[DRAFT] Fueling Stacks Builders & Growth, Meet SIP-031

[bogachevanton]

Hello everyone,

I initially intended to remain uninvolved, but I felt compelled to share my thoughts on this SIP. The document contains a substantial amount of text, which could have been beneficial had it not been lacking in substantive facts and conclusions.

No one would deny that any blockchain network is, at its core, a business. Even if decision-making is considered decentralized through the SIP voting process, there are still distinct structures within the hierarchy responsible for specific actions. Given that we operate in a business environment, it would be prudent to incorporate risk planning. We should proactively assess both current and potential risks.

Has a comprehensive Risk Management process been conducted for the launches of Stacks 1.0, Stacks 2.0, the Nakamoto Upgrade, and the implementation of sBTC? Is such an assessment being carried out now? Have the following steps been taken:

• Risk Identification
• Risk Assessment
• Probability Analysis
• Impact Evaluation

Have the primary risks been evaluated, including:

• Operational Risk
• Financial Risk
• Liquidity Risk
• Reputational Risk
• Compliance Risk

Has a risk monitoring system been established?
These questions also apply to the potential creation of the proposed fund.

Additionally, SIP-031 outlines only the positive effects of the proposed changes—where is the analysis of potential drawbacks? The third-party tokenomics report does not suffice. While the statistical data may suggest an optimistic outlook over the next five years (which I doubt), the report itself is highly technical. An average Stacks user without a financial background would struggle to interpret the graphs and methodologies, even with the aid of AI.

Finally, I have several questions regarding past events:

• I distinctly recall August 2022, when the grants program was discontinued, and a forum post (grants-and-residence-program-changes-august-2022/13588) announced the end of funding. That was nearly three years ago. Why were no alternative measures taken during this period to replenish the fund? Why has the funding shortfall only now become a pressing issue?
• Why is the SIP draft being shaped primarily by application developers (3 out of 5 authors) rather than by the Stacks Foundation, Hiro, or Trust Machines collectively?
• Since 2021, numerous projects have received funding from the Stacks Foundation (to my knowledge). What is their current status? How much investment did they receive, and what were their outcomes—both technically (product development, user adoption) and financially (net profit, debt)? If specifics are needed, I can explicitly name projects such as:
  • CityCoins
  • Mechanism
  • Console
  • Stacks Foundation Grants Program
  • stacking.club
  • and others.
• How has the impact of halvings been accounted for? From 2021 onward, there has been no halving, yet two are scheduled in the next three years (2026 and 2028) (aligning-with-bitcoin-halving-and-incentives-after-nakamoto/17668).

[mark07]

If you read the proposal carefully, one of parts for the funding will be potentially on Dapp and you are one of third party dapp founders.
So basically the inflated stacks, which is stacks investor’s funding, will potentially flow into some of the existing DApps

[LNow]

I would also strongly recommend to ditch official, VC-pitch-like language and formulate this SIP using plain and simple words:

Key ecosystem entity such as Stacks Foundation, Hiro etc. combined together don’t have enough financial resources to support Stacks ecosystem growth and marketing to the extent that other ecosystems does. Since the inception we managed to raise $XX out of which X% has been spent on …, remaining X% won’t allow us to grow Stacks ecosystem the way we predicted, nor the way we would like it.

On top of that due to legal implications caused by SEC-qualified sale, and funds fragmentation (split between multiple entities each with their own legal form and duties) we are unable to engage in certain activities such as: …

With this in mind, we propose the following:

1. Create new legal entity that will be responsible for …
2. Emit XXX new STX tokens that will fund the account of this entity and will be used for …

Keep it simple

[reubs]

I have read carefully, and just letting you know that my opinion is not influenced by the dangling carrot whatsoever.

And in all honesty, for someone who’s built one of the most visited apps as per daily visitors over the past 18 months- surely I should be supported? Regardless of that- this SIP puts stacks in a spot to win and gives them the firepower to do so.

Just my opinion and I welcome everyone’s opinion on this.

[diegomey.btc]

+1

[diegomey.btc]

big yes to SIP-031 — this is the kind of move that sets Stacks up for real traction.

as a builder, this hits the right notes: funding, coordination, support for DeFi users & apps.
community gets sustainability. users get better UX & more liquidity. builders get resources + security.

let’s build something that lasts, we need to stay competitive.

that said — clear governance + transparency on how the endowment runs is crucial.

we’re here for the long game, but only if it’s done right.

The value accrued over time by delivering on these goals and milestones will be 10x the “cost” of raising this endowment fund. But we have to keep everyone accountable.

One idea that came to mind, that would help us onboard more users, maybe via community quests (educational) and mission-based is to dedicate a small % of these funds to a “community airdrop” - it has the potential to attract new users and increase adoption.

[onceinalifetime]

stablecoin-backed sBTC is a step forward, but it’s not enough! Stacks needs USDT & USDC as native assets to unlock true DeFi potential and drive adoption. Let’s bring these stablecoins on-chain!

[Resh]

I believe this is already in progress and leadership/entities have this as a priority. This however is separate topic to this SIP.

[Resh]

Yesterday, MrWAGMI held an AMA spaces with @alexlmiller and there was quite a bit of context added to address many of the questions that the community has or had. I found it to be very helpful and frankly insightful especially around the topic of governance. Only part that I personally would like to understand and appreciate is on the tokenomics maintenance level. I personally appreciate the openness, transparency and the straight talk.

I have taken the opportunity to draft the key components he addressed (apologies if some of the information here seem redundant, including them for accuracy purpose and for the benefit of others who did not get to attend the spaces or have not listened to the recording):

What SIP031 Is About

SIP031 proposes creating a unified endowment structure to replace the current scattered treasury system across multiple organizations (Hero, Stacks Foundation, Bitcoin Frontier Fund, etc.). The proposal aims to streamline ecosystem operations and provide sufficient capital to compete with other top blockchain ecosystems.

Governance Structure

• 9-member treasury committee to oversee the endowment
• Professional staff hired to handle day-to-day operations
• Appointments committee will have 60 days to solicit community input and nominate 6 of the 9 committee members
• Transparent reporting with annual deep reporting (similar to IRS Form 990)
• Published mint addresses for community tracking of fund flows

Fund Management

The endowment will be managed by:

• Professional investment team including Chief Investment Officer
• Executive director and specialized staff
• Diversified portfolio across STX, Bitcoin, fiat, and other investments
• Market maker partnerships to improve liquidity and potentially grow treasury

Fund Amount and Structure

Total: ~525 million STX tokens

• 25M STX: Community/entity contributions
• 100M STX: Immediate working capital (minted and unlocked)
• 100M STX: Private sales with 12-36 month lockups to investors
• 300M STX: Emitted over 5 years for operations (may be burned if unused)

Why One Large Raise vs. Phased Approach

Alex explained the rationale against smaller, incremental raises:

Economic Research Basis:

• Sufficient scale needed: Economic research showed this amount is required to create something sustainable and competitive across different market scenarios
• Economies of scale: Larger treasury enables better investment management and growth potential

Predictability Benefits:

• Community confidence: Better to ask for sufficient funds upfront and burn excess than repeatedly return asking for more
• Avoid fundraising fatigue: “I absolutely don’t want to be in that place” of coming back for additional funds
• Clear expectations: People know what they’re committing to rather than facing repeated dilution events

Two Likely Outcomes:

• Success scenario: Treasury grows significantly, making the initial dilution irrelevant
• Failure scenario: Ecosystem struggles and no one would approve additional funding anyway
• No middle ground: Unlikely to be in position where partial success requires more funding

Strategic Reasoning:

• Compete effectively: Need sufficient resources to compete with well-funded ecosystems rather than “take half measures”
• One-time event: This is designed to be the final major fundraising rather than establishing a pattern

Tokenomics and Supply Mechanics

Inflation Considerations:

• SIP031 would increase STX inflation but Stacks would maintain a lower inflation rate than competitors (Avalanche hit 30% early on, Solana also has high rates)
• Represents a one-time adjustment rather than ongoing inflationary mechanism
• “Smaller piece of bigger pie” philosophy - accepting dilution for massive ecosystem growth

Token Distribution:

• 200M minted immediately (100M working capital + 100M for private sales with lockups)
• No immediate market flooding due to working capital use and investor lockup periods
• Private sale restrictions: International or US accredited investors only

Investor Lockup Periods:

• 12-36 month linear vesting for institutional investors purchasing the 100M locked tokens
• Potentially longer lockups: Alex suggested some deals could extend beyond 36 months
• Staggered releases: Linear vesting prevents large token dumps at unlock dates
• Why lockups: Investors prefer buying locked tokens over unemitted tokens for certainty

Future Value Accrual Mechanisms:

• Dual staking: Bitcoin holders can stake and earn Bitcoin yield while requiring STX holdings
• Fee abstraction: Users pay gas in SBTC, converted to STX behind scenes, creating protocol revenue
• Potential buybacks: Protocol revenue could eventually repurchase newly minted tokens

Treasury Diversification Strategy

Current Problem with Scattered Treasuries

• Inefficient scale: Multiple small treasuries (5-10M tokens each) across different organizations cannot be managed as effectively
• Limited professional management: Each organization’s CFO has to manage their portion rather than having dedicated investment expertise
• No economies of scale: Cannot access sophisticated investment strategies available to larger endowments
• Missed growth opportunities: Haven’t been able to grow treasuries like Harvard and other major endowments that make money off their funds annually

Diversification Asset Classes

Multi-Asset Portfolio:

• STX tokens: Core holding but not the only asset
• Bitcoin (BTC): Strategic allocation given ecosystem’s Bitcoin focus
• Fiat currencies: For operational expenses and stability during market downturns
• Other investments: Unspecified but implied to include traditional and crypto assets

Professional Investment Management

Key Roles:

• Chief Investment Officer: Dedicated professional to manage diversification strategy
• Experienced investment team: Able to make sophisticated allocation decisions
• Market maker partnerships: Create additional revenue streams through liquidity provision

Strategic Benefits of Diversification

Risk Management:

• Bear market protection: Won’t be forced to sell STX at market bottoms for operational needs
• Operational stability: Can pay expenses in cash rather than dumping tokens during downturns
• Currency flexibility: Can make grants and payments in cash instead of only STX tokens

Revenue Generation:

• Market maker operations: “By buying low and selling a little bit as high, it doesn’t affect the market at all but builds up treasury value over time little by little”
• Professional management: Access to investment strategies that grow the treasury while funding operations
• Economies of scale: Larger unified treasury can access investment opportunities unavailable to smaller pools

Implementation Strategy

Initial Funding:

• OTC private sales: Convert 100M locked STX to fiat/other assets through institutional sales
• Immediate diversification: Don’t hold all assets in STX from day one
• Staggered conversion: Systematic approach to building diversified portfolio

Ongoing Management

Professional Staffing:

• Day-to-day staff of the endowment who focus on conceiving and executing most programs
• Treasury committee oversight: 9-member committee appointed by community to oversee staff decisions
• Rotating committee terms: Committee members serve rotating terms and can be changed out if not performing
• Similar to other foundations: Operates like other crypto foundations and nonprofits with board oversight of professional staff

Decision-Making Process:

• Staff execution: Professional staff make most day-to-day allocation and program decisions
• Committee approval: Treasury committee oversees and approves major staff decisions and hiring
• Community input: Committee members responsible for regularly talking to community members to get perspective on priorities
• Annual planning: Staff develops programs and plans subject to committee oversight

Operational Efficiency:

• No community vote required: Individual allocations don’t go to community vote (would take “2-3 months of work and 6 figures worth of staff time” per SIP vote)
• Professional standards: Able to maintain confidentiality for business deals (publishing every contract would prevent partners from signing)
• Streamlined operations: Eliminates current inefficiencies of coordinating across 5+ different organizations

Active rebalancing: Professional team can adjust allocations based on market conditions Strategic timing: Sell assets strategically rather than being forced by operational needs Growth focus: Aim to grow treasury value over time while funding ecosystem development

Transparency and Accountability:

• Annual reporting: Deep, comprehensive annual reports similar to IRS Form 990
• Impact reporting: Reports must show not just spending but impact and future plans
• Published addresses: All mint addresses will be published for community tracking
• Community recourse: Ultimate community control through ability to change committee or pass new SIPs if needed

Why Not More Frequent Reporting:

• Resource intensive: Hero spent “about a million dollars and several months of work almost full time from two employees” for SEC annual reports
• Quarterly would be very hard: Monthly reporting would be impractical due to resource requirements
• Balance needed: Between transparency and operational efficiency

Key Governance Principle:

• Separation of concerns: “The decentralization of governance is different than the efficiency of daily operations” - community maintains control of overall direction while professional staff handles efficient execution

Fund Usage

Primary allocations:

• Core development: Expanding to 20+ (eventually 50) core developers
• Security infrastructure: Multi-million dollar security programs, bug bounties
• DeFi primitives: Native stablecoin issuance, bridging infrastructure
• Business development: 7-figure integration deals with exchanges, custodians, bridges
• Liquidity deployments: Initial DeFi liquidity (small portion of total)
• Marketing and ecosystem growth: Supporting the momentum needed for adoption

SBTC Integration

• SBTC development and infrastructure is part of the roadmap this funding enables
• The endowment provides resources to scale SBTC beyond current 5,000 BTC cap
• Supports development of fee abstraction (paying gas with SBTC)
• Enables dual staking mechanism for Bitcoin holders to earn Bitcoin yield

Potential Risks

Alex acknowledged several risks:

• Inflation concerns: Adding to STX supply, though competitive with other chains
• Execution risk: Need to hire quality professionals and make good investments
• Market timing: Bear market could affect treasury value
• Community concerns: About centralization vs. operational efficiency
• Regulatory constraints: Limited to accredited/international investors for private sales

Fund Deployment Strategy

• Immediate deployment: Working capital available day one after implementation
• Phased approach: Private sales to institutional investors with lockups
• Market validation: Institutional investment signals confidence to retail investors
• No direct protocol token purchases: Focused on infrastructure, not bailing out individual projects

Competitive Context

MrWAGMI/Alex emphasized this follows proven patterns:

• Avalanche raised $230M led by Polychain/Three Arrows using similar mechanisms
• Solana raised $300M from a16z and others
• Other chains had advantage of launching with larger treasuries in clearer regulatory environment
• Stacks chose conservative SEC-qualified route which limited initial treasury size

Setting New Precedent:

• Stacks as regulatory pioneer: “We were very early on even how we started… we applied for Reg-A” and followed SEC-qualified approach when others operated in regulatory gray areas
• First of its kind: This type of treasury raise through SIP process is unprecedented - “we’re creating precedent by doing a raise like this”
• Regulatory compliance: Other chains raised funds pre-launch or in less regulated environments, while Stacks is navigating post-launch fundraising within regulatory framework
• Community governance innovation: Using decentralized governance (SIP process) for major fundraising decisions represents new model for established protocols

Operational Costs

While specific line items weren’t detailed, Alex mentioned:

• 7-figure annual costs for major integrations and partnerships
• Million+ dollar security budgets (already implemented after previous incidents)
• Comparable to top ecosystems that employ much larger core development teams
• Market maker operations as ongoing cost with potential treasury growth upside

The overarching theme was that Stacks needs this capital injection to compete with newer chains that had the advantage of launching with larger treasuries in a clearer regulatory environment, while the tokenomics represent a calculated trade-off of short-term dilution for long-term ecosystem dominance in Bitcoin DeFi. The treasury diversification strategy represents a shift from reactive treasury management to proactive wealth management, positioning Stacks to compete with better-capitalized blockchain ecosystems.

[longstreet.btc]

It would help to provide more specificity where possible to make this feel less abstract. I’m not sure if these ideas overlap with existing comments, but I wanted to share a few suggestions to strengthen the proposal and provide examples.

It would be valuable to outline a framework, or roadmap for how independent builders, small teams, and community groups can access various levels of grants and support. This framework could include:

• Tiered grant opportunities (from microgrants to larger project funding)
• Clear criteria for evaluation based on impact and scalability
• Transparent guidelines for reporting and accountability to ensure trust and effectiveness

Providing this structure would make the process of accessing funding more transparent and inclusive, encouraging a wider range of contributors to participate.

This framework can build on programs that have already demonstrated success. Referencing these specific initiatives would provide concrete examples and build confidence. These relatively small-scale efforts already have delivered meaningful results and could become significantly more impactful with additional funding. Examples include:

• DeGrants
• BUIDL Battles
• Stacks Ascent
• Content Creators Guild
• Others?

Referencing these examples makes the abstract concrete and shows how the SIP’s funding can drive growth, benefit the ecosystem, and attract new builders and community members.

It would also be helpful for the SIP to specify what additional resources the new entity can provide to support broader ecosystem engagement and growth. This might include:

• Access to marketing expertise, co-marketing opportunities, and promotional support
• Sponsored technical audits or security reviews for promising projects
• Mentorship, networking opportunities, or business development assistance to help builders succeed

These additions would position the SIP as a comprehensive support system for the ecosystem.

[franco_79001]

HI, I warned everyone this would happen due to the very nature of unchecked democracy, or what here is called “governance”.

@franco_79001

To preserve the integrity of STX, we must establish a constitutional framework that explicitly prohibits governance from altering monetary policy. This constitution would serve as a bulwark against the tyranny of the majority, ensuring that the foundational economic parameters remain sacrosanct and beyond the reach of collective interference.

You can check the discussion here

Diluting the individual STX holder in the name of “growth” is a collectivist agenda. This will scare away bitcoin OG’s who will convert their STX to Bitcoin where they can avoid dilution as bitcoin does have an immutable monetary policy and bitcoin doesn’t have a democratic system in which the rich lead the governance decisions of the network, not even miners, as seen in the big block civil war, nodes were the ones that lead, not miners.

As a Bitcoin related project, it should have the same principles as bitcoin, is already a crime the STX ICO had a pre-mine on top of the 80-90Million $ they gathered, now turning on the money printer is a second crime, as if it was not enough already.

[PauCity]

The Nomiks analysis referenced in this SIP concludes the endowment will be drained much sooner than 5 years if STX price is not sustained above $1.00.

While liquidity may prop up a market in the short term (1 year or less), in the long term it will devalue all compounded by the loss of trust.

[franco_79001]

Guys, it is a tax and a subsidy, but there are ways to make it more freedom-compatible, or at least the STX holder could have more options.

Imagine that the individual STX holder had the power to choose what he wanted to do with their share of the subsidy.

The subsidy arrives in a treasury and the individual holder can use his subsidy share to fund whatever he wants, if he wants to fund 100% of his share to marketing alone, he should be able to decide, or 50% marketing and 50% development, or if he doesn’t want to fund anything, he should be able
to have the option to burn his share and that way it won’t reach the markets and dilute us all. Also, having this share burn is a safeguard against misuse of the funds, at least he can opt out of funding by burning his share.

This model gives more choices to the individual STX holder but only AFTER he is taxed, still is a TAX but this way is a little better for him, having choices vs not having a choice.

Honestly, I don’t want this tax, please reconsider your values as a project and I already unstacked all my holdings in case this goes through, I was banned from telegram, something tells me this is already decided.

[enjoywithouthey]

Risk Assessment is a major aspect missing in the SIP.

[stacksmaxi]

I strongly DISAGREE with the proposal and will be voting NO. While I appreciate the effort put into the documentation, this represents a fundamental misallocation of resources that fails to address Stacks’ core infrastructure deficiencies while asking existing holders to accept 30%+ dilution over five years.

Point-by-Point Rebuttal to SIP-031

1. Inflation and Token Economics - A Hidden Tax on Holders

Proposal Claims: Increase inflation from 3.52% to 5.75% average, staying “below other ecosystems”
Reality Check:

• This represents a 63% increase in inflation rate
• Total new emissions of 525M STX = ~30% dilution of current supply
• The “working capital” 100M STX mint is immediately dilutive with no market restrictions
• Comparisons to other ecosystems ignore that those projects often have revenue-generating mechanisms Stacks lacks

Fundamental Flaw: You cannot inflate your way to prosperity. This massive dilution will likely suppress STX price appreciation, making the “growth” funding worth less over time.

2. Lack of Accountability for Past Performance

Critical Missing Element: The proposal completely ignores the track record of existing entities:

• sBTC delays: Originally promised years ago, still not fully functional
• Nakamoto upgrade delays: Multiple postponements with shifting timelines
• Limited ecosystem growth: After nearly a decade, Stacks remains outside top ecosystems despite significant prior funding
• No bridges: As you correctly note, there are virtually no quality bridges to move assets to Stacks
• Oracle absence: No reliable oracle infrastructure for any assets except STX

The Ask: Now they want 10x more funding without demonstrating competence with existing resources or addressing why previous efforts failed.

3. Infrastructure Deficiencies Ignored

What’s Missing from This “Growth” Plan:

• Bridge Infrastructure: How can you build an “economic hub” with no trade routes to other chains? The proposal mentions “integration costs for bridges” but provides no concrete plan
• Oracle Networks: Complex DeFi primitives are impossible without reliable price feeds. The proposal ignores this fundamental requirement
• Cross-chain Interoperability: After a decade, Stacks remains largely isolated from the broader crypto ecosystem

Backward Priorities: The proposal focuses on marketing and incentives before building the basic infrastructure needed for a functioning economy.

4. Operational Structure - Adding Bureaucracy, Not Efficiency

Proposed Structure Problems:

• Three separate entities: Stacks Endowment, Operational Entity, and Stacks Foundation
• Nine-member Treasury Committee: More bureaucracy, not streamlined decision-making
• Multiple approval layers: Will slow execution, not accelerate it

Your Point Validated: Creating another management entity will increase inefficiency, not reduce it. The proposal adds organizational complexity while claiming to solve coordination problems.

5. Questionable Economic Analysis

Third-Party Report Issues:

• Analysis based on “existing and historic STX performance” - ignoring fundamental infrastructure gaps
• Conservative assumptions that don’t account for continued execution failures
• No modeling of how 30% dilution affects token value
• Comparison metrics cherry-pick successful examples while ignoring failures

6. Misaligned Incentives and Governance

Treasury Committee Structure:

• Appointed positions: Initial committee appointed by temporary body, not elected
• Self-perpetuating: Committee members choose replacements
• Conflicts of Interest: CIO gets automatic committee seat
• No STX voting: Endowment pledges not to vote, but gives committee control over 30% of supply

7. Resource Allocation Priorities Backwards

Budget Breakdown Analysis:

• Growth/Marketing: 51% (20% marketing + 31% bootstrapping)
• Engineering: 12%
• Operations: 10%

The Problem: Prioritizing marketing over engineering when basic infrastructure doesn’t exist. This is like advertising a bridge that hasn’t been built yet.

8. False Comparisons and Cherry-Picked Data

Misleading Benchmarks:

• Sui, Avalanche, NEAR examples: These ecosystems had working bridges, oracles, and basic infrastructure before launching growth programs
• Correlation vs. Causation: Growth may have occurred despite funding programs, not because of them
• Survivorship Bias: Only successful examples cited, no mention of failed treasury programs

9. No Accountability Mechanisms for Results

Missing Accountability:

• No concrete success metrics beyond vague “ecosystem growth”
• No clawback provisions if targets aren’t met
• No timeline for delivering basic infrastructure (bridges, oracles)
• Annual reporting insufficient for $500M+ initiative

10. Technical Execution Track Record

Concerning Patterns:

• sBTC: Years of delays, still not production-ready
• Nakamoto: Multiple postponements
• Clarity-to-WASM: Still in development after years
• PoX improvements: Incremental progress despite being core to the chain

Question: Why expect different results with more money when execution problems persist?

Alternative Approach Recommendation

Instead of this massive dilutive treasury, Stacks should:

1. Focus on Infrastructure First:

   • Dedicate existing resources to building quality bridges
   • Establish oracle infrastructure partnerships
   • Complete sBTC and core protocol improvements

2. Demonstrate Competence Before Expansion:

   • Show ability to deliver promised features on time
   • Build working interoperability before marketing campaigns

3. Conservative Growth Funding:

   • Smaller, milestone-based funding tied to infrastructure completion
   • Direct accountability for deliverables before additional funding

4. Actual Decentralization:

   • Let market forces drive adoption once infrastructure exists
   • Avoid centralized treasury management that concentrates control

My Recommendation to the Community

STX holders should VOTE NO on SIP-031. This proposal asks us to dilute our holdings by 30%+ to fund a bureaucratic growth initiative led by the same teams that have consistently missed deadlines and failed to deliver basic infrastructure.

After nearly a decade, Stacks still lacks bridges, oracles, and reliable interoperability - the fundamental building blocks of any blockchain ecosystem. No amount of marketing spend can substitute for working infrastructure.

The honest path forward: Fix the foundation before building the house. Deliver on existing promises before making new ones. Show competence with current resources before requesting massive dilution.

Let’s demand infrastructure-first development with clear accountability metrics tied to concrete deliverables, not another bureaucratic money grab.

[stacksonchain]

Very unfortunate to only list examples where an Endownment led to increased engagement and traction. Survivorship bias or something else? Many endowments failed and the users paid for it. for ex NounsDao. What are you doing differently?

The pro-endownment comments are considering it as a 100% winning strategy. There is a lack of clarity about who exactly decides where the endowment will go. All evidence points to it will be the same people currently running stacks (maybe add in a few VCs). Will these same people or their proxies (who limited marketing or helping indie devs up until the year of 2025 when it became too late) end up in charge of the endowment? I believe a solution such as DeGrants which is much more community oriented & driven, would have a much higher marginal utility than the official stacks grants programs.

Not criticising anyone’s work the last few years, I am not sure I would have done differently. But the same mentality that got stacks here will not save it.

[enjoywithouthey]

Reputational Risks
The SIP-031 does not adequately address the reputational risks associated with aspects of sustainability, changing the emissions, and the initial mint.

For example, please note the following excerpts from the SIP

Predictable STX Management for Market Stability

This new treasury structure brings greater stability and predictability to the market environment for STX holders.

The Stacks Endowment will publish a forward-looking STX deployment schedule, clearly communicating the timing and amounts of STX allocations. By proactively sharing this information, the Endowment reduces uncertainty and builds confidence - an approach proven effective by other leading projects. Such transparency is especially valuable for those seeking long-term stability and growth within the Stacks ecosystem.

1. In the context of a cryptocurrency, a sustainable emission rate refers to the controlled and predictable release of tokens to balance network growth and security. Sustainable emissions also imply the emission rate can be maintained over the long term. By definition, a sustainable emission rate decreases, such as the Bitcoin halvings, therefore an increase in the STX emission rate conflicts with sustainable practices typically found in the industry.

2. By increasing the STX emission rate it demonstrates the token emissions can be manipulated. This reduces the predictability in the emission rate and may reduce trust in the network.

3. These reputational risks must be addressed as part of the community decision to approve the SIP. The perception of Stacks as a Bitcoin Layer-2 often times may associates Stacks with Bitcoin philosophy (no changes to emissions, no one-time mints). However, for Stacks to compete with other well-funded chains, with large treasuries and “looser” adherence to Bitcoin philosophy, Stacks may, per community approval, make these protocol-level changes to emissions.

Endowment Creation & Specifications

The endowment will be created … the majority of Top 50 crypto ecosystems (which currently have a median of ~10%, further details are below).

To fund the initial working capital, such as that needed for deployment in DeFi, in liquidity operations, grants, and similar,

1. “…”
2. 100M STX will be created via an one-time token mint, immediately upon implementation of the SIP - while immediately unlocked and usable, these tokens will be used for working capital such as grants and DeFi deployments and will not be released to the open market.

1. The initial mint can and most likely will be interpreted as “money printing” which is a taboo activity in crypto culture. It should be explicitly stated that the Stacks total supply is not being increased, only the circulating supply. In lieu of “created” a more accurate term could be “emitted” or “distributed.” Regardless, this mint will be criticised and associated with centralized behavior, potentially attracting negative sentiment and media coverage.

2. There potentially may be short term price impacts due to dilution of current $STX holders. The SIP does not address nor quantify the impacts to current token holders from dilution. The Nomiks report addresses various risks such as market sensitivity, survivability and feasibility however no mention of price depreciation due to dilution. If the dilution is negligible, then it must be presented as such.

In summary, an avenue to mitigate these reputational risks is to build a more unified community consensus. This is only possible if the community is made aware of the associated reputational risks ahead of the vote. Therefore, at a minimum, these risks should be addressed by the SIP.

Utilizing the Stacks Protocol as a funding source after the ICO and TGE is unprecedented in the industry. Furthermore, following the history of the SIPs, this will be the first Stacks SIP motivated by funding rather than a technical or security upgrade. Notwithstanding, emission changes have been made to the Stacks Protocol via SIPs (see SIP-029) but again, this is the first proposed SIP with motivation to finance an off-chain entity. With any unprecedented activity, there are associated risks and known risks should be disclosed to the community in the SIP.

Presently, Stacks is the leading Bitcoin Layer 2. In one narrative form or another, Stacks may be viewed as the layer designed to enable Bitcoin to compete with other blockchains in the decentralized finance market. However, for Bitcoin to command market share of DeFi, there may be circumstances when protocol-level changes on the layer-2 are justified. This is the beauty of the STX/BTC stack. Bitcoin remains the pristine L1 asset while the L2 asset is flexible for bootstrapping, technical upgrades, and future-proofing. However, these changes do not come without risks, and fully understanding and disclosing all known risks should be part of the process moving Stacks forward.

[enjoywithouthey]

If this language isn’t included in the Stacks Endowment Bylaws it’s a non-starter.

[franco_79001]

If this SIP-031 is passed, then collectivism has won and individualism has failed, in bitcoin, what makes it thrive is individualism and you guys want to do the opposite.

[rainer]

I think this is the most dangerous moment for Stacks. If SIP-031 passes, the entire vision for sBTC will vanish into thin air. Stacks will forever be branded as a centralized VC chain. What truly supports a brand’s premium positioning is its unwavering commitment to its founding principles and beliefs, even in the face of adversity – just as Porsche, in its toughest times, never abandoned development support for the 911, proving its commitment by cutting executive salaries to ensure its funding.

If SIP-031 gets approved, sBTC will become untrusless in the future, and STX will super hardly command the premium narrative pricing for BTCfi in the capital markets.