version 0.3, 26 October 2022

Introduction

So far, Golem Foundation has realized its statutory purpose through various projects, such as Wildland and User-Defined Organization. All of these ventures require the development of novel, not-yet-implemented technological and economic solutions that need to be tested for applicability in complex, real-life decentralized systems. The proposed framework (GLM Governance Experiment aka Octant) leverages the existing community of GLM holders to create a testing ground to gather priceless empirical evidence that can later be applied in various ventures led or funded by Golem Foundation, especially Wildland. Such evidence can only be acquired in real-life environments with participants and stakeholders facing actual economic incentives.

The main incentive for users to join the GLM GE will be the potential to participate in the staking reward distribution. In order to be included in the actual distribution, users will be required to perform specific activities within various experiments initiated by Golem Foundation, such as voting on proposals, trying out new verification/onboarding tools, etc. In return, Golem Foundation will be able to gather useful data, analyze patterns of users' behavior and thus improve subsequent versions of various protocols and technologies.

The minimum viable product (MVP) of Octant is going to be focused on testing various hypotheses related to sustainable financing of public goods and infrastructure. Evidence gathered in the MVP will be vital to shaping the ultimate framework of Wildland governance, especially the Build Fund and related concepts.

It is also expected that Octant will trigger further positive externalities in the entire GLM ecosystem, including providing incentives for GLM ownership.

Octant MVP

tl;dr

<aside> ❗ Key elements of Octant MVP:

• Golem Foundation stakes its Ether as part of the Ethereum’s switch to Proof-of-Stake. Staking generates proceeds (ETH staking proceeds or $SP$). Golem Foundation retains its control over staked Ether.
• Any GLM holders can lock their GLM into the Octant contract. Staking in this context means time-locking, potentially combined with some additional conditions. Locked GLM of one user is not pooled with other users' assets, and the setup is non-custodial.
• A part of the staking proceeds is generated to a separate Octant contract (total rewards $TR$ ). The amount of $TR$ is determined by the fraction of the entire GLM supply locked by Octant users. The stream of total rewards $TR$ is further split into user rewards ($UR$) and matched rewards ($MR$).
  • Each GLM GE participant can claim their user rewards ( $UR$). The amount of $UR$ available is proportional to the amount of GLM locked by a user.
  • Matched rewards ($MR$) are the key building block of Octant. Each user decides whether to claim the entire $UR$ or whether to donate it (or a part of it) to one or more predefined public good purposes. If they choose to do so, the unclaimed $UR$ is automatically matched by $MR$, which is a function of the amount of GLM locked by a user and the proportion of $UR$ donated to public good purposes.
  • $UR$ that is not claimed or which is allocated to purposes that end up not passing the predefined threshold of contributions is transferred to Golem Foundation.
• The mechanism described above is repeated in every epoch, whose length has been tentatively set at one quarter (3 months). </aside>

<aside> 🔎 Octant: the flow of funds

</aside>

<aside> ❔ How notation works in this paper

• $t$,$t+1$, $...$ denotes time/subsequent epochs
• $i$ and $j$ denote participants of the GLM GE. In particular, it is assumed that in epoch $t$ there are $N_{t}$ participants. $N_{t}$ may vary from epoch to epoch.
• $k$ denotes organizations/funding purposes. In particular, it is assumed that in epoch $t$ there are $K_{t}$ organizations/funding purposes eligible to receive donations. $K_{t}$ may vary from epoch to epoch. </aside>

Parameters of the governance

Distribution of staking proceeds

• If user $j$ decides to participate in Octant in epoch $t$, the GLM amount she locked is denoted as $GLMGE_{j,t}$.
• A part of Golem Foundation's total proceeds from ETH staking in epoch $t$ ($SP_{t}$) shall not be transferred to the Octant contract. The amount of funds transferred (total rewards or $TR_{t}$) depends on how much of the total GLM supply ($S[GLM]{t}$) is locked in the Octant smart contract in epoch $t$. The Foundation does not retain any fraction of the yield (i.e., $TR{t} = SP_{t}$) only in the theoretical scenario when the entire supply of GLM ($S[GLM]{t}$) is locked, i.e., $\sum{i=1}^{N_{t}}GLMGE_{i,t} = S[GLM]_{t}$

$$ TR_{t} = SP_{t} * \sqrt{\frac{\sum_{i}^{N_{t}}GLMGE_{i,t}}{S[GLM]_t}} $$

Individual/User Rewards