Proposal to Enable Upgrade and Continued Evolution of Community Activity Rewards

Summary/Abstract: Enable a major upgrade and continued evolution of Community Activity Rewards (CAR) as follows:

• Align calculation and distribution intervals to ensure anyone benefiting from a reward distribution is doing so in more direct proportion to their impact on reward allocation; target hourly and introduce some jitter/randomness.
• Introduce a calculation based on sells and converts out of a coin to the benefit of holders that remain; allow developer discretion to define and iterate on this calculation.
• Programmatically add and remove coins from CAR eligibility based on a calculation that encompasses usage and active participants. Coins below eligibility thresholds would not receive any rewards for a period. Allow developer discretion to experiment with eligibility thresholds.
• Allow developer discretion of 1-4X the published rate of the current CAR schedule as network digests these new upgrades and the Creator Review Council accelerates creator approvals.
• Allow developer discretion to deploy upgrades to this system as they are ready as opposed to consolidating into a single, one-time change

Note, separate Snapshot proposal will address whether to distribute coin rewards to users as $RLY based on pro rata ownership of the coin as opposed to simply increasing the backing liquidity pool.

For reference:

• Discourse discussion since January 25, 2021 - https://forum.rally.io/t/rewards-evolution/249/1

• Discourse discussion to create a 2nd proposal on delivery mechanism such that the community can weigh this very important part of the network upgrade individually - https://forum.rally.io/t/rewards-evolution/249/34

Background: The 7.5B $RLY allocated to promote network usage represents 50% of the fully diluted supply. This schedule enables a reward schedule of 2,568,493 $RLY per day over 8 years. CAR is the first program that draws from this bucket and currently distributes only ~80,000 $RLY per day.

Details on the design are available here:

• Rewards FAQ - https://rally.io/rewardsfaq/
• Original Rewards Blog Post - https://medium.com/rallynetwork/rally-launches-community-activity-rewards-99a04cb0c25
• Current Community Rewards Table - https://rally.io/community-rewards/

The current reward design began with the thinking that consistently increasing total liquidity backing of a coin is one of the strongest indicators of the health of a creator coin community and should therefore be the basis of a reward system that benefits the entire community.

This network upgrade achieves this goal as well as enabling creators to earn income from Community Activity Rewards without having to sell their own coin. And finally, sells/converts out of a coin also benefits the community holders that remain.

Target outcomes: A - Creators earn income in $RLY through CAR rewards for driving increased usage of their coin economies. Creators’ crypto income becomes higher than any fiat alternative and becomes headline worthy, driving media attention and word-of-mouth through various creator communities. This would create a direct and measurable uplift in high quality creator applications and creator coin launches after these changes become well understood in a ~3 month timeline.

B - ROI of CAR as measured by total liquidity staked into the sidechain becomes at least 60% of Liquidity Mining program. As of 3/5/21, Liquidity Mining’s emissions of 250K / day results in $24.4M of total value locked (TVL) across Uniswap and Balancer. Currently, CAR’s emissions of 80K / day results in $2.1M of TVL on the sidechain. This imbalance represents a 3.3X difference in TVL per token emission. A successful CAR upgrade would bring this more inline to less than a 1.6X difference as a key performance indicator the community can monitor.

Proposal: Enable the developer to enact the upgrades to Community Activity Rewards as defined in the Summary of this proposal. Note, while this Snapshot includes the wording of the original proposal by DFS to distribute CAR as $RLY, there is a good debate that the $RLY CAR should continue to be inserted into the liquidity of the entire community. Thus, a second simultaneous proposal will enable the community to weigh in on just the delivery method.

A Yes vote for this proposal would accomplish the following:

• Approval of the above terms to enable the development team to enable these comprehensive network upgrades (with the exception of the $RLY Community Activity Rewards distribution mechanism to be voted on separately) on or after March 27, 2021

A No vote would result in rejection of these terms.