government where you are working on For example, you are doing those buybacks that we just mentioned Spoiler alert. Unless you have it legally very, very figured out You are a security Love that That means that it's an important stakeholder Because you have to pay taxes so they are going to be a holder I think it leads us quite nicely to the next part of this talk Please don't share recordings with your local authorities But let's talk about how do you actually try to accrue value directly to a token In a way that is regulatory compliant but at the same time that makes sense For people who are participating in this economy That they are actually making the right decisions Because I think if we go back to a couple of slides ago I think we lost our way by not making governance tokens And these kind of utility speculation type tokens the same one It can absolutely be that, right?

So how do you turn these governance tokens into productive assets? So first you have to create value, right? If there's no value being created, there's no value you can return Otherwise, there's only so much you can do to fix something through tokenomics You actually need value creation mechanisms for value to be returned in some way So don't try to fix a broken car, is what I'm saying If the car is broken, fix that part first And then start thinking about how do I return that value? One interesting example and one interesting direction That has been probably at the basis of one of the biggest DeFi protocols Existing today and one of the most significant ones In terms of its impact on the industry Is the sort of curved system of lockers So you sacrifice some liquidity for your token Which might seem counterintuitive And you're saying, alright, if you're ready to lock for a certain amount of time Then we can share some of the revenue in the direction that you want, right? You can start to help make these long-term decisions Because you're long-term aligned For Curve, the longer you stick to this token The more voting power you had in terms of directing the liquidity of Curve And this was actually built a super long time ago On top of Aragon contracts So vote escrow, these locking mechanisms exist There's also staking, right?

In a way, sort of the same thing Vote escrow, staking mechanisms, why can't I talk about the same thing? The interesting part about this blocking of token and this prioritization of long-term incentive alignments over liquidity of your token is that you're kind of creating this 3-3 mechanism that was talked about a lot when the Solid V model came out, and this is something that is at the basis of Velodrome and Aerodrome that I was talking about. If you lock long enough, we can trust you to make decisions that make sense for the long-term health of your protocol. It is also, today, I think a much more interesting option for two reasons. One, everyone is starting to think about staking, but there's obviously this risk in staking, in governance without staking, that you could get like governance attacks, and the more the systems mature, it doesn't always mean that new delegated supply is going to be delegated to delegates in a way that is going to make it sufficiently protected from governance attacks.

And, you know, governance attacks are very much a gray area. There's not really such a thing as like a clear governance attack and something that is, you know, just kind of a power grab inside a DAO. If you're looking at what happened with Compound, for example, it's very much a gray area, and if you have this long-term look, at least you can say, well, you can governance attack me. You can try to like control the resources of this DAO, but to do so, you're going to have to agree that you're going to be long-term aligned with this DAO. So I think for governance attacks, very interesting.

The second one is you're sort of creating this buffer, regulatory speaking, and again, this is the part of the talk which is maybe a little bit more also gray area, legally speaking, but the idea is the more you have this sort of staking model that protects you, you're saying that capital can be slashed. And if capital can be slashed, it means that capital is at work. It means that you have things to do with that capital, and if you're not doing them, you're going to be slashed. If there is this sort of work expectation, then your capital is more—you can reward this capital for the work that it's doing, and this is where I think that this industry needs to explore a lot more what we do in terms of rewarding that work that people are doing. And some people call it like overpaying for security, right?

Because you're saying, all right, we'll have this staking solution, and it's going to pay out 9% in the token. That's going to create a big amount of inflation for the tokens that are actually staked. I think we can't see it as overpaying for security. I think we need to see it as rewarding people that are long-term aligned with the protocol, and eventually diluting mercenary capital, and you know, capital that lives on exchanges, capital that isn't as committed to the long-term success of the protocol. And the more you reward them, the more likely you are that more capital will make that decision, right?

And so you're creating this liquidity sink where increasingly more and more capital is long-term aligning with the interest of your protocol. Something that is very interesting is that when you look at the data, both V's, because you're locked and staking, even if you're not locked, people, once they hop in, it takes quite long for them to leave. In the V, it's whatever you specify when you lock, but even in AVE or other staking contracts, generally they take a long time to leave. So like, what I think is super interesting doing the native token liquidity sink is that if you are overpaying for a security, basically what you're trying to actually do is not that security sink, it's like trying to people to lock, because you know they're not going to leave in a long time, because they have gone there for to get in. And basically the rewards that you are giving them, it's sort of like what you have to pay to get that liquidity to be synced for a long time.

And you probably have to do some math around what doesn't make sense for your project, but I 100% agree with what you are saying. And I remember talking with Stakehouse, and they were complaining that for DYDX in particular, they were overpaying security in terms of people that were staking. And I think they were missing exactly this point, which is like, well, staking in most of these ones is not at all about the security, a little bit, but there is a point in which it's actually just to incentivize people to lock, because over time you know that they're going to stay, and that's why you want them to participate. Yeah, yeah, totally. Great comments.

So, let's talk maybe a tiny bit more about that staking idea. I'll go pretty quickly through these, right, because we kind of went through them on the previous slide. But yeah, this idea that staking represents work, and work can be rewarded. Simply holding your token is not something you can reward for obvious securities law. So creating these work possibilities is very interesting.

And I think that's where we go back to governance, because governance is work. Governance is actually trying to make the right decisions for a protocol. And the type of governance that you're doing, depending on the complexity of it, is more or less likely to be considered as work. Again, staking and slashing, big part of actually creating this work requirement. But governance, I think, is just as strongly correlated to creating this dynamic where what you're doing with your token can be considered work.

What we kind of push at Aragon, and we think is a better idea for this work requirement, is a gauge system, which implies that token holders make decisions over capital allocation. And the idea for these decisions is you're locking your token, and then you're voting on the type of spending that the DAO should do. And the reason why I think it's better is that most DAO governance is all about responding to pre-existing proposals. And responding to pre-existing proposals allows you to express your opinion in a relatively limited way. You're saying mostly yes, no, or abstain.

You can participate in the making of the proposal, only come in at a time where they can vote yes or no on that decision that's kind of already been made. What I think is more interesting is a constant governance decision, which is how are we going to take the resources that we have together and spend them in order for this protocol or this project to grow. And you can spend them in many different ways, right? They could have like growth incentives and say, well, actually, I want our capital to go to these different pools in order to reward LPs, because I think rewarding LPs will grow our TVL, it will grow our protocol. But you could also say, I think that actually what we need to attract more people to buy our token, and then our token becomes more valuable, and then the incentives that we're creating become more valuable.

Well, I think that part of our budget should go to token buybacks, for example. And these token buybacks would increase the price of your token, make your reward worth more. There's tons of different things you could do with your tokens, and you should be able to express them in more complex ways, but also in more set and forget ways. Because with gauges, what you can do is you express your opinion one time, you say, well, actually, I think 20% of the token inflation, or sometimes it's inflation, sometimes it's the protocol fees, right? It's the money that's being generated by the protocol.

Well, you can set and forget and explain, I wanted to go to these different possibilities. And if you change your mind in two weeks, you can do it. If you change your mind in two years, you can change it, right? I think it's a much more realistic way of taking token holder preferences and expressing them. Again, this is just for capital allocation, right, and for protocol upgrades.

You could imagine some kind of gauge system, right? If you think about it, it's sort of how Bitcoin works. Because if you're creating blocks on Bitcoin, you kind of choose which standards you want to keep, and you want to add. And if you don't add that standard, if you don't add taproot to your block, it's just not going to be there. So the system kind of increasingly decides which standards make sense for the community or not.

And so Bitcoin does... Democracy of the field. Yeah. And Bitcoin does this without any kind of formalized governance, right? But I think for the DAOs that we're talking about that are relevant to us, it's more about capital allocation.

Something that I feel super interesting just felt like you can change your mind over time. I think it's not that you can only change your mind. It's sort of like the project is going to evolve over time. And in the beginning, if you're just the PGE, you probably want to incentivize staking rewards. So you want to incentivize people to log more tokens until you have some metrics that are more stable.

But then over time, as you have distributed more and more tokens, you're running out of your own tokens. And I think, for example, that's what's happening right now with Euler. They needed to do some buybacks because after so many years, and after their hack, and after so many funding rounds, they needed to get back some of their tokens and some of their liquidity. And I think whatever you choose really depends on the state of your project. And everything can make sense.

It's just like, why does it make sense for you in particular? Yeah, definitely. I think there's two more arguments for gauges that you can read here. I'll talk about it for a second. Obviously, I think something I really like is that when you're voting on these kind of yes, no, abstain proposals, if you're in the minority, your choice is kind of canceled, right?

It's not expressed. A proposal passes in the same way, whether it passes 52% or 99%, right? That, to me, is quite problematic. So I quite like that minority votes are reflected. If you own 0.

1% of the token supply of something, you're directing 0.1% of the resources of that particular project. So I quite like that. And then the second idea is, I don't know if people have read the End of the Era of Foundations piece that Yannick posted quite recently. I think this goes quite well in that direction because what he's really advocating for is, on the one hand, there's a team.

On the other hand, there's a network. And the protocol is part of that network. The token is part of that network. The DAO, part of that network. But the team has to be completely separate, right?

So if you want to be considered decentralized enough, right, to get that all-powerful, like, commodity status, you need to reasonably and reliably show that token holders are making the decisions for that protocol. It cannot be controlled by a team, right? So I think that gauge models are a lot there. And so the V blocker is part of aligning incentives long-term, protecting yourself from governance attacks. And the gauge model is part of creating actual work for token holders and creating a way to reward token holders long-term without falling into securities law.

Two last thoughts. If you're thinking yourself about, like, I want to create a token, I want to make my token work for my project and not the opposite, keep in mind that you need a demand, right? You need people that are going to buy this token. And what we're seeing, like, we've all seen the charts that go down only. That's because you're releasing your token, you have investors, you have team members, but you don't have a clear reason why people should buy your token.

And that is, obviously, you can't fix that, right? The second thought, protocol upgrades and changes are important. They're part of, like, protecting yourself from that deep performing risk, but they're not enough for people to actually buy your token for it, especially if they have, like, a clear minority stake, as we were talking about. I'm not going to buy, like, 0.0001% of the Arbitrum token supply in order to have a very little impact on Arbitrum governance.

Third is, while we're talking with the car, you need to create value. That's the first step to anything, is creating value for users and being able to capture some of that value. If you can't capture value, then you probably don't need a token. You need a business that works first, right? The fourth idea, obviously, distributing ownership to the right people is always complicated.

You're going to have many different types of stakeholders or fewer, right? Like, if your protocol is really simple, it might be fewer. Their incentives need to all be aligned in order to push them to do what's best for the value of the token. So we've been talking about Velodrome and Arbitrum. For example, if it's, you know, if the incentives of the traders were to sell the token, the wheel is broken, the positive triangle is broken.

You can't have any place where the main incentives of people is to dump your tokens. Otherwise, the whole system thinks with it. And then the last idea about, like, lockers, obviously, lockers, at Aragon, we're more thinking about them in terms of lockers because we think that there's more parameters that we can adapt. Obviously, with a locker, you can have, like, this cool-down period. You can have, like, different changes in voting power.

While with staking, it's probably a little bit more, you know, straightforward. You stake your token, you receive a stake version. It's one-to-one. When you unstake, you unstake, right? And so that's why we think that lockers is probably, like, a better way of thinking about this paradigm of instruments for token management.

It's obviously not the whole solution, right? The whole solution is to actually find interesting things for that capital to do while it's locked. If you're just saying, lock your tokens, we'll give you money, that's probably, like, that's going to fall on the security floor, and you're going to be stuck. So you need to think of value creation actions. If I have to add something, another way to reward but not doing it directly is, like, you provide incentives for third-party projects, and then you allow bribes, which go back to the stakers.

I know bribes have, like, a bad buy. But if you are thinking it from just the monetary value that you want to give to stakers but you don't want to do it directly because of legal reasons, bribes do help in that sense. Because, like, you are not rewarding people. Older people are rewarding your stakers. Yeah.

Maybe bribes is a loaded term, but there definitely is an idea if you own part of a network, and this network needs to make a decision, and people want this decision to be X, Y, or Z, if you manage to find a way for X, Y, or Z to incentivize your voters to go in that direction, you're creating value. Is it the right... I think for purely financial things, this can be a very good tool. It's not always the right one, but there's definitely things to explore in that area. I also find funny that the bribes might be the legal way.

Yeah. Sort of, like, ironic. Yeah, definitely. Definitely. I think that's it for me.

Thanks so much for joining, and if anyone has questions, let's do it. I've got a question about Georgia. It makes sense when we continuously stream value in one direction or another, but I like this idea that then, like, it needs to be kind of, like, linear, as in, for example, it makes sense for marketing budget, like, how much do we want to spend into Google Ads? Because any amount makes sense, and basically, simply, we can observe the effect. But it doesn't make much sense, or how can it fit into other kinds of spending where there is a discretionary spend?

Like, as I said, it makes sense for Google Ads, because any amount makes sense, but it doesn't make sense if we want to buy a MacBook. Because in a MacBook, if MacBook costs $1,000, then $800 doesn't make it, but spending, you know, $1,200 is, you know, like, we have $200 too much. Yeah. Makes total sense. Something that I 100% agree that not everything fits in Engages.

I think it's like trying to use several things for, like, you should be using the tool that fits exactly what your needs are. That said, like, if we were to force gauges for buying a MacBook, let's follow that example, what we provide is a way to set up minimum and maximums for gauges. So, you can say, like, for example, they have core team over there, right? Like, core operations. You don't want that to be defunded.

So, in the gauges, you can say, actually, for the core team, I want a minimum of, like, $20,000 per month, or whatever it is, okay? And a maximum of $50,000, because, like, we are not in the point in which we want to grow the team massively. So, that's one of the ways. You could set up minimums and maximums. Have you seen this working in practice, for instance, because, like, I can imagine that things like that just fits perfectly.

But for those more general kind of things, in general, like, do you have examples where there's people who are trying to... I think, and I may be wrong, okay? Like, Ave is starting now to do this with the umbrella gauges, I think, okay? And I know Benki is also iterating over this, but you're right. Like, I wouldn't say there is a project right now that gives all their expenses through gauges.

Also, because there are not many projects that have value accrual directly to the DAO. So, like, if you don't have value accruing to the DAO, how do you provide that back, right? Yeah, I think there's that. Obviously, gauges are a good mechanism for capital allocation and these types of decisions. They're not going to serve as well in non-capital allocation decision types, but you do have...

I think an interesting way of thinking about gauges is where you take them, right? If you take them from treasury to different categorized spending, that's one idea, but maybe, actually, your gauge doesn't live... Like, that's not the main gauge that you care about. Maybe the gauge that you want to ask your stakeholders about is this one. How...

Maybe not that one. Maybe this one. In the growth incentives, let's ask our users where they want these incentives to go. And you'd say, all right, for now, we're going to vote on a minimum budget and a budget that makes sense for these different categories, and then where the gauge actually will live is in growth incentives. And maybe, like, what we've built for Mode is a practical gauge, in a sense, where Mode decided they had this OP token allocation and they wanted to distribute this OP token to the different projects on it.

And the way they did it is through a gauge system. And not only were these incentives going to the project, but the project then had the opportunity to say, well, actually, our token holders are going to vote on where the specific incentives go in their own protocol. So, Kim Exchange, which was the biggest exchange on Mode, for example, was voting on, well, you know, if you have your... Sorry. You can vote on whether it goes to, like, the ETH-USDC pair, or, actually, if you're one of our competitors, you could even vote without tokens on directing incentives to the ETH-EUR token pair, and then you have this moment where I think you can create much more intertwined ecosystems where owning each other's token can be positive.

And the success of, you know, the success of Kim Exchange is now related to your own success. And when they're getting money, well, actually, your token holders have better liquidity for buying your token or selling your tokens, and you're creating a better experience for them. So, what I also like about Gages is this kind of inter-project possibilities. And when I'm thinking about much larger dollars, because Mode was a very interesting example. They distributed 2 million OP tokens, so it must be $4 or $5 million.

It's projects distributing much more than that, like 10 times that. Not that many, but the projects that do actually have an opportunity to say, well, now you can use your own token to incentivize my token holders to vote for your protocol and do this again and again in different ways to create a much more intertwined digital economy in your own, like, kind of little sovereign roll-ups or ecosystem. Yeah. On your question, like, 100% agree. Like, it's very difficult to do all of them.

So, like, I also agree with Nathan, like, generally you would focus just on incentives, which is what Velo, Curve, all these do. Going back to the question that you said, like, if there's any, and just for the sake of science, one that is somewhat doing it already and they are doubling down on it is Sushi. They're still alive. And they have the, what is the contract, the MasterChef. So, the MasterChef receives all the fees from SushiSwap.

I think only Mainnet. I'm not sure how they do it at CurseMain, but like, and that decides where to send those funds. Part of it goes to the core team. They are not using gauges. It's like a contract that has hard-coded the values.

And a part goes to the core team. Some part goes to the ex-SushiStakers, like, second contract. And some other part goes to incentives. Now, I know they are trying to move it towards, like, I don't know about that yet. Awesome.

Any other questions? Awesome. Well, thanks everyone for your time. I really appreciate it. And yeah, if you got any more questions or want to talk about this, I'll be.