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RNP-003: Resource Acquisition and Allocation for Core Team and Grants

RNP # Title Category Author Created Status
003 Resource Acquisition and Allocation for Core Team and Grants Ecosystem Fund Allocation Ryan Shea 03-20-2023 Approved and on the Roadmap

Overview

The Render Network Foundation, or the "Foundation", was established to facilitate the development of the network and support growth initiatives across the ecosystem. As the sole proprietor of protocol repositories and major assets crucial to the successful operation of the network, the Foundation now requires resources in the form of capital and labor to effectively perform its function.

This proposal outlines a mechanism for the Foundation to acquire immediate resources, and specifies how these resources can be allocated by the entity in order to bring product and growth initiatives to fruition.

Category

This is a core proposal within the Ecosystem Fund Allocation category.

Motivation

The Foundation is principally responsible for core protocol development, ecosystem growth activities, and implementing or monitoring approved proposals via the RNP process. The objective of this proposal is to equip the Foundation with resources and processes required for it to fulfill its duties. With a proper resource allocation, the foundation will be able to achieve its goals and focus on growing the network while having a clear pathway for allocating said resources.

Stakeholders

This proposal impacts all members of the Render Network community, as well as OTOY Inc, the founders of the Render Network.

Implementation

In order for the Foundation to operate as intended, it needs to acquire and then allocate resources.

Acquiring Resources

RNP-001 defines a supply schedule in which new emissions are distributed to stakeholders within the network. In production, network governance is utilized in order to determine the split of emissions as they are distributed to creators, node operators, liquidity providers, and other valuable actors.

This proposal advocates that 50% of emissions in Year 1 be allocated to the Foundation for use as outlined below.

This should be sufficient to equip the foundation to accelerate execution of its responsibilities, while still ensuring that sufficient emissions remain for creators, node operators and liquidity providers, when taking into account current and expected network growth in Year 1.

During Year 1, monthly emissions are scheduled at 760,567 RNDR tokens. Allocating 50% of these tokens to the Foundation would leave 380,283.5 RNDR tokens per month, or 1,140,850.5 RNDR tokens per quarter. In Q4 of 2022, less than 200,000 RNDR tokens were distributed to node operators. Therefore, even if network demand were to increase fivefold during Year 1, there would still be sufficient emissions to adequately compensate node operators and other participants. Also note that the potential deflationary mechanisms around the buy-and-burn process significantly impact unit economics, both under and over 6x network demand growth.

Core teams at the Foundation are expected to monitor network utilization and growth and make adjustments to these quantities over time. Grants can also be issued to third-parties to support monitoring emissions.

While it will still take some time before the roll-out of the BME model described in RNP-001 is released and emissions are minted, OTOY Inc. has agreed that if this RNP-003 is approved, it will provide the Foundation with an immediate interim loan facility of up to 4.5M RNDR tokens from its Treasury.

Allocating Resources

Once the Foundation has accrued sufficient RNDR tokens in its treasury to operate, it can allocate these resources via two primary channels:

  1. Core Team Expansion: The Foundation will hire product, engineering, design, and growth team members to facilitate network initiatives and RNP directives.

  2. Grants Programs: The Foundation will earmark some portion of its treasury for bespoke grants and bounties to support ancillary infrastructure and services necessary for network growth.

Foundation leadership is responsible for each of the above actions, and must incorporate community input when building and executing against all product and growth roadmaps.

Drawbacks

The Foundation is expected to receive a decreasing amount of RNDR from emissions over time. This presents two challenges:

  1. Parameter selection for emissions distribution is a complex process, and requires significant forecasting expertise. A Foundation-led team will invest resources in adequate forecasting tools.

  2. The Foundation treasury does not currently have a permanent and sustainable path for consistent RNDR denominated inflows over time.

This requires sophisticated capital management within the organization and the ability to pivot based on changing resource needs.