Preamble: earlier this year the team at UMA decided to airdrop their KPI (key performance indicator options to a large number of governance active addresses. KPI in this case meaning that the payout (in UMA) depends on the TVL of their protocol. This was done both as a PR stunt to get the word out & to align incentives for the protocol’s medium-term adoption.
Giving stakeholders conditional upside exposure through call options is nothing new in traditional finance & tech, yet its rare in defi (in fact UMA is the only example of such an option distribution that I know of)
There are currently 3 ways to gain exposure in another DAO
- farm their coins with treasury funds/pool 2 migration to sushi/tokemak
- exchanging treasury $bond for their token at market value in order to gain immediate influence in the respective DAO
- exchanging european style options that would expire at a much later date with Barnbridge TVL as a payout variable
Example 1 is “free” but slow
Example 2 is immediate, but uncertain in achieving mid-to-long term aligned incentive & strong, mutually beneficial partnerships
Example 3 although experimental, might just be the balance between no immediate cost & long term strategic partnerships
This is all in the context of strategic partner acquisition but could also be expanded internally, e.g. paying liquidity providers & stakers partly in long-maturity options, reducing immediate dilution while incentivising community retention.
I believe option distribution to be a powerful yet underused tool for fostering cross- and inter-dao relationships that last & build upon each other.
- yay or nay
- what protocol to use
- how much should be set aside, if yay, & general deal sizes