From 2baa3560097f035740d31fe57cf96756c9d741d3 Mon Sep 17 00:00:00 2001 From: George Appiah <48031636+iamGeorgePro@users.noreply.github.com> Date: Sat, 22 Feb 2025 13:00:37 +0000 Subject: [PATCH 1/2] Create 024-2025-02-05.md Signed-off-by: George Appiah <48031636+iamGeorgePro@users.noreply.github.com> --- sig-economics/meetings/024-2025-02-05.md | 263 +++++++++++++++++++++++ 1 file changed, 263 insertions(+) create mode 100644 sig-economics/meetings/024-2025-02-05.md diff --git a/sig-economics/meetings/024-2025-02-05.md b/sig-economics/meetings/024-2025-02-05.md new file mode 100644 index 00000000..85d36562 --- /dev/null +++ b/sig-economics/meetings/024-2025-02-05.md @@ -0,0 +1,263 @@ +# Akash Network - Economics Special Interest Group (SIG) - Meeting #24 + +## Agenda +- Recap of previous meeting and action items. +- Updates on PIP02 and transition to PIP03. +- Market making and liquidity enhancement proposal. +- Addressing bot activity and security concerns. +- Open floor for discussions and feedback. + +## Meeting Details +- Date: Wednesday, February 5, 2025 +- Time: 10:00 AM PT (Pacific Time) +- Recording: Coming Soon +- [Transcript](#transcript) + + +## Participants +- Scott Hewitson +- Cheng Wang +- AMerePotato +- B S +- Deathless +- Dimokus +- Forbes analos +- Rodri R +- Tyler Wright + +## Meeting Notes + +### Recap and Updates +- **PIP02 Dashboard Completion**: + - The **PIP02 dashboard** has been finalized and added to the **community pool spend reporting repo**. + - The **PIP02 fund allocation** of $10 million is nearly complete, with **$8.7 million committed** and **$2 million already spent**. + - PIP02 contracts are set to run for a year from their signing date. + +- **Recent Proposal Updates**: + - **Community Programs (Q1 2025)** and **Community Activities (Q1 2025)** were **approved**. + - These include **Vanguards, Insiders, Ringmasters**, as well as bounties, hackathons, and small community events. + - **Q1 Events Proposal** (led by Amanda) passed, focusing on **ETH Denver and Nvidia GTC**. + - Some earlier proposals failed, and discussions are ongoing to refine and resubmit them. + +### Market Making and Liquidity Enhancement Proposal +- **Liquidity Challenges**: + - Proposal up for discussion on **enhancing AKT liquidity and market depth**. + - The goal is to **decentralize liquidity support** and **strengthen order book depth** on major exchanges like Coinbase and Kraken. + +- **Market Maker Mechanics**: + - Market makers help **reduce price volatility** and **increase confidence for institutional and retail traders**. + - By loaning AKT to market makers, they provide liquidity and maintain healthy bid/ask spreads. + - Structure involves **loans with call options**: + - Market makers receive AKT as collateral and provide stablecoins in return. + - If price increases beyond a strike price, they return stablecoins to the community pool. + - If the price remains below the strike price, they return AKT. + +- **Expected Impact**: + - **Doubling liquidity depth** within **three months**. + - Makes **large trades possible with minimal price slippage**. + - Helps **attract institutional investors** and **stabilizes token price movements**. + +### Addressing Bot Activity and Security Concerns +- **Credit Card Payment System**: + - Some abuse was detected through **bot activity and fraudulent credit card transactions**. + - **Engineering and security teams** are implementing **new friction measures** to mitigate abuse. + - **Provider networks are being monitored** to ensure fair use of resources. + +- **Long-Term Fixes**: + - Integration of **third-party security services** to detect **bot-based abuse at account creation**. + - Adjustments to **design and user experience** to discourage fraudulent behavior. + +### PIP03 – Future Provider Incentive Planning +- **Early Planning Stages**: + - With **PIP02 nearly at full deployment**, discussions on **PIP03** have begun. + - **Objective**: Bring on **more GPUs for a longer period with better cost efficiency**. + - **Organic demand for H100s and H200s** is increasing, reducing the need for artificial incentives. + - **Optimization Strategy**: + - Work with partners to **stretch funding further**. + - Increase **capital efficiency**, allowing more **GPUs to be onboarded with the same budget**. + - Encourage a **self-sustaining provider ecosystem**. + +### Transparency in Fund Management +- **Returning Unused Funds to the Community Pool**: + - Overclock Labs is **returning $200,000 in USDC and excess AKT tokens** from previous proposal overestimations. + - Specific funds being returned: + - **$180K USDC from SDK47 liquidation buffer**. + - **$20K from Console 2 excess**. + - **114K AKT from Q4 events funding**. + - Commitment to **full transparency** in fund usage. + +### Open Floor for Questions and Feedback +- **Potential Changes to SIG Meeting Schedule**: + - Discussion on **adjusting meeting times** to better accommodate global participants. + - No final decision yet, but options remain open. + +- **Encouragement for Public Questions**: + - Participants encouraged to **ask questions in public channels** for **greater community transparency**. + - SIG Economics **remains committed to full disclosure** and **community-led discussions**. + +## Action Items +- **Scott Hewitson**: + - Finalize and upload **PIP02 spending reports**. + - Track and process the **return of excess funds to the community pool**. + - Monitor ongoing discussions around **PIP03 development**. + +- **Cheng Wang**: + - Oversee **market-making proposal discussions** and update the community on next steps. + - Work with partners on **PIP03 strategies** to **increase GPU availability at reduced costs**. + +- **Tyler Wright**: + - Ensure that **meeting transcripts and recordings** are posted in relevant channels for community reference. + +- **Community Members**: + - Review and **provide feedback** on the **market-making proposal**. + - Participate in **GitHub discussions** on liquidity improvement and PIP03 development. + - Engage in **public SIG Economics discussions** to ensure **wider transparency and collaboration**. + +## Transcript + + +Scott Hewitson: All right, welcome everyone this February 5th. It's the second SIG economics of 2025. I'm Scott Huittson. I lead these calls regularly pretty much every time. and so we talk about what we talked about last time. we'll talk about any props that are up or have passed. and then kind I like to open it up to anyone for ideas, questions, comments. and then usually Chang's got some good updates on some programs. I got some updates on some programs. So with that, let's see. We got so last call in January, beginning of the year, it was a little lighter. I talked a little bit about the PIP PIPO one and PIPO 2. + +Scott Hewitson: one action item I had was to get the PIPO2 dashboard up and running. So, I'm going to drop that in here for everyone. And also before this, I just created a PR to add that to the community pool and spend reporting repo, which I'll drop in here as well. this is kind of a spot for anyone who's received funds from the community pool to post any kind of reporting or transparency that they want to. from overclock lab side, we put up a ton of props. We try to be as transparent as possible. And so we have reports for pretty much every prop that we have up. I think these are through 2024. I still need to add 2023. + +Scott Hewitson: just a chore to do that. hopefully I'll be able to get that done sometime soon. so yeah, the PIPO 2 dashboard live. PIPO2 we signed a ton of contracts in January. that request was 10 million dollars. I think we're at 8.7 committed and spent about 2 million so far. there's deposits and front-loaded costs on those. so yeah, I mean most of them will be going a year from then. So if there's any questions regarding PIPO 2. I'll open it up for just a second. no. Okay. + +Scott Hewitson: the other thing let's go to some proposals. So last call I think was January 8th we had a couple proposals pass the community programs Q1 and the community activities. So those are led by Adam WNY the head of community that's all the Vanguards insiders ring masters that's the programs and then activities there's the bounties the hackathons and then some community events. and then the other prop that passed was the 2025 Q1 events proposal that's led by Amanda head of events. so I think that that prop was just for ETH Denver and Nvidia GTC. Those both passed. There was some that failed in early Jan. + +Scott Hewitson: I think some folks have been talking and seeing what they can do to kind of refine that and put up something. I don't have as much insight on those as though. what else did we talk about last time? there was some questions about the credit card payments and USD integration. If you recall, there was a prop that passed for console 2 that was funding prop. and there were some questions about abuse. from overclock standpoint, we know there's bot activity. we're working on it. we're putting friction in spots. some of those providers are pit providers. just a portion of them. but we're working on it. + +Scott Hewitson: And I don't know if Chang wants to speak more on that in a moment, but let's see what else we got in here. Yeah, that seems pretty good. Andrew was on and asked a few good questions. He's always good for some questions. but yeah, do you want to open up any new movements or… + +Scott Hewitson: things you want to update folks on? + +Cheng Wang: Yeah, certainly. + +Cheng Wang: Thank you, Scott, for running these and doing the recaps and doing literally all the heavy lifting. So, as far as stuff that's kind of worth covering is kind of the bot activity and some of the kind of miners and stuff like that that are coming through on a caution using some of the resources there. Of course we are right as a core team and community aware of the activity here and the fix for a lot of these things really have to start at the top of the funnel right so really about sussing out whenever an account is trying to be created right that is botted right and not legit. + + +### 00:05:00 + +Cheng Wang: So really once we've already put into place rather a lot of measures to be able to counteract these particular things through 30 third party service providers some of them through just better design and the design has kind of as it improves over time right so the product is definitely evolving and s we've already mitigated a lot of the early issues that we've seen and will continue to do so so we definitely ask and urge the community to be patient around this kind of stuff and just every kind of day, every week, every feature that goes by, these issues are continuously being mitigated and I imagine pretty quickly I'm pretty confident that it'll happen quickly that these issues will kind of fade to the wayside as we kind of push the controls and tighten up the controls. + +Cheng Wang: So that's number one as far as bot activity and activity that we don't want on a caution network that really takes away from the nuts and bolts of what makes a network great. that's Number two that's going to be a big one that is currently in play right now as far as GitHub discussions go is I think yesterday I put up a GitHub discussion for enhancing aos network liquidity and depth. Right. thank you for just Johnny on the spot just throwing right in there. that I think is a brand new one. So for those of you who haven't read it, I highly urge you to please go read it and consider it. we'll let this of course percolate for about a week before putting this on chain for voting. And this of course is TLDDR. + +Cheng Wang: we want to really decentralize and push part of the support for the Akash network community to the AOS network community rather in order to enhance depth and enhance liquidity for AOS network's major markets on our cryptocurrency exchanges and continue the effort of really decentralizing that right and this isn't something that's new to other decentralized networks of course do that as well so this will I think enhance our depth and liquidity by about 2x if not more over the course of the next three months. That is going to be the mandate here. And as far as the agreement and kind of structure of deals that we're able to strike with market makers, we'll share to the extent legally we're allowed to, so definitely the e either way this will greatly enhance our presence and the ability for people to get in and get out of positions, right? + +Cheng Wang: and continue to mature our markets as our product and standing continue to mature as well. So that's something that's currently in the chamber if you will. So please go ahead and review that and let us know where your thoughts are. Feedback of course is always welcome and desired. Last portion is going to as Huie mentioned we are close to maxing out on incentives O2. So we are starting to contemplate incentives 03. But before I get to that, Scott, please go ahead. + +Scott Hewitson: you can pick one strike for a loan call option just to Yeah. + +Cheng Wang: Yeah. Yeah. Yeah. how does it work? Yeah. Yeah. how do market makers work, I guess, is one thing. So, you and I have been in the game for a little bit, And it's kind of we forget sometimes. So, market makers are essentially a service provider. + +Cheng Wang: and their purpose is to provide liquidity. So what does that mean? for a project like a Kosh network for example when you go to cryptocurrency exchanges like Kraken like a Coinbase right you go and you want to sell something you buy A you want to sell AKT you open up the screen and you'll see the depth right how much can you buy what orders are on the bid and offer right so thank you for sharing this screen so here you can see very clearly there's let's just say Coinbase right I take row number three there plus 2% depth is 137. Minus 2% depth is 126. What does that mean? this basically means that you can go to Co Coinbase exchange and you can buy up to $137,000 worth of AKT and it'll move prices less equal to 2% up. + +Cheng Wang: If you sell $126,000 worth of AKT on Coinbase exchange,… + +Cheng Wang: it will diminish prices by 2% equal or less than 2%. Right. so that's what this kind of means. So by adding and getting market buys and… + + +### 00:10:00 + +Scott Hewitson: market buys or… + +Scott Hewitson: market sells. Yeah. + +Cheng Wang: micro sales. Exactly. And so the volume of course is the volume within a 24-hour period. And so by working with market makers and increasing depth, what we're doing is making that number bigger on both sides, So that people who want to buy Akos can buy a larger quantity without moving prices as much and subsequently if they want to exit their position or they can sell without moving prices as much. What does that do? A few things. Number one it introduces stability right in that you can say look if I get into a position where I want to get out the price isn't going to fluctuate dramatically. Of course if someone comes in and introduces worldwide tariffs or something like that all bets are off. + +Cheng Wang: But all things being equal so that's one point. The other thing it does in terms of increasing depth here is for institutions, whales, people who want to get into position, big-time traders, whatever it is, they will have a greater degree of confidence getting into these positions, And because they know if they buy some amount of AKT, they can get out of this amount of AKT. So that increases a healthier kind of flow getting in getting out of positions and just in introduces more activity. So one way you can think of it is greater the depth, the greater the amount of people or potential traders you introduce or kind of bring into the cash network market who are willing to participate. And so doing all of this of course it costs is very capital intensive. It costs money, right? + +Cheng Wang: So, how market makers typically operate when Huey referenced the loan call option is the protocol network will typically say we'll take X amount of Let's just say 1 million AKT it's $ At current prices, we'll loan them $2 million of AKT and they will take the $2 million of AKT as collateral, And they will pledge their own stable coins, in this case whatever the pair is that we want them to mark and make on and create the depth on both sides right and so that's kind of how things operate and it'll be done for a predetermined period of time whether it's 24 months or somewhere in between and typically the structure of this is a protocol loans tokens to a market maker pledges their own money or collateral + +Cheng Wang: Or money, excuse me, or funds in the form of stable coins to help you create both sides, right? So, you're buying and selling an AKT and USDT. and typically each one of these loans are segmented into various tranches or sections, right? And each tranch typically has a strike price. And so a strike basically means at a predetermined period of time the market maker can either return to the protocol the tokens or return to a protocol some amount of stable coins based on that strike. So let's just say the loan is $1 million and the strike is $3 one million tokens and the strike is $3 per AKT. + +Cheng Wang: If AKT prices go up to three or more, then the market maker has the ability to exercise that option at the end of the term of the contract and return 3 million USDT USDC to the protocol and they keep the initial 3 million tokens. Really simple. If prices are below $3, then they don't exercise the option, right? They keep whatever stables they have. They return the original 1 million AKT back to the protocol. So either way, no matter the scenario, that capital is going to be returned back to the community pool. or there will be a separate governance proposal, Kind of trying to renew the process and continue to enhance and build on the depth that we will have brought to the network through this process. So I hope that makes sense. + +Cheng Wang: it's a bunch of moving pieces, but this illustration here is the pretty very vanilla stock standard way of how market makers typically work and work with protocols. and there are more nuance and I suppose exotic options that are out there that we do want to test. so that's why there's at the kind of the bottom here, I think we're at the top of Africa where it was written where the duration of time is somewhere 12 to 24 months. But of course there are more exotic options. + +Cheng Wang: I think it's probably closer to the top shorter durations over here high level details right so more novel strategy for example mic shorter durations right and due to some other constraints and when we do those things we'll definitely let the community know but the important thing to emphasize is end result this will dramatically increase depth for a network markets which is going to increase participation and all the metrics kind of exchanges and market makers etc funds and traders look for. two is that these funds won't just be sold off. + + +### 00:15:00 + +Scott Hewitson: Awesome. Thank you for that color and… + +Cheng Wang: It's literally there to create the depth that you see in exchanges. and then at the end of the term, right, these funds will either be returned to the pool and stables or an AKT based on the determined strike. So, those are the three big takeaways here. + +Scott Hewitson: explanation. I know you and I probably take it for granted that just see this stuff all the time. does anyone have any questions as it pertains to loan call options or market makers or anything in this realm? Yeah, I think I mean at the end of the day like the funds are going out. they're the community pool's funds. If price goes up a ton, we just get a bunch of stables in the community pool. which can be good because then people can request stables for smaller development development work or whatever. + +Scott Hewitson: it's a way to hedge, if the price goes up or we have stables in the pool and the price goes down, you got stables. there's always funds there. I know there's challenges with being volatile and requesting funds. So, one other thing that I want to call out just in regards to stables. does anyone have any other questions? Market so I want to call out so from 2024 there's a couple of props that we put up where we put liquidation or ball v ball buffers. and the big ones I think are for the apes for console 2 and SDK47. + +Scott Hewitson: so we request over the amount of funds and then liquidate to get a spec specific dollar amount and then there's some excess right on one it might be higher than another. when we did do that not that it was a mistake but it was just happened that all funds were liquidated versus at a stop point. So there are about 200 grand of stables that are going to be going back to the community pool. we put just testing all the flows and everything we put back 20 grand in USDC this morning I think that was from console 2 and then the SDK47 the request was I don't know it was 300 grand and it was liquidated 480 because price pumped crazy. So we take the 300 grand from the prop because it's stables we're going to throw 180 grand back into the pool. I just want to call that out. + +Scott Hewitson: I know I've said it before in some past sig economics, but we're waiting on a few things. but yeah, no, those funds are ready to be pushed back and have started to be pushed back. And then also for Q4 events, we requested I think 300,000 tokens. and we needed I think 660k US and there was a ton left over. So there's another like 114,000 AKT that's going to be heading back to the pool as well. I know it's there's a little bit of trust me, bro. + +Scott Hewitson: this is what's going on. I try to do as much stuff on chain so people can verify, but if there's ever any questions or ever anything where something might look fishy not, please just ask me. there, I try to pride myself on being as transparent as possible and making sure we are doing the right thing from overclock standpoint because we do request pool money from the pool so much. and frankly we want other people to do the same. We want other people big teams to be requesting big amounts to progress the network. And so by doing it from our side we kind of setting the standard for everyone else. So if there's ever any questions any doubts u I get DMs from time to time and I answer questions and people like hey this looks kind of sketchy. I'm like I know it kind of does look sketchy but let me explain to you a little bit more. So please please please ask those questions. + +Scott Hewitson: ask them in public, too. I don't mind respond like every response I do, I assume that it's going to be screenshotted and shared with everyone. So, I will respond in public the same way I respond in DMs. but just wanted to call that out. Lots more funds coming back to the Kai, what's up? + +Tyler Wright: No, I was just going to add that much appreciate all the work that you do Scott here and obviously Chang with the SIG. I would ask that people start to ask things in public channels. I think we talked about the steering committee in other meetings because again I'm sure other people this may have the same questions but we're just like continuing some of these conversations because I know that overclock labs is always trying to act in honorably and again as an example to the rest of the community. So please don't feel like there's anything that's kind of off limits or shouldn't be transparent. Feel free to ask. + + +### 00:20:00 + +Tyler Wright: And I'll also add real quick that I know there's a discussion happening right now. I will make sure that this video recording and notes and transcripts get uploaded as quickly as possible and added as a comment to that discussion so that people have this thick economics meeting as a reference point because I know there's been a lot of great conversation here. So Chang. Thank you stuff. + +Scott Hewitson: All right. I think I cut you off, chain so you could explain loan call options and then I went on a tangent and now we're back. + +Scott Hewitson: So, I'm going to shoot it back over to you … + +Cheng Wang: No. + +Cheng Wang: I'm good. No, I'm good. + +Scott Hewitson: and let you talk about the next thing you want to talk about. + +Cheng Wang: Yeah. Yeah. So, the other thing on deck is not quite yet, but we're starting to just a little bit of a sneak peek, As we're close to full deployment or commitment on PIP 02, we are starting to contemplate PIP 03. And of course, we've already brought on a lot of GPUs onto the network. And of course, PIP03's effort will continue that. and with a couple of developments, We've learned a lot through the process of the first two providers and programs, pilots rather. And so from there, and as kind of network adoption continues to grow is getting more efficient with these programs, And so we're looking at working with other partners on how we can bring on GPS for a longer period of time for a smaller period of smaller amount of funds from the required is required from the provider incentive pilots. + +Cheng Wang: what does that mean? That means that with the same dollar amounts, we can bring more GPUs on for longer periods of time, And so, especially as the demand on the network grows, organic demand will just kind of eat up all the resources. Just for context, right, H200s that were brought onto the network just ish, three weeks max ago, have all been kind of just gobbled up, And those are all just really folks coming in wanting the H100s, knowing how Aos works, knowing they've used H100s and other resources before and seeing these things come on and just snapping them up, so we're really seeing a lot of organic demand taking over and the kind of the organic growth factor starting to accelerate. + +Cheng Wang: And so as those things kind start to happen with the further or subsequent pips, we'll be able to become a lot more capital efficient as we have been successful in bootstrapping supply as well as demand onto the network via the first two. Of course, the work is definitely not over, but as far as all indications go is that the organic growth is happening and people are self-s serving themselves in order to scale, which is exactly what we want to see. So before we obviously put pen to paper you'll see in PIPO3 hopefully that we'll be deploying introducing some pilots in order to do just that right introduce more effect capital efficient means to keep resources on a network longer and bring them on for a cheaper price. + +Scott Hewitson: Let's see. Kane, do you have anything else you want to talk about other than market making potential PIPO3 stuff? + +Cheng Wang: I'm going to lie in Was there something I'm supposed to talk about? + +Scott Hewitson: Maybe. I don't know. No, I No, just asking. no, you're good. let's see. I don't think I really have anything else from my end. I will say so there was I, talking on my little ramble earlier, a question I got was, how are these funds being used for PIP? Because, in the proposal, it talks about paying people to run the providers and all that stuff. I'll say right here, every single dollar that is being spent is purely just for GPU, just for hardware leases, running them, doing all the stuff, the programmatic side, we're just doing without making any money. All the money is going towards signed contracts. So, that was a question I got in my DM because there was some confusion about some of that stuff. + + +### 00:25:00 + +Scott Hewitson: But I know we said on chain, but it's like every single dollar spent is going to contracts or GPUs. period. and I'm on the record saying it, so we're good. + +Cheng Wang: 100% co sign and… + +Scott Hewitson: Yeah. + +Cheng Wang: validate that. Yeah. + +Scott Hewitson: And So, any other things? Does anyone have anything they want to bring up? any ideas, comments, concerns, questions? this is kind of the time when I rely on Andrew, but he's not here today. he usually is good for two or three questions. Gets the brain going, but doesn't look like he's here. Does anyone have any questions or comments? Nope. All right. how about from the standpoint of how we're doing these calls? is everyone okay with it? + +Scott Hewitson: Is it, I know there's been some thought because people are all over the world maybe changing up a time from now on. It's usually at the same time, but I know there's folks on the other side of the world. Maybe we could do a later or earlier one tie to try to, get some other folks in. but other than that, I don't really have anything. Cool. All righty. + +Scott Hewitson: I'll do one last call for questions or comments. Raise your hand. Otherwise, hit me up in the SIG economics Discord or me or DM me and I'll tell you to put it in SIG economics. but All thanks everybody and I hope everyone has a good rest of your week and let's keep progressing the network. + +Cheng Wang: Thank you everyone. + +Cheng Wang: Thanks. Thank you everyone. + +Tyler Wright: Appreciate y'all. + +Tyler Wright: Yeah. Thank you. Bye-bye. + +Rodri R: You guys. + +Scott Hewitson: + +Scott Hewitson: Thanks everybody. Appreciate it. + +Cheng Wang: You next time. Bye. + + +### Meeting ended after 00:27:04 👋 + + From e6b01255c4971935d962b56a556b67a4ea88a0cb Mon Sep 17 00:00:00 2001 From: Drinkwater Date: Tue, 25 Feb 2025 09:54:40 -0500 Subject: [PATCH 2/2] Update 024-2025-02-05.md added video recording link to meeting details Signed-off-by: Drinkwater --- sig-economics/meetings/024-2025-02-05.md | 2 +- 1 file changed, 1 insertion(+), 1 deletion(-) diff --git a/sig-economics/meetings/024-2025-02-05.md b/sig-economics/meetings/024-2025-02-05.md index 85d36562..94d477cb 100644 --- a/sig-economics/meetings/024-2025-02-05.md +++ b/sig-economics/meetings/024-2025-02-05.md @@ -10,7 +10,7 @@ ## Meeting Details - Date: Wednesday, February 5, 2025 - Time: 10:00 AM PT (Pacific Time) -- Recording: Coming Soon +- [Recording](https://45wmsy7ehe3xuhbzjaxscqyznx64l4ipwxey2il32hsrz2n7lj6q.arweave.net/52zJY-Q5N3ocOUgvIUMZbf3F8Q-1yY0he9HlHOm_Wn0) - [Transcript](#transcript)