Income factors for consideration

Listing the different income factors that will be considered for each income approach

The following are some relevant factors for consideration to help compare the different income approaches. An approximate score will be added against each income approach with a rationale behind the score for each of the different factors. The scoring for each factor will range from 1 (very bad) to 5 (excellent). The importance of each factor is also rated out of 5, where 1 is not important and 5 is very important. This importance will be used to determine a final overall score. As an example, a moderately important factor (3) could be represented as a 60% importance value, if one approach received a score of 5 for one factor this value can then be multiplied by the factor importance (0.6) to generate a final score of 3 (0.6 importance * 5 score).

Short term income potential

  • Description - A new and emerging Web3 ecosystem can benefit from income in the short term that can help with funding the development of infrastructure, protocols and applications. Funding for these types of initiatives could help with creating more reasons for people to use the network.

  • Importance score - 5, Very important. If a network is unable to generate enough growing demand there is a risk that the fees generated from any network transactions will not be sufficient to pay for the operational costs of the nodes that maintain the network.

  • Scoring questions - What immediate income could become available due to this income approach? How fast could that income become available or increase in the short term?

  • Scoring - High income potential is good (Score - 5). Low income potential is bad (Score - 1).

Long term income potential

  • Description - A Web3 ecosystem that wants to become sustainable over the long term will want to think about how the network is going to be maintained and improved and how it will be able to respond to changing a environment.

  • Importance score - 5, Very important. Treasury income could play a vital role in determining whether a Web3 ecosystem is successful and sustainable over the long term. A Web3 ecosystem could likely need a long term solution for generating income to help pay for maintenance and development efforts that maintain and improve the ecosystem.

  • Scoring questions - What is the long term income potential from this approach? Is the income reliable under pressure and does it scale as the network grows?

  • Scoring - High income potential is good (Score - 5). Low income potential is bad (Score - 1).

Incentive complexities

  • Description - How income is generated for a treasury can impact the incentives that are involved for the community and contributors involved in maintaining and improving the network.

  • Importance score - 5, Very important. Web3 networks will likely need to be maintained and improved over time through ongoing contribution efforts from highly skilled professionals. Where the funds come from to pay for these contribution efforts can influence the complexity to collect and distribute these incentives and also impact the behaviour of the contributors who receive them.

  • Scoring questions - How complex is it for incentives to be collected together to pay for ecosystem maintenance and development? Who is contributing to these incentives and what influence could these actors have?

  • Scoring - Low complexity is good (Score - 5). High complexity is bad (Score - 1).

Game theory risks

  • Description - How treasury income is generated could have an influence over the actions that a bad actor could take to increase their opportunity for personal gain or their influence over an ecosystems direction.

  • Importance score - 5, Very important. Malicious actors could attempt to exploit the systems and processes available in an ecosystem for personal gain or alternatively could be trying to just harm the network. How a treasury generates income will be an important area of concern to consider how a malicious actor could exploit that income source.

  • Scoring questions - How easy is it for a malicious actor to get a larger amount of influence in the ecosystem? How could these actors influence the treasury decisions and how income is used? How could these actors benefit from that influence on decisions to benefit themselves or to harm the network?

  • Scoring - Low risk is good (Score - 5). High risk is bad (Score - 1).

Last updated