Grant of SWM tokens to Swarm Foundation for 2019H2 budget


#1

Title: Grant of SWM tokens to Swarm Foundation for 2019H2 budget
Sponsor: SWARM Council (voted 12-15-2019, 5 “yes”, 0 “no”)
Created: 12-15-2019
Version: version no. 1.0
Ballot Type: Up/Down
Voting Period: 7 days
Staking Address: Exempt from the staking requirements per SNC-2019.02/Article VII.B.10
Start time: 1576515600 (UTC/GMT Monday, December 16, 2019 17:00:00 PM)
End time: 1577120400 (UTC/GMT Monday, December 23, 2019 17:00:00 PM0)

Grant of SWM tokens to Swarm Foundation for 2019H2 budget

The Swarm Foundation is seeking a grant from the Swarm Network Treasury of SWM 5,095,906 to it’s wallet at 0xDC12be2836C8d679C3C0BEc2Da4E406e235610DC.

This grant covers the expenses the organization has incurred for H2 2019 for the following categories:
SWM 2,247,310 for core team
SWM 2,848,596 for 3rd party service providers for Product, Marketing, Legal, and Admin

The goals for this period include to finalize the build-out of the Swarm protocol layer functionality and create further ecosystem functionality to connect actors with the protocol. Legal, and Admin covers ongoing expenses in maintaining the organizational structure and legal status.

Further details about the proposed budget can be found here:

License

Copyright and related rights waived via CC0.


#2

So this means that aprox. 5 million SWM will be transfered to the formentioned wallet for the past work done in H2 of 2019?

Will this be converted to cash/ethereum/bitcoin to pay for services/core team or will the services/ core team be paid directly in SWM?

How were the services from a third party paid during this period? I imagine that the third party services needed to be paid like monthly and not every half year…

How is it mentioned only now after the work was done that the 30% of the foundation wallet is needed for the past expenses? I thought that this was covered or at least partially covered with money collected from ICO and the team isn’t rellying solely on foundation wallet to cover expenses…

This report about proposed budget is just so deficient, can you at least provide the average monthly prices of SWM based on which the SWM SUM was calculated from?. and maybe like devide the expenses in categories like infrastructure: x SWM, product y SWM, legal z SWM…
For the next half year I expect like a proposal for the work that needs to be done in the future and the aproximation of expenses are then presented to the community and voted on… not like for the past work this is not the ‘‘democracy/decentralization’’ that was being sold to the community with this baloot voting system

What does this maintaining of organizational structure mean and what needs to be done here?

Can I also write some better Medium articles and get paid in SWM for doing so? because the last article published was just pathetic and it is a pity that precious SWM tokens get spend for low quality work…


#3

Can you please break down what the 2,247,310 SWM for core team means? What is it that the foundation is paying for exactly?


#4

Was this paid in SWM tokens or fiat? Can we have a break down of what was exactly paid for?


#6

This is an unexpected bill for past work, why wasn’t the council informed about up coming costs at the start of H2 of 2019? And they’ve only just sprung up now.

A breakdown of exact costs paid, when (monthly), and exactly what services were the payments for?

Is this amount requested Solely for past works? Is any of the amount estimates? And if so, then where will the Swarm not used go? (Into a councils wallet for future funding for example, or returned to the treasury?)

Will the SWM be paid in SWM or $ or ETH?
And at which date exactly will the exchange or $ rate take place for the payment of works done? We must know… as the value of Swarm and it’s exchange rate to $ is and can vary substantially from day to day, we don’t want to be short in paying the debt for works done and then need to PAY Out more at a later date for the same works. We also, would like a refund to the treasury, if, on the date of exchange the price unexpectedly increases in $ value, if, the SWM requested by the foundation increases in $ value exceeding the payments required.

Are the payments by workers, team, and other services being requested in SWM as final payment, or being requested as $ as final payment?

Has this amount already been paid?
If so, why wasn’t the council involved in voting with regards to the costs being incurred?
And if already paid, how was it paid, in SWM or fiat?

The details for the large amount of SWM the foundation is requesting really does need to be more precise, and specific. It’s a considerable amount of SWM the foundation is asking for…for works already done. I trust the foundation understands why much more information is needed.

Many Thanks

Steve


#7

Also, what does the comment in the comments section of the document mean by ‘Partial payment’ … does the request of SWM by the foundation not actually cover the cost for H2 2019, will more SWM be requested at a later date to cover full payment and not just partial payment for the same period H2 2019?


#8

As one of the top 10 Swarm holders my vote will have to be NO I’m afraid, at least until much more detail and clarification is provided.


#9

A response on the key topics and questions asked by Swarm Members:

  1. Token budget: Further details of (Prod, Dev, marketing etc):
  • Here are more details on the expenses: https://drive.google.com/file/d/1PoWvY02bIddv3VGEZ9MsSBzcoNjsQZKC/view?usp=sharing

    • That’s an overall 7 month of already spent expenses amounting to $241K overall budget
    • With a total of 6 core team resources that received a total of $78K in SWM (avg of $11K per month)
    • Core team members have been working in these main areas: conceptual, product/dev, adoption (issuer education, community management, etc) & legal/regulatory
    • Only Dec’19 values are not spent yet - total of $18,936 or ‭824,952‬ SWM.
    • It’s the Swarm Networks prerogative to acknowledge the reasonable spend for the deliveries listed below in Section 3
  • Re future spend, the Swarm Network can decide how to prioritize future priorities, treasury spend and developments

  1. Potential Token Liquidity:
  • It’s not 5M SWM being sold into the market, the majority of distributions have already made along the way apart from Dec team comp; you can identify the recipients from the documents linked above.
  1. Intellectual Property:
  • Generally, all protocol layer functionality is and has been developed by the Swarm Foundation and is along the way open-sourced and made generally available to the community. The Swarm Network can decide to adopt these components.

  • In the past 7 months, as Swarm Capital had a functioning fiat operation, the company has been expensing resources and developing protocol layer components on behalf of Swarm Foundation; this includes:

    • Smart contracts suite:
      • SRC20
      • Asset Tokenization
      • Fundraising Smart Contracts
      • ISOP (Issuer Staking Offer Pool)
    • Masternodes
      • Packages
      • Dashboard
    • MAP
      • Conceptual work
      • Centralized MVP
  • So far part of these components have already been made available via GitHub with the fundraising smart contracts shortly ready to be released.

  • In combination these protocol-layer components enable an open full-stack tokenization process: for reference, please review the Swarm Whitepaper, that lays out the structure of the Swarm platform with it’s three primary layers of Core, Services, and Application.

  • The open sourcing of all the above protocol layer components depends on the Swarm Foundation being able to compensate Swarm Capital for delivered work.

  • Apart from that,

    • Swarm Capital’s business is bringing customers to the Swarm network, guiding them through the process and integrating/offering other value adding components.
    • All Swarm Capital customers who use the Swarm infrastructure will be required to stake SWM according to the Network policies
    • Swarm Capital has developed proprietary software for it’s for-profit licensing model, on top of the components developed by the Swarm Foundation, adding to the value of the network.
    • There is no funding from Swarm Network or Swarm Foundation into Swarm Capital.
    • It may be considered advantageous to have some IP held by Swarm Capital, particularly for premium products that require a fee (since Swarm Foundation is a non-profit and does not hold the appropriate licenses for a fee-based model.)

#10

Further questions from Robert @rbrths in Telegram:

  • Why did SC start developing code for the foundation?
  • Who decided it for which exact purpose?
  • From which time on did it happen and how much of the whole product is now SC property?
  • Is the code in the GitHub repo entirely from the foundation, and if yes, why is not everything coming with open source licenses?

#11

It’s still unclear who owns what and what conflicts of interest there are between SCapital and Swarm token holders, and how to prevent SCapital to effectively make all the money while token holders are left in the dust.


#12

What happens if the vote is a clear NO?

Trust is starting to become a problem for me, especially since nothing is being done to preserve prices and save foundation tokens, and the community isn’t being listened to.


#13

I am also very much weary about giving Swarm Capital 5m tokens as that might give them a lot of leverage to vote for decisions that are directly against Swarm token holders’ interests and move decisions towards making fiat profits for SC instead of working towards raising the token value.

Call me stupid but at this point I can’t trust the for profit entity and the team, who also seldomly shows up or listen to the participants’ needs.


#14

Here are some of the questions from Crypto Coin Ninja in telegram:

Why did the open source software product become intellectual property of Swarm Capital with no decision or communication amongst the community?

Why is this now being disclosed?

What are the build dates, version notes, all the audit trail of a developed solution not fiscal but technically? Not git hub but actual testing etc

Who made the decisions on all of this and when?

I also stated this:

Joel Dietz admin, [Dec 17, 2019, 7:28:39 PM]:
So my understanding (please correct me if I’m wrong) is that about six months ago Swarm Capital began paying for all Swarm Foundation related expenses out of pocket but is currently retaining all the IP for those products. It is basically giving the Swarm community a buy back option for the IP if it receives the requested amount of SWM.

If that’s correct it probably should be a formal arrangement between Swarm Foundation and Swarm Capital so that the ownership is clear


#15

Now I am more satisfied with the more detailed explanation of expenses.

I still dont understand its stated that:

That’s an overall 7 month of already spent expenses amounting to $241K overall budget
With a total of 6 core team resources that received a total of $78K in SWM (avg of $11K per month)

So the core team has already been paid on a monthly basis with the total amount of 78k$ in SWM for the past 7 months of work.

The question is where did this SWM come from? I mean it was borrowed from somewhere some other fund or where did it come from if we are only now discusing the the potantial transfer of 5milion from treasury to refund the expenses for the last 6 months.


#16
  • Why did Swarm Capital (SC) start developing code for the foundation?

    • See previous response “as Swarm Capital had a functioning fiat operation the company has been expensing resources and developing protocol layer components on behalf of Swarm Foundation”
    • Additionally, Swarm Capital has been developing other software on top of the Swarm Protocol and therefore it had a functioning infrastructure and teams that could help develop the underlying protocol (as demonstrated by the milestone deliveries)
    • The development from SC for SF started in late Q2’19
    • Restated, this was as a service and assistance to the Swarm Foundation, and it’s the Swarm Network’s prerogative to endorse that or not.
  • Who decided it for which exact purpose?

    • See previous responses
    • The Swarm Council had been made aware of this in Jul’19
  • So the core team has already been paid on a monthly basis with the total amount of 78k$ in SWM for the past 7 months of work?

    • Correct
  • Where did this SWM come from?

    • The SWM was paid from Swarm Capital
  • We are only now discussing the potential transfer of SWM 5 million from treasury to refund the expenses for the last 6 months.

    • Correct; and these expenses have already occurred (see previous response)
  • From which time on did it happen and how much of the whole product is now SC property?

    • See previous response
  • Is the code in the GitHub repo entirely from the foundation, and if yes, why is not everything coming with open source licenses?

    • All code that is developed by the Swarm Foundation is published under open source license; it therefore holds no IP; if there are deficiencies with the license, then that needs to be evaluated and taken care
  • “Transfer of IP to Swarm Capital”

  • Why is this now being disclosed?

    • As we are shortly before releasing another major milestone with the fundraising smart contracts, the open issue of transfer needs to be resolved beforehand
  • What happens if the vote is a clear NO?

    • The developed components remain within SC
  • Joel Dietz: “So my understanding (please correct me if I’m wrong) is that about six months ago Swarm Capital began paying for all Swarm Foundation related expenses out of pocket but is currently retaining all the IP for those products. It is basically giving the Swarm community a buy back option for the IP if it receives the requested amount of SWM. If that’s correct it probably should be a formal arrangement between Swarm Foundation and Swarm Capital so that the ownership is clear”

    • This statement is accurate
    • Just to be added, that expenses were kept extremely lean and efficient (8-10 person dedicated team 6 months plus legal with only $241K budget)
  • With regard to voting IN a new foundation chairman would it not be a better idea to vote in a strong and committed community member for a more balanced membership. Who here would be prepared to put themselves forward for this position??


#17

Could we remove anybody involved financially with Swarm Capital from the foundation as it looks like the conflict of interest could bring risks. (Example of risk: deciding to reduce staking or reduce token utility in exchange for paid services from issuers.)


#18

With 5m tokens at hand, swarm capital could easily swing more votes towards making profits for the company and reducing the token stakes/utility and other ways.

How do we prevent such potential risk of a takeover in governance?


#19

My main concern is regarding Swarm’s product suite and what the Foundation/Network have been funding for the last year. The Core Swarm team has been conceptualizing these products for more than just the last 6 months therefore I think it is important to clarify what was funded by the Foundation and what was funded by Swarm Capital.

We have been conceptualizing Investor Pass, Onboarding App, IQ Manager, MAP and the Fundraising Contracts since Q3 2018. I personally have been paid solely by the Foundation until July 2019 (from July 2019, over ⅔ of my salary has been paid by the Foundation and less than ⅓ by Swarm Capital) . Most of my work, conceptualizing these tools, was done while I was working for the Foundation and not Swarm Capital, most of my salary and the salary of all Core Team Members was agreed to be paid by the Foundation, not by Swarm Capital.

Swarm Capital is asking for a large refund from the Swarm Foundation, yet it is claiming to own most of the customer facing products which were conceptualized and developed before it even existed.

In order to have a better understanding of what is being claimed by Swarm Capital I would like to ask Timo and Philipp to point out which repos and tools were supposedly paid by Swarm Capital and which were paid by the Foundation so we can better assess the current situation:

Investor Pass (http://ipass.swarm.app/) - A tool that authenticates users and facilitates user qualification when onboarding to STO’s
https://github.com/swarmfund/swarm-ip-sdk - Private Repo - Created 13/May/2019
https://github.com/swarmfund/swarm-js-utils - Private Repo - Created 21/08/2019

Onboarding App / Earlybird (e.g. https://tradeassets.swarm.app/) - This tool allows users to authenticate and load their personal data from Investor Pass
https://github.com/swarmfund/swarm-ip-frontend - Private Repo - Created 15/Jan/2019
https://github.com/swarmfund/swarm-verification-sdk - Private Repo - Created 08/Aug/2019

IQ Manager (http://iq.swarm.app/) - This application manages information obtained from Investor Pass through the Onboarding App that is meant to be qualified by Qualification Providers. This application utilizes MAP certificates for its operation.
https://github.com/swarmfund/swarm-kyc-dashboard - Private Repo - Created 28/May/2019
https://github.com/swarmfund/swarm-kyc-app - Private Repo - Created 29/Mar/2019

MAP (https://marketaccessprotocol.docs.apiary.io/#) - The Market Access Protocol is a system that enables investor qualification compatibility across qualification providers and STO’s
https://github.com/swarmfund/JsonSchemas-Swarm - Private Repo - Created 31/Jan/2019
https://github.com/swarmfund/swarm-map-sdk - Public Repo - Created 19/Mar/2019
https://github.com/swarmfund/swarm-map-api - Private Repo - Created 04/Mar/2019

Swarm Centralized Fundraising Application with Copper integration (e.g. Dashboard application for https://onboarding.indx.swarm.fund/)
https://github.com/swarmfund/swarm-fundraising - Private Repo - Created 02/Apr/2019
https://github.com/swarmfund/swarm-fundraising-ui - Private Repo - Created 01/Apr/2019

Swarm Tokenization Self-serve app (https://swarm.app/)
https://github.com/swarmfund/tokenization-self-serve - Private Repo - Created 27/Aug/2019

Swarm Decentralized Fundraise Contract - SRC20 Token Contracts
https://github.com/swarmfund/swarm-compliant-contract - Public Repo - Created 16/Jul/2019

Swarm Masternodes (https://masternodes.swarm.fund/)
https://github.com/swarmfund/swarm-mn-agent - Private Repo - Created 10/Sep/2019
https://github.com/swarmfund/swarm-mn-api - Private Repo - Created 16/Jun/2019
https://github.com/swarmfund/swarm-masternode - Public Repo - Created 24/Jun/2019
https://github.com/swarmfund/swarm-mn-dashboard - Private Repo - Created 14/Jun/2019

Swarm Token Upgrade (https://etherscan.io/token/0x3505f494c3f0fed0b594e01fa41dd3967645ca39)
https://github.com/swarmfund/swarm-token - Private Repo - Created 27/Aug/2019


#20

The SNC is pretty clear about the purposes of the Swarm Network, the role of the Swarm Council (e.g. how the procedures are to establish it) and how decisions are made. Feel free to suggest new members or GAPs.


#21

Just to be clear. I have no problem with Swarm Capital being reimbursed for what it has spent. I just think that claiming to own the IP for a lot of products that were also paid by the Foundation is a bit of a stretch and it only hurts the network.
The Swarm network would be better off If anyone could build on top of these tools, and with 5MM SWM tokens in their possession, I don’t see how this would not greatly benefit Swarm Capital as well.