Process, process, process. We are going to learn how to Hatch a Commons!
The Hatch is the critical initial phase of the Token Engineering Commons (TEC). This page will guide you through the steps of the Hatch and what happens to liquidity that is deposited. We will also answer some frequently asked questions about the parameters and the process. There’s a couple key variables to be aware of in the Hatch, the numeric values of these variables will be chosen by the community (your economy, your choice) but the overarching principles are very important to understand.
Phase 1 - Hatch DAO. On the first day the TEC gods create The Hatch, it remains open for a limited amount of time for hatch contributors to send in wxDAI. There’s a minimum funding goal that needs to be attained in order for the TEC Hatch DAO to be created, if the goal isn’t met the Hatch fails and 100% of the funds are returned.
Once the minimum funding goal is reached and the funding period ends the wxDai is moved into two separate vaults and TECH tokens are minted. A brief breakdown of what happens is as follows:
- One vault will be assigned to hold the wxDAI that will back the currency and can be accessed by burning your TECH tokens to redeem a proportionate amount of wxDAI.
- A second vault will be assigned to hold wxDAI in the funding pool, this pool will be used to further the TEC’s goals and can only be moved by a vote by the DAO. It is taken as a percentage of the total funds contributed and is non-redeemable.
- Contributors are given TECH tokens based on the amount of wxDAI they contributed against the total wxDAI contributed to the Hatch.
- Of those TECH tokens freshly minted a percentage of that is given to the community that built the TEC and its culture based on their Impact Hours.
Phase 2 - The Commons Upgrade. The next phase of the hatch is upgrading it to a more robust DAO. As a liquidity contributor you can participate in the upgrade proposal, this will move all contributors, tokens and funds to the final TEC DAO. If you vote no or do not vote you will be given the option to exit the hatch DAO before it upgrades. If you exit during this phase your tokens will be burned and you will receive an equivalent value of funds in exchange from the vault. The wxDAI and TECH token amounts that were contributed to the funding pool and the TEC community contributors will not be reimbursed. If you voted YES and the upgrade vote passes then the hatch process ends, engines fuel, and this baby takes off into outer space! The final TEC DAO is created and the upgrade process completes.
After the Commons Upgrade, the Augmented Bonding Curve, Conviction Voting and Disputable Voting will be live and active.
The governance of the Hatching process - starting from the TEC initialization to the Commons Upgrade- will involve three voting events:
- 1.The Hatch DAO Parameters Vote. IHT tokens and CSTK Tokens with 50/50 weight will use quadratic voting to choose the best proposed set of Hatch Parameters. These parameters will be used to deploy the Hatch and TEC Hatch DAO.
- 2.The Commons Parameters Vote TECH tokens will use quadratic voting to choose the best proposed set of Commons Parameters. These parameters will be used to deploy the Commons Upgrade.
- 3.The Commons Upgrade via the TEC Hatch DAO. TECH tokens will use Dandelion Voting to migrate the funds in the TEC Hatch DAO to the TE Commons (parameters for approval were decided in (#1) the Hatch DAO Parameters vote).
Upgrading to a Commons
The Pre-Hatch phase includes all the processes and decisions that need to be decided upon in order to deploy the Hatch DAO. The Pre-Hatch phase is centered around a single voting event that will initialize the Hatch DAO parameters and attempt to fund the Hatch Raise.
There are three major requirements for the Pre-Hatch phase:
1.) The Token Engineering Community must deliberate on proposing the best set of Hatch DAO Parameters.
2.) The community must initialize and execute the Pre-Hatch Vote.
3.) The community must be successful in meeting the minimum Hatch Raise requirement.
In order to understand how long the Pre-Hatch phase will last, we need to first understand when the Pre-Hatch phase officially begins. The Pre-Hatch phase begins when Hatchers are able to vote on the proposed parameters through the TokenLog Application.
The duration of this vote is pre-determined by community members along with a set of Hatch DAO parameter options. Once the vote is over, the Token Engineering community will also establish an amount of time for the community to co-vest funds that satisfy the Minimum Goal requirement. Once this is accomplished, the Hatching process can transition into the next phase.
The following parameters will be voted on during the Hatching Process:
Support Required - Support Required is what percentage of tokens need to vote yes (of the tokens that were used to vote) for a proposal to Pass in the Dandelion Voting App.
Minimum Quorum - Minimum Quorum is simply the percent of the total supply of the token that needs to participate in a vote in order for it to be able to be passed.
Vote Buffer - Vote Buffer is the amount of time that must pass between each subsequent vote. This parameter will determine the number of votes that can take place within a period of time and whether or not we can have votes run concurrently.
Vote Execution Delay - Vote Execution Delay is the period of time after a vote passes before the vote can be executed.
TollGate Fee - TollGate Fee is a simple Aragon App forwarder that requires a user to deposit fees before executing an action. Useful for when an organization wants to make actions public, but impose a customizable cost to prevent spam.
Hatch Minimum Goal - Hatch Minimum Goal is the amount of funds that need to be raised during the Hatch in order to initialize the bonding curve.
Hatch Maximum Goal - Hatch Maximum Goal is the maximum amount of funds that can be sent to the Hatch.
Hatch Minting Rate - Hatch Minting Rate determines the number of TECH Tokens that are sent to the Hatchers per wxDAI that is sent.
Hatch Tribute - Hatch Tribute specifies what percentage of the funds raised by the Hatch are not redeemable. All other funds raised will be able to be redeemed by TECH Token holders.
Membership Ratio - Membership Ratio (Hatch Oracle) is the amount of wxDAI (wrapped xDAI) each CSTK Token holder is able to send to the Hatch.
Maximum IH Raise - Maximum IH Raise is the maximum amount of funds that can be allocated toward Impact Hours.
Expected Raise/IH - Expected Raise/IH is the amount of funds we expect to raise during the Hatch per Impact Hours awarded to community members.
During Parameters voting, you will be utilizing IH, TECH, and CSTK tokens through the TokenLog application.
TokenLog is a new governance tool that democratizes open-source software projects by creating token-weighted backlogs. It allows projects to continuously gather feedback from their token holders in order to help plan and prioritize their work. It allows token holders to actively signal which items matter to them rather than just vote on single proposals.
No. At the moment, there is no process being implemented that will allow you to delegate your vote during the Hatch process.
After the vote has ended, there will be a predetermined amount of time for Hatchers to co-vest funds into the Hatch Raise. The Hatchers will send wxDAI in exchange for TECH tokens. The wxDAI will serve as the Hatch DAO's temporary Reserve, and TECH tokens will represent voting power within the Hatch DAO.
If the Minimum Goal Requirement is not met, we will need to restart the Hatch process. 100% of the funds will be returned.
The Post-Hatch DAO is the second phase of the Hatching process. During this phase, we will use the Hatch DAO to vote on the parameters of the Commons and to implement the Augmented Bonding Curve, Conviction Voting, and Disputable Voting modules within the Token Engineering Commons.
The Hatch Tribute specifies what % of the funds raised by the Hatch are not redeemable. All other funds raised will be able to be redeemed by TECH token holders.
If the Commons upgrade occurs, the funds from the Hatch Tribute will go to the funding pool to create public goods for the field of token engineering and to fund DAO operations via Conviction Voting.
As a reward for contributions to the Token Engineering community, all IHT token holders will receive newly minted TECH tokens after the Hatch Tribute is established and the Hatch DAO is operational. The amount of TECH tokens provided is determined by the community during the Pre-Hatch phase.
TECH token holders can vote on any proposals that appear in the Post-Hatch DAO.
You do not have to be a Hatcher to submit a proposal but you do need to have TECH Tokens to vote on them.
Dandelion Voting is a voting framework where any member is free to submit a proposal which is then voted on and approved by the community. Every member contributes to the proposal an amount consistent with their percentage of the overall funding pool. After a proposal is approved, a dissenting member can withdraw their funds in what is known as a “rage-quit”.
The proposal is still approved, but the remaining members shoulder the financial burden of the member who exercised their “rage-quit” capability. In this case, you may redeem any TECH tokens you have for the wxDAI contributions you made, minus an Exit Tribute that is decided on by the community.
Since the funds you have committed are managed through a Dandelion DAO, any disagreements can be responded with your ability to “rage-quit” and pull your funds from the Hatching process. Any TECH tokens you have will be redeemed for your wxDAI contributions minus an Exit Tribute that is decided by the community during the Pre-Hatch phase.
As part of the Hatching process, upgrading to a Commons means that members of the Token Engineering Hatch DAO have decided to establish their own DAO, the Token Engineering Commons.
This procedure of members consciously dissolving the Hatch DAO behind them in order to create an unincorporated entity is a big feature of the Commons Stack legal strategy to satisfy the regulatory requirement of establishing "sufficient decentralization".
TEC tokens are distributed after the Hatch DAO agrees to the implementation of the Augmented Bonding Curve. Once this happens, funds will be migrated and all TECH token holders will receive TEC tokens at a 1:1 ratio.
It is likely that the Hatch DAO will decide within its parameters that the TEC tokens will require a vesting period in which you are unable to sell TEC tokens back into the Augmented Bonding Curve. The vesting period is a measure that ensures the stability of the Bonding Curve through the early period of the Commons when token "dumping" can have adverse impacts on the Commons ability to fund early proposals.
Yes. Whether you decide to become a hatcher or not, you will be able to purchase TEC tokens directly from the Augmented Bonding Curve within the Token Engineering Commons after the upgrade is complete.
Conviction Voting is a method of voting that offers a novel decision making process that funds proposals based on the aggregated preference of community members, expressed continuously.
If you are interested in taking a deeper look into Conviction Voting please reference our blog post.
Disputable Voting is a new voting framework that adds new mechanics to our voting modules which include delegating votes, protections against last-minute vote result flipping, and new methods for disputing proposals.
Now that the Hatch is over you can help grow the Token Engineering Commons into a Social Impact powerhouse by helping the TEC in its day-to-day operations or help funding exciting new projects that will advance the field of Token Engineering!
Yes. The core engine of the TEC is that interested parties buy TEC tokens that will be used to fund TEC projects. The Commons will become a community that collaborates with each other around the future of token engineering. The TEC community will become a schelling place for projects that advance the state of token engineering and serve as a networking hub for token engineering researchers to build next generation token economies. See also TEC Funding Proposals: What Kind of Projects Should Apply
At the TEC, we collect funding proposals within our Forum. Have a look at some of the potential projects getting involved with the TEC.
One of the TEC missions is to gather and steward the efficient distribution of funds to projects in the emerging field of token engineering, and to encourage the robust and ethical design of tokenized infrastructures. What kind of projects does the TEC want to fund?