The Terran Standard for Protocol/dAPP Launches

The Terran Standard for protocol launches

I am proposing to create a project launch standard set of rules for the Terra community. As a decentralized community, we need to hold our actors and new protocol developers to the standard we expect. We can’t rely on central authorities like Terra Form Labs, or large “whale” investors to ensure good actors develop on the Terra blockchain. In fact, we are only decentralized if we are creating and enforcing such a standard. Without such a standard, we are not a true decentralized community or organization.

Regulators have clearly shown a distaste for anything centralized within the blockchain space, especially stablecoins. Rightfully so, as a centralized organization acting in the manner of a blockchain/exchange is operating outside of, or in direct violation, of current laws and rules. To protect ourselves, we need to take control and assert our authority as a decentralized community. We set the standard, and we enforce its rules. Accountability is on us, as a community to decide how a project should disclose its parameters, “tokenomics”, marketing agreements, early investors, and other relevant information. Current securities laws revolve largely around disclosure, and we need to come forth and prove we are a decentralized organization that properly discloses relevant information and risks. More importantly, we need to prove we have the ability to protect the community from bad actors before and after they launch.

Recently, we have had the normal growing pains that come with new launches and increased awareness and demand. Some have been hugely successful and show great promise. Others have been less than transparent and rife with poor or inadequate disclosure. Currently, we stand on the precipice of an explosion of new dAPPS on the Terra protocol. As an investor in the Terra blockchain, this is exciting and exactly what we should all want. As a decentralized organization, without a clear standard for how a project should launch, we should be concerned. A clear, simple standard for how a project discloses information, communicates about timelines and investors, operates its launch, and how it will function and operate once launched should be a paramount concern. To that end, I am proposing the following 6 rules for project launches, to be met before a project can launch on the Terra blockchain:

  • A projects parameters need to be clearly, and in plain simple terms, disclosed prior to approval for a launch
    • Functionality of the proposal requires a full white paper, published publicly laying out the protocols function and the biggest risks should the function fail prior to the community accepting the protocols launch.
  • Tokenomics need to be fully and completely disclosed, summarized within the white paper and separately detailed in a “Tokenomics” document for community to review.
    • Tokenomics include
      • The total fully diluted pool of tokens being created
      • Ownership of those tokens and how they are or will be distributed
      • Vesting periods for any pre-sale tokens
      • Airdrops: amount, schedule, how distribution is determined
      • How tokens are earned
      • How tokens accrue value or are used in governance
  • Marketing agreements must be disclosed in full pre-launch
    • Must disclose who is compensated to market the protocol and how are they being compensated
    • If they are fully vested or if they have a lock up period
  • Early Investors must be disclosed in full
    • How many tokens they were allotted
    • How those tokens are vested and when
    • What they paid for the token allotment (their investment and price of investment)
    • What if any privileged access they have to the ICO
  • Approval vote
    • Establish a community vote to approve the launch of all new projects/protocols
      • Vote date can only be set once other standards have been met, no incomplete protocol documentation will be allowed to launch
      • Token holders representing more than 1% of the circulating supply of tokens can only vote in support or against but cannot contribute tokens to the vote “anti whale” clause.
      • Project launch votes require a minimum 50% yes votes to pass (simply majority). Protocols should work to meet the standard and engage the community to encourage voting.
  • Enforcement mechanism
    • Ability to disband or takedown a protocol, by 2/3 majority vote (66%) within the “anti whale” clause should they violate the standards post launch, or prove to have violated what they published pre launch.

I welcome amendments and addendums to this set of rules. Feedback, criticism, etc. If we want Terra to be the standard for decentralized money, we as a community need to ensure it sets the standard for the blockchain space. Projects launching into our community need to meet that standard, and it is incumbent upon us, the community to set and enforce that standard. We need a mechanism and standard by which to do that. I understand this is similar to the community pool spend committee, but these standards focus specifically on project launch, and require the community to participate, not a centralized committee. They would be enforced post funding and before the terra community would be able to invest or participate in the protocol.

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Thanks @tenaxproposit
This all seems well intentioned. But I would prefer, rather than acting as gatekeepers, to see these “guidelines” implemented/encouraged via a site similar to rugdoc, giving the projects ratings and best practice guidelines. That way people can choose.

My 2 cents

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Was not familiar with rgudoc, will check it out. I agree, I’m not entirely comfortable with community being gatekeepers, and not sure how well it would work tbh. A site like you suggest would be good, and a threshold rating for launch might be better. appreciate the feedback.

What I think you are after is a certification service that dApps could utilize that would bring some credibility to their site.

The service would audit their claims, and provide some kind of assurance to the end-user.
This is very similar to how dApps use 3rd party security audits and proudly display them on their sites.

I think it’s a great idea to have a trusted 3rd party certify your dApp… but I’m not sure it should be a gate towards listing/running a dApp on a network.

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Yes, this is what I am getting at. 3rd parties create a second layer of trust, which is a layer of risk. But, I agree, a service that can provide certificaiton and verification of the dAPP claims for ivnestors/users would be a big improvement. The other issue is disclosure and a set of standards for disclosure. If we as a community can craft and generate such a set of standards, it would be very good for both strengthening the community and on boarding new investors/users. Even if it is not a gate for launch, it would create an evaluation standard, at the least.
Thank you for the feedback, very helpful to clarify my thinking.

An auditing/certification process sounds great, but it’s important to avoid conflicts of interest by decentralising where the money comes from to pay for it to all.

There needs to be a cost associated with being audited - but the funding for the auditing body needs to not come from that fee.

Perhaps something whereby the community fund bankrolls the audit process, but the fee projects pay for being audited goes to Angel Protocol or something like that?

This both funds and maintains the integrity of the audit process, ensures that it won’t just get overloaded by people expecting a free stamp of approval, and supports a good cause in the process.

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I agree with most of the points. One question: why 2/3 majority vote ( 66 %) on the enforcement mechanism ? Thank you.

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idea would be a simple majority is not enough to sanction, to apply penalty to the project and potential community member invested in it, we need greater than a majority or a “super majority” to agree. But I think the auditing/rating site/service is actually a better implementation. I posted here ot get some feedback and clarify my thoughts, as I think a way to evaluate projects prior to launch is sorely need for the non coder members.

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Isn’t this sort of due diligence the sort of thing you expect a launchpad platform to facilitate?

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Yeah, for sure I think the launchpads can help evaluate projects, but Terraworld shows it is imperfect at best. They launched with a clear typo in their contract…the launchpad limited the risk by being able to reverse the launch and return funds, but so far I am not seeing them create tools or standards for what a high quality project looks like. In addition, they have nothing to do with how a project is marketed and what disclosure around the marketing/promotion is. For example, the use of paid promoters is a HUGE area of disclosure in tradfi. If you have a position or are being given compensation, you have to disclose it…in Defi, you can use an influencer marketing campaign, paid in pre-sale tokens, and not disclose any of it, at the moment. It is one of many reasons regulators are so anxious to crackdown, we aren’t policing ourselves in a meaningful way. Appreciate the feedback, collaborating or building this type of service/check in launchpads would be a great avenue towards better evaluation and disclosure for sure.

I don’t see the auditing/certification being a central process itself.
auditors would be certified. (ie pecksheild, cryptonics, halborn, etc ) would perform the actual audit, at the dApps expense.
the DAO itself would be responsible for certifying which auditors are qualified.

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thanks for you suggestion I think we need this

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