Grant of SWM tokens to Swarm Foundation for 2019H2 budget


#22

By now, it should be clear that 2.2M SWM of the comp is paid to core team members and not to Swarm Capital (Since Philipp and i are receiving 0 SWM), so the 5M SWM that gets mentioned repeatedly is clearly a misnomer.


#24

In this thread it seems that we have a bit of contradictory information about this, including the possibility that Swarm Capital is controlling private code repositories that were created before Swarm Capital existed. Can you confirm either that this is not the case or that something will happen in the future to mitigate this?

At this moment I think this element remains unclear to a lot of people (i.e. exactly who owns what). So would be nice to get to a general point of clarity and then figure out what makes the most sense re: next steps.

In general if there are private repositories that were created prior to the creation of Swarm Capital it seems obvious that they should belong to a Github organization that is controlled by the Swam Foundation and/or be open sourced so that there are no private repositories.

Is there anyone within the Swarm Foundation who has the ability to manage this?


#25

How did Swarm capital pay monthly for the expenses created in July, August, September since Swarm Capital was established only in October? (Public announcement of Swarm capital establishment was made on 10.10.2019)

How did Swarm Capital acquire all the SWM tokens which were used to pledge/pay for expenses created in those 6 months?


#26

LukaP: Swarm Capital was formed and established earlier before it was announced. It’s a private company and does not publicize information about transactions or business relations.


#27

When exactly was Swarm Capital established then?

I can’t wrap my head around this, how is it possible that Swarm Capital acquired 5million of SWM tokens which is like 5% of total supply without letting know the Swarm council? and why didn’t anyone tell that expenses werent paid on a month to month basis from Swarm treasury fund but that they were pledged by Swarm Capital?

All of a sudden the community was given an ultimatum. Pay the 5 million SWM ‘‘owing’’ to the Swarm Capital or ‘‘the developed components remain within SC’’. I don’t know its like enforcing something from the Swarm community which wasn’t aware that the developement was paid at that point by some third party (SC) and that the tech being build within the period from July-December was actually paid by SC and therfore SC owns all the tech build in this period unless 5million of SWM is transfered from the Swarm treasury to SC.

Last question: Why weren’t the expenses paid from the Swarm treasury on a month to month basis knowing that there was enough funds (SWM in treasury) to cover all the costs of the operation for the formentioned timespan.

Best regards,

Luka


#28

What jobs were done to justify 2.2m tokens? We want to evaluate whether that is a fair payment or not. I say payment in Swarm should be with Swarm tokens valued at ICO price, not at current price after the team sold and sold and crushed the prices so that they can now get millions of tokens and swing future gaps with it to the advantage of swarm capital.


#29
  • Will the foundation be required to pay for anything else regarding development or is the job done?

  • So that we can keep the remaining funds to actually last until prices are much higher?

  • What will be open sourced and by what date?


#30

There has been a lot of chatter about what would be done with the 5M tokens if released for compensation of past work. Swarm Capital is in it for the long-run and committed to the adoption of the Swarm Protocol. To underscore that statement it’s willing to voluntarily: Receive the tokens in an unadministered smart contract, which releases these tokens linearly over the course of the next 12 months. That way, the organization has not only taken on the risk of pre-funding development for the Swarm Network, but is also demonstrating the forward long-term commitment to Swarm Network and preserving the SWM token holders interests.

Further responses to questions raised:

  • Will the foundation be required to pay for anything else regarding development or is the job done?

    • See comments above for the developments that were accomplished thus far; just to reiterate, that with the outstanding release of the fundraising smart contracts an open full-stack of tokenization and fundraising can be operated on Swarm;
    • On the open infrastructure investor onboarding needs to be decided and operated by every issuer separately anyway
    • The core outstanding task on the protocol layer is where to go with MAP and how to decentralize its components on the Swarm Masternodes; so that is what the Swarm Network Members will have to prioritize and balance against when it’s needed
  • So that we can keep the remaining funds to actually last until prices are much higher?

    • There are no obligations to continue any of these payments by the Swarm Foundation.
    • When the components above are released into open source, there is no reason why the community could not decide to pace any further spend until later
  • What will be open sourced and by what date?

    • See response above;
      • 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
    • All the named components are ready to be released; only the fundraising smart contracts are in security audit, but we expect them to be ready in Jan’20
  • “What I’d like to know is what jobs were done to justify 2.2m tokens to team members?”

  • https://t.me/swarmfund/77901

    • Hear, hear…
  • Further questions around IP funded by Swarm Capital:

    • All the developments that had been made by MVP, Jiří Bláha, and Vadym Hrusha - even before Jul’19 - were paid for by Swarm Capital, partially via affiliated entities. The same applies to work done by Sam Stone, Sasha Lieders and Aaron Wood as contractors solely to Swarm Capital starting Jul’19
    • The list of components listed above are the ones that were done for Swarm Foundation and are the components in question to be released and accounted for within the submitted budget.
    • Any work done by core team members before Jul’19 on behalf of the Swarm Foundation are non-proprietary, as the organization has no mandate to hold IP, but open sources all it’s work, in line with its stipulations and purpose.
  • As far as the question “who made he decisions?” is concerned, the answer is Swarm Community… Community voted for the SF board and by extension the decisions taken by the board…

    • Please review the role of the Swarm Council in the https://docs.swarm.fund/SNC-2019.02.pdf 3 and some comments over here Election of Chris Eberle to the Swarm Council
    • There are no decisions that were made on behalf of the community. Swarm Capital stepped in, decided to further fund the development on it’s own dime, and is asking for a grant in exchange for the technology
    • if the Swarm Network Members don’t agree with that exchange of value, then it does nothing and the tokens (and tech) remain where it is; the members are free to decide on alternatives to pursue it’s goals
    • Anyone else can take a similar decision to approach the Network for a grant or alternatively develop and donate technology to achieve the purposes of the organization; yet, it’s all about who shows up and takes the risk; in this case Swarm Capital did and notably is offering to pass it on at cost with no mark-up; where are any other developers / organizations showing that kind of engagement?
  • When was Swarm Capital established?

    • The company was enter into the public registry in Liechtenstein on 03/29/2019 under FL-0002.608.155-1; anyone can look it up - it’s public record

#31
  • Why weren’t the expenses for the past 6 months paid from the Swarm treasury on a month to month basis knowing that there was enough funds (SWM in treasury) to cover all the costs of the operation for the formentioned timespan?

  • Lets say now Swarm fundation transfers those 5M tokens to the SC for the past expenses. What is the plan for the next half year regarding funding? From where will the expenses get paid and who is expected to get paid in this period? Maybe some kind of half year expected funding plan is needed here.


#33

Why weren’t the expenses for the past 6 months paid from the Swarm treasury on a month to month basis knowing that there was enough funds (SWM in treasury) to cover all the costs of the operation for the aforementioned timespan?

  • Swarm Capital made the decision to step in and take over development for the Swarm Foundation, as 1/ it had a functioning fiat operation (necessary to pay bills and operate), 2/ was developing add-on components anyway and 3/ the token price was negatively impacted in the market and an ongoing payment by the Foundation would have strained the treasury even further.
  • All of the above was discussed with the Council and the group came to a decision that the budget approval vote (the one we’re having now) would be delayed until later when more product was ready to be released, with the idea that usage of the tokenization app could positively influence the price of SWM, and the Foundation would repay Swarm Capital using far fewer tokens. As of today, this didn’t pan out.
  • This was discussed amongst the Council in detail. It was felt that putting a forward budget vote out at that time would have been soundly rejected since it would have depleted the treasury to almost nothing. A rejected ballot only based on hypotheses could have put the project at risk of not getting crucial infrastructure developed further namely next gen of SRC20, asset tokenization, tokenization app, fundraising SCs.
  • The Council unanimously agreed to delaying the vote and have Swarm Capital step-in to paying for dev in the meantime. It seemed the right thing to do and even in hindsight it is debatable whether Members would approved using more than half the Foundation budget as it was at the time, with nothing having been delivered as yet. So, Swarm Capital paid from its own funds, making sure to complete these important product extensions.

Lets say now Swarm foundation transfers those 5M tokens to the SC for the past expenses. What is the plan for the next half year regarding funding? From where will the expenses get paid and who is expected to get paid in this period? Maybe some kind of half year expected funding plan is needed here.

  • You could argue that we are entering a phase where 90%+ of the protocol has been created and will be released. Creating auxiliary modules that bridge into other systems and create premium experiences for issuers and investors is not within the core purpose of the protocol layer and should be done by other organization. Like mentioned before a core question is about when the time has come to extend the MAP within the decentralized infrastructure. That will require some work, but not an excessive amount and the question is, when the right time has come for doing that.
  • So overall, the argument could be to enter a phase of adoption, where it’s more about catching up issuers, showing the use of the infrastructure and digital securities in general, and then extend the network in the direction where there are gaps for further/scaled adoption. In the process of those discoveries, dev (and expenditures) could be paused.

#34

If, the 5 million SWM are voted to be paid by the network, can we have clad iron confirmation that the 5 million SWM tokens are payment in full settlement.

And after payment of the tokens whilst they are locked up, if, they go down in USD value that no more than the original 5 million SWM will be required/requested.

Can you confirm this for my/our peace of mind.

Thank you.

Steve


#35

Would swarm capital be willing to revoke the gab from a yes or no to allow alternative options for repayment of their costs realised to date?

The below options are possible alternative means to pay for the works complete, whilst leaving equity for the foundation Treasury, the networks future growth and development requirements. They are by no means the only alternative options but examples to see if there is movement, or an alternative to this issue as opposed to what’s currently offered.

it could be agreed that swarm capital has invested resources to the value of $241k which is owed by the swarm foundation. This has to be paid back in swm or cash by the swarm foundation after a fixed period (18 months). There could be an option that the value of $241k can be used as a negotiation tool / cost offset when Swarm Capital are negotiating or trying to onboard possible issuers. I don’t have specific details for this Offset/negotiation element but would be interested if swarm capital could propose areas where this could possibly be achievable and allow them to recoup their costs from future issuers as opposed to the foundation ( maybe give better deals to the issuers who are looking for exceptional staking deals). I would not be against swarm capital receiving a profit on top of the costs spent to cover the deferred payment.
The IP could remain with swarm capital until the value owed has been recouped via payment or some form of onboarding clawback / offset. Swarm capital would allow the foundation to develop on the latest swarm capital IP on the basis of the 18 months payback period and in the good faith the values owed would be paid back.
The deferred payment would be deferred for a maximum of 18 months and it would be the risk of swarm foundation based on the quantity of swarm (currently 5million)if the value of swm went up or down. The tokens can be locked in a audited smart contract for security. If the swm value goes down then swarm capital would have the right to $241k at the swm value or cash value from the foundation in 18 months, if swarm capital have not been able to recoup that usd value via onboarding issuers cost savings or an alternative clawback system in that period.
I believe this Or something similar would incentivise all parties to grow the network and therefore the price of the utility token, whilst not depleting the foundations reserves at the least commercially advantageous time.

  1. If the payment of these works is a urgent financial requirement/concern for swarm capital then would swarm capital be open to the option of offering equity in SC via a sto on the swarm platform to current token holders and or others, as possible part payment of the $241k and to raise further funding?

Currently there are 2 gabs being proposed which have severe impact as far as I can see, one which sells the foundations holdings at the least commercially advantageous time without the community being aware of its agreement ( I accept that the council was aware of this since June but failed to notify anyone as they felt it would be rejected) and the staking gab which possibly reduces the token holders ability to accrue value as was previously approved via gab.
I appreciate this is a dynamic and constantly changing landscape but hopefully there can be alternatives proposed and discussed to ensure a longer term view for all parties involved, as opposed to a Purely yes or no question with 7 days notice.
I look forward to your response.


#36

The team compensation was based on USD and converted into SWM, based on a 30 day avg price, on a montly basis. That was the chosen way in order to maintain a team on a permanent basis. If the ICO price was used as a basis for compensation, it is unlikely that team members would have stayed and worked on the project.


#37

Here’s a variation of a proposal by Swarm Capital to voluntarily do the following:

  • Core Team comp (SWM 2,247,310):
    • Swarm Capital would receive the tokens in an unadministered smart contract created by the Swarm Council, which releases these tokens linearly over the course of the next 12 months.
  • Vendor expenses (SWM 2,848,596):
    • Swarm Capital receives credits against issuance stakes in the same amount; the token pool is governed and staked on Swarm Capital behalf by the Swarm Council
    • When issuance stakes are released (after burning of the underlying security tokens), Swarm Capital receives such tokens; but, the minimum staking period is 12 months from when each issuance stake had been staked
    • This mechanic creates an incentive for Swarm Capital to continue to promote use of the Swarm network and displays its commitment to the SWM staking model.

Other responses to listed questions:

  • If, the 5 million SWM are voted to be paid by the network, can we have clad iron confirmation that the 5 million SWM tokens are payment in full settlement. And after payment of the tokens whilst they are locked up, if, they go down in USD value that no more than the original 5 million SWM will be required/requested. Can you confirm this for my/our peace of mind.

    • Yes, the agreement between Swarm Foundation and Swarm Capital will be shared with the Swarm Council before the release of the tokens
  • Also, if the ballot results in a No and the IP for the code remains at Swarm Capital, can it be bought back later? Lets say in some possible future when the token price is 10 times as high as currently, can the code be open-sourced for 500k instead of 5M tokens then?

    • This is a hypothetical question ; see proposal above
  • Also, there’s the narrative of SC taking risk by developing the code and now asking for compensation. The chance of token price further declining in Q3 and Q4 to be at a new low now certainly was not 50:50. Why the wait until now to ask for compensation with a large quantity of low value tokens instead of asking upfront when token value was much higher?

    • Looking at the schedule of payments in the spreadsheet, you can see that the amounts have been calculated using the price of SWM as it was each month. This is therefore taking into account historical prices and not using the current price as the basis. This means that the amount requested in the grant now is exactly as if it would have been requested monthly.
  • If SF voted no to paying SC and not have access to the private entities IP would that mean SF would still have the right to decide on the rate card and what staking/lockup models were used by any party who built on top of the network or can SC or any other entity make amendments to suit their issuers or business model?

    • Please review the SNC at https://docs.swarm.fund/SNC-2019.02.pdf
    • The Swarm Network has the full decision making power to determine its own network policies, etc via the GAP/GAB process from its Members.
    • Swarm Capital is merely a part of the Swarm Network and voices its opinion through voting in the same way as any other Member. Swarm Capital can not unilaterally set policy for the Network.
  • @RudoProphet: “Would swarm capital be willing to revoke the gab from a yes or no to allow alternative options for repayment of their costs realised to date? The below options are possible alternative (…)”

    • We appreciate the thinking here
    • Please review the proposal made above, as we think it aligns nicely with elements of the alternatives you’ve laid out in your comment.

#38

This is confusing. The IP belongs to Swarm Foundation, right? How in the world did all the hard work the team did become private IP of Swarm Capital? I’m confused because I feel this ballot is based on incorrect facts that IP doesn’t belong to Swarm Foundation already. Can someone clarify just this point?


#39

@jazzwall please review the responses in this thread above closely. We are not talking about the open source IP that was developed in the past and that you particularly are familiar with.

This ballot only concerns those developments for the Swarm protocol layer that Swarm Capital has been funding and where it is asking for compensation for for the time frame since Jul’19. Subsequently, it is to be to then open source by the Swarm Foundation.

Everything else before then is already open source. Whereas, as pointed out, there may be gaps in proper open source declarations that need to be fixed.


#40

You have not answered my very IMPORTANT question directly. I/We want a YES full stop.
Unless this is given for the avoidance of any doubt, then I can not see how ANYONE will vote this payment through because it is not 100% certian that if the value of SWM token falls during the lock up period Swarm Capital will not ask for more than 5 million SWM to cover the cost in the fall in dollar value of SWM.


#41

We must be sure this is a clear YES answer before the end of the vote. Not have the vote and then the paperwork will be put to the foundation before the release of the funds because we could be held to ransom AGAIN. We are Sorry, but we are looking for a simple YES. to this question without anything tagged along after a comma. Absolute clarity must be given here.


#42

Yes.

(on behalf of SC)


#43

Thanks Philipp. Much appreciated.