Replace Wearable Crest GBM Auctions with DAO Vote with Fixed GLTR Fee

Background:

Chapter 3 of the Gotchiverse Game Bible explains how Wearable Crests (that are required for guild channeling) can be won in GBM auctions using the GLTR token.

This ERC1155 Crest cannot be purchased off the open market, but must be won in a Bid-to-earn Auction using GLTR. Auctions will be held every three months for all Wearable Crests, and the winners of those auctions will automatically be transferred the Wearable Crests onchain, thus earning their Guild the privilege to engage in Guild Channeling.

Problem Statement:

A competing guild or whale could act maliciously and push up the price in the auction for a wearable crest resulting in the crest being owned by the whale/competing guild and sitting idle rather than with a guild that has focused on acquiring those wearables. Or they could resell it, by reselling the land parcel, to the guild at inflated prices.

The GBM auction also offers an incentive for people to figure out which guilds currently own lots of a wearable supply, then bid up a really high price (based on a percentage of the guild channeling earnings) for the wearable crest with the goal to be outbid for a Bid to Earn profit, then repeat this process again and again.

The GBM auction system makes it hard for guilds to collaborate on acquiring wearable crests. It’s not ideal for guild members to outbid each other but there will be concerns around who in the guild should be getting the GBM rewards. Spies in guilds can also exploit this information to shakedown guilds.

GBM auction participants trolling/apeing in on wearable crest auctions has the ability to severely damage guilds as they currently exist.

Proposed Solution:

Replace Wearable Crest Bid to Earn auctions with a DAO vote where individuals receive 1 vote per unit of wearable they hold. And for each wearable they own they can vote for an address that can be whitelisted to acquire the Wearable Crest.

To support GLTR utility there can be a fixed GLTR fee (set by Aavegotchi DAO) to claim the wearable crest by the whitelisted address.

Other things to consider:
How would we handle ties? (perhaps an auction with the winning whitelisted participants only)

Do you support this proposal?

  • Yes
  • No

0 voters

4 Likes

I support the removal of GBM bidding incentives, but I can’t support the introduction of an alternative so soon, without much input from others and team, and packaged into the more popular removal of GBM.
Ideally what you are proposing here would be separated into 2 votes, or only made into a unified proposal after more input from the rest of the DAO.

3 Likes

You are giving principles too much importance versus the cost. If a guild considers that the crest is worth that amount, they will bid, if not, they will not bid and they can sell the items that will be on high demand from the guild that won the crest. This is how fair market works. Nothing wrong with it. If one entity wants to lose money just for the sake of messing a guild’s plan, that s their decision.

7 Likes

I will copy & paste my response to this from the discord:

People keep saying that a crest is worthless unless you own the wearables. That’s not true at all. If you sniped the crest of a popular guild at an auction, you have huge leverage over that guild, to demand a percentage of their profits or whatever you want. You have the power to deny them all that income. Because the alternative for the guild is to get nothing, or sell all their wearables and buy new ones, losing a lot of money in the process and maybe changing their whole identity as a guild. The auction system in this case gives whales the ability to extort guilds. It’s an awful experience for guilds and their members, who are our core playerbase. We should not subject them to this kind of potential extortion.

I fully support this proposal, as it fixes the main issue while still keeping the GLTR sink intact.

I don’t know that a DAO vote is ideal (do we really want to have 250 dao votes every 3 months?), but some similar system where the group with a plurality of the wearable gets the crest. Probably a new UI page would be needed for this, to avoid having to create hundreds of snapshot votes every 3 months (one for each wearable).

1 Like

Adding another poll to capture the community sentiment better.

Do you support getting rid of bid to earn incentives for wearable crest auctions?

  • Yes
  • No

0 voters

1 Like

I think this will result in a reduction in the number of guilds and a centralization of a small number of guilds controlled by whales. Every 3 months I expect to see the number of guilds to drop as whales will concentrate their position with larger GLTR bags and more wearable crests under their control.

The players in the existing guilds we have now will need to adapt and be ready to dump their existing wearable guild and go find another guild that has won one of the wearable crests they have a wearable for.

I just don’t see how smaller guilds can compete with the likes of Gotchi Vault (currently sitting on ~58M FRENS) and these large guilds with partner parcels.

If wearable crests become too expensive this will put inflationary pressure on the wearable supply as smaller guilds will need to find a cheaper wearable crest. Smaller guilds will need to buy these new wearables off the secondary market as raffles are becoming harder to win.

1 Like

While we were brainstorming this mechanic, we did discuss the idea of Wearable holders voting on which Gotchi Lodge should hold the parcel. As an idea I think it has merit, but as Zygo pointed out above, it could be a logistical challenge getting everyone to vote the right direction, further complicated if multiple guilds emerge trying to claim the same Wearable.

However, my main concern lies with AavegotchiDAO setting the prices for the Wearable Crests. The auction method lets the free market tell us what the price should be, whereas the DAO method lets us tell the market what the price should be. Whenever possible, I believe it’s optimal to let the market make these types of decisions, but I do acknowledge that Guilds may feel uneasy if they have to constantly worry about losing their Crests.

Incentivizing Guilds to provide liquidity on the GAX in order to earn GLTR to hold onto their position is a cool mechanic that is very beneficial to the overall ecosystem, and helps prevent value extraction, but we do not want to add unnecessary stress to what should be a casual farming game :slight_smile:

I believe there’s probably some optimizations we can make to the proposed system to make it fairer and less prone sniping, but I believe the system itself will be quite strong.

So my vote would be to keep the proposed system, but add in some checks and balances where needed.

4 Likes

The idea of introducing “channeling exploitation rights” for each wearable is very interesting, it definitively helps to establish a solid long-term plan regardless of changes in the player base.

However, as Jarrod pointed out, giving incentive to people for fighting for those crests, will have a negative effect on small/medium guilds with low liquidity. Based on the previously known information, all guild members made a financial commitment assuming that this will grant them the right to be part of guild channeling. Now, all the responsibility and pressure are on the guild leaders who either manage to win the auction or fail completely. Even if we are not many in such a position right now, this new mechanism exposes us greatly to any wealthy user who wants to extract value and target guilds who had announced preference for a certain wearable.

If winning by voting is not an option, at least it would be very desirable to have some additional protective mechanics such as avoiding using bidding incentives. Guilds will bring a lot of value to the game if PixelCraft and the DAO support their efforts, speculators will leave whenever they feel the time is right.

1 Like

i think that rather than having a bid to earn, it could be more of a stake to earn, you could farm fractionalized guild crests and a vote could be required to set the crest to a structure or likewise change it to another one?

to have decentralized ownership of crests makes the most sense to me. would allow for more distributed ownership of something that i don’t see should be centralized ownership. if you want to keep share your going to have to keep staking underlyings so still keeps it flexible with fluctuating and changing user base.

i think that this other model where it goes back up for auction is going to cause a high friction ux.

likewise if i am a gotchi and i want to have part of other guilds organization i should have access to do so. its an open free market were trying to build not more tools for whales to camp the best assets.

although if a whale wants a big share of a high profile guild because they believe in the long term value proposition of the likeness they should be able to deploy there capital accordingly aswell.

at the end of the day the end result should best reflect each wearable holders community interest.

Please do not let the dao set prices for things. the vault has control of the votes now and we’re in an electoral college type situation, where whatever the majority in the vault says, is what the dao thinks. As we’ve clearly ceded dao control of the game to the vault by allowing them to control the votes, the only way to keep things fair is to design market based mechanics that are balanced, incentivized(degen friendly), and well enough designed mathematically, where they inherently make it hard for one group to take too much of a market.

1 Like

the difference is that that this electoral college consists of all holders not just centralized figures with constituents. but i see what your saying this is why i think whatever system we have for distributing these is needs to be transparent and inclusive to all parties interested in partial crest ownership.

my actual point is that we need to design systems that are resilient, as opposed to using manual market making.

We’re about to do WW3 because the world played the “pull the economic levers with fiat debt” game for too long. The truth is, there has to be losers for there to be winners. What is most fair and beneficial for all, is if the big losers and the big winners, are the degenerate gamblers. The safety investors want their reliable yield, the gamers think they can out game each other to get more than their share, and we build the game to protect the interest of those two groups, but the truth is, the gamblers(and the people who buy stuff and dont fully utilize it, these people are like lost bitcoin wallets) are the ones who actually pay for that “extra” money people are earning. There should always be the option for someone to “do something cray” and go all in on something and either it blows up[ in their face and they get rekt, or they get a huge win and erryone mad… Intermittent reward is what keeps the world going…

1 Like

I think we need to look into changing quorum rules when it comes to Gotchi Vault. It’s basically a whale pool and is causing centralisation issues due to a defect in crypto taxation policies of governments. It’s just going to get worse with each rarity farming season.

2 Likes

Too late. We’ll never win that vote :wink: Might as well move on and do our best to build the game in a way that keeps price manipulation out of the hands of the dao.

1 Like

maybe changing quorum rules is less attractive than establishing a checks and balances system, so that different community entities can keep each other in check. also as far as i know the gotchi vault is a permissionless treasury management protocol hardly a product only available to whales. and they are also making strides to make sure that there overall votes represent the sentiment of the members in their pool of assets not just the sentiment of the whales with the proposal power.

The community already gave up their rights when they allowed vote delegation, so… I think best response is to simply keep coming up with GLMR sinks so that it dilutes their dominance. The idea of of GLMR charge to reroll a parcel was a nice one…

I don’t think griefing is going to be a huge problem, with the GBM auctions for crests. GLMR is limited, and guilds will go hard to get the ones they wanted, and there’s going to be tons of it blown on the top ones, which means it will be tied up in those auctions. There’s far too many wearables for a group to be effective enough in the auctions to truly dominate it, and the part of the rules where it says you can be in multiple “guilds” means that even if you are not in the guild for your awesome item, you can probably make a deal with them for access to the channeling, as they do gain from having you there due to the spillage rates declining as the lodge levels and the channeling rate going up exponentially with additional channelers.

Here’s another idea to solve the issue: Instead of being auctioned off for GLTR every 3 months, every crest has to be “charged” with GLTR every week (which is sent to the DAO or burned, whatever) before it can be used to channel. The only way for a crest to change locations is for 51% of wearables holders to trigger a move, via smart contract.

With this solution there’s a constant GLTR sink, and wearables holders can control the location of the crest whenever they want instead of every 3 months. There’s still the issue of how much GLTR should charging the crest cost, but maybe somebody else has an idea of how to link that price to the market somehow.

Since wearables represent a significant investment, and aren’t very liquid, and are tied to guild identity, I feel they should have the power to determine where the crests go. Putting crests up for auction opens up potential for a lot of abuse and bad experiences for players, and provides very little benefit. I honestly worry that if crests go to open auction, a lot of players and even guilds might quit in disgust if somebody buys their crest and uses it to basically extort them.

3 Likes

So you are saying that people may rage quit and sell their stuff cheap in the bazaar allowing players that may not have had the opportunity to buy those items another chance at a lower cost?