A draft proposal for Ethereum's membership in the Libra Association
Table of Contents
- Libra Membership Requirements
- LibraDAO Proposal
- Benefits and Value Proposition
- Libra Association Documentation
Libra Membership Requirements
Per the Libra Association membership documentation, these are the following requirements to be considered as a candidate for Libra Association membership:
- More than $100B USD in market value and/or more than $500M in customer balances
- Reach to over 20 million users annually
- Sustainable brand with recognition as a top-100 industry player from third-party industry organizations or media
- Contribution of $10M from a business, NFP, multilateral organization or academic institution to the Libra Association
- Greater than $1B in assets under management (AUM)
- In operation for greater than 12 months
- Employment of enterprise-grade security, privacy and infrastructure operations
- Custodying or staking of greater than $100M in assets for users / clients
- Run a self-hosted validator node - including hardware and personnel requirements
- Run a cloud server validator node
- Engagement with Libra technical support
In 2020, the Libra Association consisting of 100 members will be launching a blockchain and reserve-backed cryptocurrency, for global payments use cases.
Ethereum is a public blockchain with over 8,000 public nodes, a market capitalization of over $30B and more than 65M unique Ethereum addresses. These metrics combined with high global market reach, sustainable brand and technological maturity, make Ethereum an attractive candidate to be a founding member of the Libra Association.
We propose the creation of a hybrid legal co-op/DAO to join the Libra Association. This for-profit entity will run and maintain the Libra validator node and cloud server node and as a co-op will distribute validator rewards to DAO members, proportional to their contribution.
Ethereum Membership Qualifications
- Ethereum has more than $500M USD in value in Ethereum address balances ($30B market capitalization).
- Ethereum has reach of over 20 million users annually (65M unique Ethereum addresses).
- Ethereum has a sustainable brand and is a leader in the blockchain sector.
- The LibraDAO will make a contribution of $10M.
- Ethereum has greater than $1B in assets under management of Ethereum validators through decentralized consensus ($30B market capitalization).
- The Ethereum blockchain has been in operation for greater than 12 months.
- Ethereum-based organizations such as the Ethereum Foundation and ecosystem projects. (potential DAO members) employ enterprise-grade security, privacy and infrastructure operations.
- While the Ethereum blockchain itself does not hold custody of user’s assets (although wallets/dapps can), the shift to proof-of-stake consensus will lead to greater than $100M in assets being staked by users to secure the blockchain.
Note: LibraDAO is a placeholder name.
Security Token Offering (STO)
The LibraDAO will conduct a Security Token Offering from accredited investors to fund:
- $10M contribution to the Libra Association
- Technical and personnel operating costs for running the Libra validator node and cloud server node (minimum $280,000)
- Legal fees for incorporating and operating the legal structure
- A reserve dedicated to funding ETH-Libra interoperability infrastructure
Participants in the STO will have the option to contribute to both the organizational pool and the developer pool by toggling their contributions.
Alice is an accredited investor and wishes to become a member of the LibraDAO. She would like to purchase $1M worth of security tokens and wishes to contribute 40% to organizational costs and 60% to the developer pool that will build interoperable ETH-Libra technology.
As a result, Alice will have governance rights over the operations of the LibraDAO as well as how developer funds are distributed.
Token Sale Mechanism Design
The mechanism design for funding allocation is still a work in progress, but it will take into consideration recent cryptoeconomic research.
There is potential to use an Augmented Bonding Curves, where contributions are split between a Funding Pool that sustainably funds organizational costs and a Reserve Pool that will feed the Developer Pool.
It is also possible to structure the token sale as an auction, where candidates bid on membership and those who contribute a greater percentage to the developer pool are algorithmically favored.
Auction bids could be derived from a product of the total monetary contribution and the percentage of the contribution allocated to the developer pool - favoring those who contribute a greater portion to the developer pool to incentivize longevity of resources for cross-chain development.
In the case that the token sale is completed and the Libra Association denies membership to the LibraDAO, all funds will be returned to investors. Organizational Design
We propose that the LibraDAO organization be a unique hybrid legal co-op/DAO to optimize benefits for members and enable decentralized governance of the organization and technical requirements:
Legal, profit-sharing Co-op: We propose the LibraDAO to be a legal, profit sharing co-op that allows members to receive validator rewards from running the Libra blockchain validator node.
Organizational and Funding DAO: We also propose that the organization be built as a decentralized autonomous organization (DAO) that allows members to:
- Participate in organizational governance including operational, technical and board decision-making, potentially built on the Aragon stack
- Participate in governance over a pool of funds for ETH-Libra infrastructure development, leveraging smart contracts and design from MolochDAO
LibraDAO Developer Pool
The LibraDAO will be committed to developing interoperability infrastructure. Specific development that would benefit both the Libra and Ethereum ecosystems include:
- Two-way ETH/Libra light clients
- Wrapped LBR on Ethereum and/or wrapped ETH on Libra
- MOVE compatibility with EVM / Ewasm
- ETH/Libra gateways (eg. wallets, user-facing dapps)
- ETH/Libra identity solutions
- ETH/Libra privacy technology (eg. mixers)
- Other innovations
The distribution of Developer Pool funds will be decided through decentralized governance similar to the MolochDAO where participants will use their tokens to vote on development projects.
DAO Membership - Request for Membership
- LibraDAO - Request for Membership List (comments are open for suggestions on other members)
The LibraDAO intends to have high-quality members focused on building the ETH-Libra ecosystem. Their participation in the token sale would be highly valuable so they can partake in ETH-Libra governance and have visibility into Libra governance. It is critical that members are diverse and have varying specialties across the Ethereum domain.
To be compliant with Libra Association and regulatory requirements, all members who participate in the token sale must also be accredited investors and must meet KYC/AML obligations. Other due diligence may be required by the LibraDAO or the Libra Association to secure membership.
Benefits and Value Proposition
Historically, payments and banking infrastructure have seen widespread collaboration from complementary and competitive players. Examples include:
- IMF and World Bank - monetary international financial organization and UN specialized agency consisting of governments, central banks and financial institutions as members
- The Clearing House - run 50% of US wire and ACH payments, owned by the top 25 US banks
- Enterprise Ethereum Alliance - Ethereum-based consortium of over 100 technology, banking and retail partners
The Libra blockchain network and Ethereum would both benefit from collaboration and interoperability. As a result, it is imperative that representatives of Ethereum participate in Libra governance to:
This would enable Ethereum representatives to:
- Run a Libra validator node
- Participate in Libra governance via contribution of $10M for Libra Investment Tokens (LIT)
- Contribute to Libra ecosystem development, strategic roadmapping and global payments market growth
- Promote* ETH/Libra interoperability, infrastructure development and collaboration between developer communities
- Join forces in educating existing and potential users on the benefits of blockchains and digital assets
- Foster greater legitimacy for Ethereum development and enterprise partnerships
The benefits of Ethereum’s membership for the Libra Association include but are not limited to:
- Support for Libra’s objectives of moving towards a permissionless network
- Increased legitimacy for Libra’s blockchain from developer communities of public blockchains
- Greater knowledge sharing between Libra and Ethereum communities on scalability, privacy technology, consensus and user adoption
- Resource commitment for Libra-Ethereum interoperability and channel access
- Collaboration on channel and market access
Libra Association Documentation
For more information, the Libra Association has released the following documentation about the organization and technical stack: