Membership Ratio Deep Dive

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What is the Membership Ratio?

The Membership Ratio is the amount of wxDAI (wrapped xDAI) each CSTK Token holder is able to send to the Hatch.

If the Membership Ratio is 2 wxDAI/CSTK

And Alice has 100 CSTK

Then Alice can send 200 wxDAI to the Hatch

What is the impact of the Membership Ratio?

It determines the Max we can raise. If the total supply of CSTK Tokens is 1,000,000 CSTK and we pick a Membership Ratio of 1 wxDAI/CSTK then everyone who has CSTK would have to contribute the maximum possible for us to raise 1,000,000 wxDAI in the Hatch.

What is wrapped xDAI?

DAI is pegged to the US dollar and is an ERC-20 token that lives on the Ethereum Network. It is overcollateralized using MakerDAO’s Vault system (formerly called CDPs).

xDAI is the native currency for the xDAI chain, which is a side chain bridged to Ethereum. The xDAI Bridge allows DAI to become xDAI at a 1:1 rate. xDAI on the xDAI chain acts like ETH does on the Ethereum network, so all transaction fees (gas) on the xDAI chain are paid in xDAI and smart contracts can respond when xDAI is directly sent to them.

wxDAI is the ERC-20 version of xDAI, just like wETH is the ERC-20 version of ETH. Often it is easier for DApps to work with only ERC-20 tokens, this is the case for Uniswap, Balancer and many other projects on Ethereum and this is also the case for the Gardens Template and the TE Commons.

DAI can be turned into xDAI here (1:1): https://dai-bridge.poa.network/

xDAI can be turned into wxDAI here (1:1): https://honeyswap.org/#/swap

What is CSTK?

CSTK is a non-transferable ERC-20 token that represents the holder’s membership score in the Trusted Seed.

The Trusted Seed and CSTK Token is explained in depth in this blog post: https://medium.com/commonsstack/cstk-the-token-of-the-commons-stack-trusted-seed-931978625c61

The TL;DR for here is

  1. CSTK Tokens are not normal tokens. They will never have monetary value.
  2. Holding CSTK tokens identify you as a member of the Trusted Seed and therefore part of the Commons Stack’s Swiss Association.
  3. Being a member of this Swiss Association offers certain legal protections and is a requirement to participate in the Hatch of the TE Commons in any way.
  4. To become a member you must apply and pay a membership fee (this will be possible soon).
  5. CSTK Tokens are accumulated via Praise (much like impact hours) and from financial contribution. They are a measure of both skin in the game and trust.
  6. The Commons Stack controls the issuance of the CSTK Token.
  7. After participating in the TEC Hatch, there is a hope that CSTK Token holders will be able to take these learnings and support the Hatch of other Public Goods focused economies.

Why does someone have to have CSTK to be part of the Hatch?

2 reasons

  1. Being a member of the Commons Stack’s Swiss Association will help protect Hatchers from being individually liable for the launch of the Commons.

  2. When Hatching the TE Commons we are initializing the governance that will control the value production of TE Public Goods. It is important that the people who take on this responsibility are trusted to care more about creating value for the field of Token Engineering than their own individual profit. The Commons Stack uses the CSTK token to curate a community that fits that description.

So what do we need to talk about in this post?

  1. What other parameters are important to consider when picking the Membership Ratio?

  2. What other information should we use to decide the Membership Ratio?

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I had some more opinionated things to say too :smiley:

There is this idea that Hatchers are not supposed to care about money… But only Rich people are in a place where they can not care about money, so does that mean only rich people should be Hatchers?

This doesn’t quite capture the concept.

The idea is that the Hatchers should be seeing their contribution as a way to make impact and make the world a better place.

The THEORY is that if this is true, then the Trusted Seed will cares about advancing Token Engineering and coordinate the creation of value for TE with the system we create and that value will be reflected in the price of the TEC Token.

Speculators that only care about making profits are not only welcome to join after the Hatch, but we NEED them to join after the Hatch. They can give a us perspective on how we are doing… The price becomes almost like a prediction market on whether or not the Commons will continue to add value to society.

It is important to note that, Hatchers are not expected to be 100% altruistic… everyone needs money to live, no one needs Token Engineering Public Goods to live. But we do expect them to have and altruistic mindset, they should be MORE value driven than profit driven. Everyone will be both!

The goal is to overcome the need for altruism!!!

That said, IMO, it’s 10x easier to enable people with an altruistic mindset to make money than it is to enable people with a speculative mindset to provide value for public goods.

We need both mindsets!

The Hatchers are curated to hold the “altruistic” mindset they are required to take a lot of risk via vested skin in the game, so they get a lot of governance power and a high reward if they collectively succeed at building the Economy.

The Speculators can come in after the Hatch, post Hatch this is a radically inclusive system any one can join as they wish.

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More on point.

I think the CSTK Ratio, Hatch Tribute, and Min Hatch Goal should all be designed together.

And the onboarding working group should be able to gather data from the Projects (how much funding is being requested) and Hatchers (soft commitments for how much they want to put in) and that should be considered as well.

Maybe we want to make sure we have enough funding in the funding pool to fund 3x how much is being requested… and we should assume 15% of the soft commits we gather will actually be contributed (pulled these numbers out of mi culo).

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If you want to see the current CSTK Distribution: CommonsStackToken (CSTK) - xDai - BlockScout

A reckoning is coming tho… There will be a Huge BURN of every on-chain token held by people who have not activated their Trusted Seed Membership soon.

Activate here: https://member.commonsstack.foundation/

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Membership Ratio + Trusted Seed Dues explainer

Every Trusted Seed Member will have AT LEAST a 1125 CSTK Score, this creates an individual cap on how much wxDai they can send to the Hatch

If a Trusted Seed Member wants to put more wxDai in than their CSTK Score permits, it forces a small Tribute to the Trusted Seed in the form of Membership Dues.

Right now, 2.5 CSTK are given for every Dai paid in Membership Dues

So the requirement is pretty small, it looks like:

1/(2.5xMR) = “Trusted Seed Tribute”

so if the Membership Ratio is 8
1/(2.5x8) = 5%

So if MR is 8 and someone wants to put in 1000 wxDai more than their CSTK Score permits, they have to pay an extra $50 in Dues.

so if the Membership Ratio is 5
1/(2.5x5) = 8%

so if the Membership Ratio is 30
1/(2.5x5) = 1.3%

But if the membership score is 30… everyone can put >30k into the Hatch… so it won’t need to be used much.

There is also an individual Cap to the % of the Total CSTK Score each person can have, if they want more they have to talk to the Commons Stack team and become more Trusted (most of the time they just need to have a quick chat conversation and show that they are value aligned with making the world a better place, and not solely interested in individual profits.)

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What is the Membership Ratio (wxDai/CSTK)?
The Membership Ratio (wxDai/CSTK) creates an individual cap for how much wxDai each Trusted Seed Member is able to send to the Hatch during the Hatch Period.

Implications & Parameter Options
The Membership Ratio (wxDai/CSTK) parameter is measured in wxDai, and you will have the option to set this parameter anywhere between 0 and ∞.

The cap for each Trusted Seed Member is based on their individual CSTK score. The minimum CSTK Score possible is 1125 CSTK. Your parameter will establish how much wxDai that can be sent to the Hatch during the Hatch Period for each CSTK ‘point’ an individual holds (i.e. if you set your parameter at 2 wxDai, a Trusted Seed Member with a 2000 CSTK Score will be able to send a maximum of 4000 wxDai to the Hatch during the Hatch Period).

Suggested Range
The Membership Ratio will dictate the amount of funding the Hatch receives, and we suggest a range of 1-20 wxDai.

Related Parameters to consider when defining the Membership Ratio (wxDai/CSTK):
Minimum Goal (wxDai)
Maximum Goal (wxDai)
Target Goal (wxDai)

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