I want to congratulate everyone in the community, but especially he Celeste swarm, on a smooth deployment of Celeste and upgrade of the Honey contracts over the weekend. As a bonus, this upgrade also included the new Dynamic Supply policy that caps yearly inflation at 10% and automatically burns Honey when the common pool balance exceed 30% of the supply.
This is a huge milestone for the 1Hive community, and addresses one of deepest challenges facing tokenized communities, the balance of power between capital and people.
When governance power is determined purely by capital, you get centralized decision making and a rich get richer effect. People who are not whales, are poorly represented in governance decisions, and you have no way to hold stakeholders accountable to the desires of the broader community or the past expectations they have bought into.
On the flip side, attracting capital is critical to the success and sustainability of tokenized communities, and decisions backed by “skin in the game” are essential to ensure that those who don’t have any interest in the success of a community cannot unduly influence how resources are allocated and what policies are enacted.
With Celeste we can balance these opposing forces, and create a more effective and aligned community.
Celeste is exciting because it makes 1Hive’s governance process both more robust, more legitimate, and more inclusive.
That alone won’t immediately result an influx of revenue to the common pool. Instead, it will amplify our existing efforts, and open new possibilities, that will enable the 1Hive ecosystem and the Honey economy to grow in new ways.
We can reward participation in Celeste by funding the reward module using conviction voting. I plan to create the first such proposal later this week, and this will create an incentive for people to stake Honey and actively contribute to the decentralization and security of the 1Hive community and its resource allocation process.
Unlike other forms of staking rewards, due to the limits an individual can stake, this will make Honey more valuable to individuals in the community that have less Honey relative to those who have more than the maximum they can stake (~30 HNY). Overtime this will result in the distribution of Honey becoming less concentrated. In contrast to all other stake based protocols, where the network stake tends to accumulate and centralize over time.
One simple way to understand importantance of this effect, is if you put yourself in the shoes of a new bee coming into the community, are you more likely to contribute if you know that you are contributing to a system that largely is controlled by and benefits existing whales, or if the system is designed to distribute and decentralize stake in the community more broadly over time?
Its my belief that the benefits (security, decentralization, legitimacy) of Celeste to the 1Hive community are significant enough that it would be appropriate to continuously provide staking rewards from the Common Pool, however, that may not be necessary as the protocol matures. We can get the same effect on distribution of Honey by supporting and investing in Celeste integrations in order to grow the volume of disputes handled by the protocol. When disputes do occur, drafted keepers get paid in Honey for their services, this revenue goes directly to participants. Therefore, as we build confidence in Celeste as a subjective oracle, and the community builds and attracts additional integrations, we can expect the volume of disputes, and eventually become significant and consistent enough that staking rewards from the 1Hive common pool can be decreased or eliminated entirely.
Currently the only live integration is the 1Hive DAO itself, and while this will likely result in some disputes, it likely won’t result in a significant quantity by itself. However, there are a broad range of possibilities for Celeste integrations, some of which are already actively being developed.
The first major integration we have planned is to extend the 1Hive.org interface to support the creation of conviction-based DAOs, either by issuing a new token or by bringing and existing ERC20 token and staking it.
Gardens is exciting because it will allow other communities to leverage some Celeste and Conviction Voting in the context of their communities, and the ability to launch tokenized communities, or attract more ERC-20 tokens from Ethereum to xDai will also benefit Honeyswap adoption.
On a similar note, the commons swarm has been working on launching the Token Engineering Commons, as well as making those same tools available for other communities, and they intend to leverage Celeste in their implementation as well, offering another flavor of a conviction voting DAO for users to choose from.
Another Celeste integrated project that is actively being worked on already is Quests. This has been in development for a few months, though I expect progress to accelerate now that Celeste has actually launched.
The idea of Quests is to provide a flexible mechanism to create flexible on-chain escrow contracts. Each quest will have three distinct roles:
- Creators - Write the specification in English for how the quest can be achieved. A portion of the funds released are sent to the creator of the Quest, incentivizing people to create useful and compelling quests that get funded and completed successfully.
- Patrons - Provide funding for Quests in order to attract champions to complete them, the Patron role will often be a DAO that funds the quest via a proposal.
- Champions - Browse and complete quests in exchange for funding. Champions can be individuals or teams.
When a champion completes a quest or quest milestone they submit a withdrawal request along with proof of completion, if there is a dispute about whether the champion successfully completed the quest as specified, the withdraw request can be disputed and Celeste can be invoked.
Quests is particularly exciting because it will help make the proposal process more accessible for individuals who are not developers, by allowing them to participate as quest creators, while at the same time improving the accountability of the proposal process and making it easier to take risks on new contributors by putting funds in escrow until milestones are reached.
One of the most useful primitives that requires a subjective oracle is a canonical set of objects or items. The Canon project, which is still in early concept stages, but is based on this idea and will leverage Celeste to create canonical sets of NFTs.
More broadly canonical sets can be used to create registries for a broad range of applications, for example the token list used by default in honeyswap, or the communities exposed by default in the gardens frontend, or the valid items in a metaverse game like beezu.
Celeste opens a ton of new use cases and possibilities for applications that could benefit from a subjective oracle, and Honey holders benefit from the broad adoption of the Celeste protocol. Therefore it makes a ton of sense for developers who are interested in building integrations with celeste to seek funding from the 1Hive common pool.