Kusama issue #1: Treasury burn, Kappa Sigma Mu and the richest collective you've never heard of

Governance
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Flipping the bird

trigger warning, if you have a canary tattoo, approach this post with caution.

Given the reaction to A Kusama Forum - Place for longform debate and healthy discussion, if we’re gonna drive Kusama’s chaos right onto Polkadot’s front lawn, let’s start somewhere meaty, with Kappa Sigma Mu society., aka Proof of Ink, aka the richest collective you’ve never heard of and perhaps the least effective use of treasury funds to date, unless regrettable tattoos are your thing.

I mean I have a couple, so I get it… you know what it’s like, you get together to chat about the ambassador programme, have a few too many beers, then you’re fumbling on Polkadotjs at 3am, yoloing a few extrinsics, and whoah, you wake up from your bro-down with a canary on your ass and $3m in your bank account.

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How did we get here?

Within the current design of Kusama there exists a treasury and a burn mechanism, designed to incentivise the spending of accrued funds.

In the current 7 day spend period on Kusama 585 KSM ~ $14.93K will be burned unless it is utilised via spending proposals.

Currently 99.8% of that spend is unused, 0.2% is redirected to the Kappa Sigma Mu society account where its used to incentivise creative innovation more tattoos, and so far precious little else.

130,000 KSM is approaching 50% of the current Kusama treasury which holds 290k KSM.

With current parameters it will take 50+ years to spend the 130k KSM it has.

Where do we go from here?

Currently the continued treasury benefits received by KSM Collective are from a hardwired runtime upgrade, rather than through more well known forms of on-chain governance.

The spend is still mandated by holders given it required approval of a runtime upgrade, but that does not mean funding cannot be overturned through a new PR which will require a vote and a 3,333KSM decision deposit…

Four potential next steps:

  1. Kappa Sigma Mu is presented as a noble experiment, but one that has ultimately failed in its goals of driving adoption of artistic communities and should therefore not benefit from perpetual, unchallenged funding.

Outcome: A PR is submitted to remove the funding via a runtime upgrade and the 0.2% is burned (for realz).

  1. Kappa Sigma Mu’s fraternity is presented as a noble experiment that hasn’t had the impact it was designed to, but the mechanism has value.

Outcome: A runtime upgrade is presented to redirect funds to a new address, organisation or inititative who submits their candidacy for a stab at delivering on the experimental mantle.

  1. Kappa Sigma Mu is presented as a noble experiment that is still early in its journey and given all of that ink splattered about, there is some literal skin-in-the-game with the motivation to make the society work over longer time horizons.

Outcome: Funding to KappaSigmaMu continues but is subject to some annual review that requires a report of activities and experiments - it doesn’t need to hit concrete deliverables, other than delivering on its promise of fostering innovation.

  1. Kappa Sigma Mu is presented as a noble experiment that is still early in its journey and the potential to work over longer time horizons. In this way, we are trusting that something will happen. Given this faith - we can present a parallel execution of the KappaSigmaMu experiment that benefits from the same 0.2% burn mechanism to sustain its experimentation and R&D, but does so with different onboarding, membership and indeed perspectives.

May the best direction win…

Outcome: A PR is submitted for a runtime upgrade that both increases the burn to 0.4% of the treasury and redirects the new 0.2% to a new on-chain R&D focused organisation.

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From the perspective of someone who’s highly unlikely to get a tattoo for any amount of money, I’m still strongly in favour of things that are innovative and drive benefit for the chain - and I really like things that are a bit different from the crowd. From that perspective, I think there is room for the KappaSigmaMu society to make a case for itself.

However, as far as I can see, the following is true:

  • The society has paid out about 10 times in the last year - small amounts, and about half of those have been dust.

  • The top-level society pot has grown by about 10k KSM in the last 3 months.

  • There’s a v2 pallet in work - but it looks like it’s been largely stagnant for the last year.

If it’s genuinely being used - or going to be used, which probably means someone finishing off and deploying whatever v2 is - I think it should be allowed to continue.

However, I’m unclear how it will ever spend 130K KSM in a reasonable way. In which case maybe some (most) of that should be removed - either burnt or redirected to other uses?

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As a society member and ink holder myself I did read the post with caution as advised. Thanks for that.

I can just speak for myself if I tell you that my ink reward when I joined the society last year was 0KSM - happy to return that if that helps anyone.
My payouts for being an active member who votes on candidates and defenders is below 0.5KSM since then. Since then the queue of new candidates got shorter and the bids increased, so the current candidate would get 39KSM for getting a KSM society ink - which is still less than I paid for my society ink.

ANYWAY - I agree with what you are saying about the inactivity of the society. It could require a reset/restart and it could require a more active user base to support and activate ideas of its original intention: bridging the gaps between machines and humans. Translating benefits of a blockchain to non-crypto folks. Promoting art projects using blockchain technology, etc.

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The problem isn’t the people getting paid for the tattoos - the problem is the giant pot that can’t be spent. To join the society, you have to submit the lowest bid. People submit bids and leave bids there and bids are visible to everyone else. No one will ever be able to bid 130,000 KSM and win the pot.

I vote we go the other direction. Distribute the 130,000 KSM evenly to the members, paid out over 2 years, and continually distribute the 0.2% pot to the members.

This will make the membership more coveted and maybe cause more random people to get Kusama Tattoos. You get what you incentivize for.

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Thanks, noted.

The push back to this is the Kappa Sigma Mu collective was not supposed to be some Kusama lottery…

In technical terms, Kappa Sigma Mu is a collective created using the society pallet on Substrate, which in principle, is defined as an economic game incentivizing users to participate and maintain membership through rewards paid by the collective treasury. But in actuality, the Society is more than just that: It aims to make the Kusama network and its functionalities known to non-technical users, raise awareness of new forms of organization and identify the link between the onchain and offchain worlds.

It has clearly not achieved its aims, so why should members receive some additional bounty?

Per @jelliedowl - if there was some credible new actions by the group that warranted additional rewards that seems more fair.

I think the best thing to do is a carrot and stick approach - we set a short time limit for the society to present their view of the future, if none is forthcoming we enact a series of steps that lead through the above stages.

  1. Kappa have 2 weeks to present a new path forward and this needs to be voted on by the community.

  2. Runtime upgrade halting the spend to society address.

  3. Runtime upgrade to burn or move or repatriate the funds.

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No offence to those in the group, I know many Parity team are but, I don’t believe any value has been brought to the ecosystem from this group.

I would vote for Option 1 or Option 2.
Either burn the funds or distribute them to an events bounty or somewhere they will get spent for ecosystem initiatives.

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The following seeks some soft signal as to the next steps with the KappaSigmaMu society funds which currently holds 130,000 KSM, an amount that is perpetually increasing due to the 0.2% treasury burn passing directly through to the society.

Should we:

  • Leave funds where they are
  • Redirect funds to a new address tbc
  • Repatriate funds to the treasury
  • Burn the funds

0 voters

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Several annotations (disclaimer: being a KSM tattoo owner): I joined the community in July 2021 for 0 KSM. A lot of people wanted to join the community at that time and there was quite some movement and discussion on what to do with the funds. Several things happened from then on:

Some people obviously abandoned the community, yet (naturally) were still selected as skeptics. This caused several valid candidate elections to fail. I earned 4 strikes due to inactivity of members who were inactive or left the community.

Since elections are hold in a 7 day turn, with 10 strikes to get thrown out of the community and a random skeptic selection it takes quite a lot of time until the community gets rid of inactive members.

Also the community turned rather inactive with the rest of crypto cooling down massively last year. There were dozens(!) of bids that apparently never were considered worth taking yhe risk or not a serious bid at all, in particular with regard to KSM value.

Remember KSM reached close to 600 USD in June(?) 2021, peaked again in Nov 2021 and with a lot of turbulences (as everywhere else) eventually reached full fledged crypto winter in summer 2022 with KSM hovering around 25-35 USD. Even a 5-8 KSM bid (which was a popular range before) meant little, given a visible & partwise increasing risk NOT to receive approval even with a valid proof of ink.

Since there was a lot of depression I would conclude that the main incentive to become member of the community was gone for quite a long time due to the circumstances described above.

From my perspective only very recently “real” candidates started applying to the community, particularly with bids coming close to a headline making bid (“This community will pay you $XXXX to get a tattoo”). People are willing to take the risk even though they can get rejected in this range.

From the perspective of the experiment I don’t see any reason to act and a lot of reasons to watch how things turn out mid term. I’d be interested to hear why this discussion takes place now and why this (imho pretty crazy) experiment should be deamed a failure as of now. As someone who entered crypto in 2014, I am convinced these few years mean close to nothing.

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Thanks for taking the time to comment - it would be great to hear more of this kind of stuff from the inked among us,

I think this cuts close to an essential challenge KappaSigmaMu faces… and that is the important but subtle difference between community as a noun aka a thing and community as a verb aka a doing.

As a long time casual observer to the initiative (which i think is a worthy experiment) I think the proof of ink as status symbol (great idea) and the economic game (which is fun) have somewhat subverted the attempt to deliver on an artistic and experimental mandate.

I don’t believe the game should end, the question at hand is more does the group need ever expanding resources - in general i believe in the adage that creativity loves constraints.

Those inked up should be the most passionate and active members of the community, after all they have actual skin in the game.

Equally, sometimes a little stick can work wonders to motivate people - often resistance to a common enemy can become a great rallying call. I’m more than happy to play that role on this issue and others if it it can unfreeze elements, inspire some energy and generally get stuff moving.

Question - do you really wanna be this guy?

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I’ll be more than happy to answer your question if you’d be so polite to answer mine first (last paragraph if you missed it).

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Sorry I read it as rhetorical.

Short answer:

I believe the burn exists as a brilliant way to sustain experimental public goods / R&D based initiatives upstream of treasuries and by not delivering on their mandate to drive artistic experimentation, KappaSigmaMu is effectively shitting all over this territory… “oh that funding model didn’t work, let’s never do it again”.

Long answer:

This discussion takes place now because ideas get stronger when they are given a good kick.

Right now, there is a lack of people kicking Kusama/Polkadot. This isn’t fud, this is how we make the collective steadily smarter, rather than just relying on parity will fix this.

Currently KappaSigmaMu’s account is receiving an ever expanding share of network resources (irrespective of whether or not the group has access to the pot) without any broader oversight.

Let’s cut back to the point of the experiment:

In technical terms, Kappa Sigma Mu is a collective created using the society pallet on Substrate, which in principle, is defined as an economic game incentivizing users to participate and maintain membership through rewards paid by the collective treasury. But in actuality, the Society is more than just that: It aims to make the Kusama network and its functionalities known to non-technical users, raise awareness of new forms of organization and identify the link between the onchain and offchain worlds.

In my view, the game is steadily becoming ever fatter, and ever lazier.

Those with ink have gained some nice status points, but (as yet) have failed to deliver on the most important aspect of their mandate.

Prove me wrong. Until then, I’ll continue kicking.

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There’s also the fact that there is 130,000KSM in the society pot - when the burn amount isn’t currently actually being spent on anything (other than a tiny fraction transferred to the game). It could be slashed to near-zero and have no impact on the operation of K-S-M. The society game has distributed about 50KSM in the last 12 months (with a bit more than that in pending payouts), while the society overall treasury pot has accrued very roughly 10,000KSM in 3 months.

I understand that we’re in a bear market and the incentive to play is low right now, and things might change. But how much funding does it actually need / justify for it’s stated purpose?

Why does it deserve an ever-increasing pot of funds it isn’t likely to ever reasonably use? Why shouldn’t something else be done with those?

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I don’t remember that there has ever been a “mandate” as you describe it. Also,the number of bids in 2021 and (partwise) 2022 proves that the society gained a lot of attention - in particular those in the range close to 0 are interesting.

I find the current development pretty much expectable: investing time in a project at 500 USD is differrent to a 25 USD price tag. Therefore the society will pay out way more in the upcoming weeks than in the last year(s) (the current candidate bid is 39 KSM). Future payouts (and strikes) will define the shape of the society.

I also expected the society to develop in a different way. There had been repeated discussions and ideas prompted regarding how the society could make use of the funds. Maybe that’s not all too suprising, given the fact that there are a lot of non-technical folks in the society. I don’t see why this shouldn’t change in the future.

Yet - coming back to my original point - it takes time - in particular given the mechanics of voting members in and out and a hefty bear market taking its toll cooling down any serious traction. Have you actively experienced a crypto bear market? How was your experience? To me this all looks very familiar.

Regarding your question if I would like to be Mike Novogratz: i personally prefer to be the person I am and I don’t think your comparison has any merits. My reasons to become a member of the society were (as far as I can guess) quite different to Novogratz getting a LUNA tattoo. I would also argue that comparing KSM to LUNA is quite a stretch.

As I said I see a lot of good reasons to be patient and I would definitely vote for that. I don’t see where “kicking” or “carrots and sticks” are helpful (in any discussion tbh).

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Yep, pretty dumb comparison.

Hmmm, doesn’t seem like you get it. It’s not even possible to join the society on a whim, you have to go through a timed bidding process before tattooing. It can’t happen the way you described.

If you want to discuss this seriously, you should show some respect, tattoos are an ancient form of art going back thousand and thousand of years. I don’t care if someone gets a tramp stamp on a drunken haze and regrets it later, that doesn’t mean all tattoos are thoughtless decisions. There are people who actually care about their symbolism, meaning or aesthetics and use them to express themselves.

I don’t expect many people to understand this, but the society goes very deep in the rabbit hole of meaning. The tattoo represents a link between human and machine. This isn’t just a vapid narrative, it actually makes a lot of sense. See this and this.

I’m one of the first few members and I can only speak for myself, but I’m very happy with this experiment and I think it’s still on its infancy. Gav is working on V2 right now, there’s still a lot of different things to try.

You probably already figured this out, but we don’t have access to the funds AT ALL. It’s not correct to say we are “the richest collective” or that we have $3m in our bank accounts. That’s simply not true. Only a tiny fraction of the funds are accessible by winning the bidding game and successfully becoming a member. By the way, the rate in which the funds are being spent is a function of success, not failure. The demand to join the society was so big that most people bid near-zero KSM to join in 2022.

We did discuss in the past the possibility of becoming a sort of DAO and managing the funds with proposals and members voting, but we received a no-go from Parity/W3F regarding concerns with regulations. In order to be clear of any regulatory implications, it would basically require every member to be KYC’ed before letting them vote, which would be a pretty annoying and contradictory thing to do on a privacy-preserving pseudo-anonymous society.

So, considering these limitations, we simply can’t expect the society to do much more than it did in the past. The society treasury, even thought it’s pretty big, it’s unspent. In the worst-case scenario, it’s just sitting idle, which is not even that bad considering how quickly the greater Kusama treasury was drained and how poor some of the proposals were. The effect is pretty similar to burning.

That being said, I’m not against burning or transferring out these tokens. We need less than 1% of that to keep the game going. I just think the society is getting a lot of unfair and inaccurate criticism.

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I was exaggerating for comedic effect.

I know this, I have tattoos, they mean something to me, even if they are both shit. I was again exaggerating for comedic effect.

Governance is very very boring for most people. A large number of people are not aware of KappaSigmaMu, or of the treasury burn model, therefore in the spirit of satire and in the public interest, I felt it was/is my public duty to poke some holes in all the serious stuff.

I’m sorry if you were personally offended, it was not my intention.

I had intended to offend the entire collective - since this entity has no legal fiction or representation to be offended, which allows me a nice segue into your following point.

This is even greater reason for burning or repatriating funds - the collective is legally incapable of spending funds since it is, like other structures in the ecosystem an unincorporated association per Legal status of Kusama / Polkadot DAOs.

The society is an organisation that is receiving communal funds, operating with something approaching impunity, outside of the existing governance, circumventing processes that others must walk across burning coals through.

The continuing treasury spend is at the benevolence of the public as a whole, there is no divine reason for KappaSigmaMu to continue to receive this spend unquestioned.

If you want responsibility, expect critique and be comfortable in the fact that it is the game, the system, the entity that is being questioned, not the individuals.

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This does not seem to be in line with the code of conduct of this forum and even seems to verge on trolling.

Personally, I think it’s important that we re-think the kappa sigma mu collective and its funding, and I think many others agree with some or all of your critiques as I do. But even a strongly held conviction doesn’t justify insincere or trolling discourse in a forum specifically aimed at elevating the quality of discourse.

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With respect I disagree.

The reason comedy (insincerity as you say) has worked forever… to tackle big issues, is you can approach difficult subjects in a lateral and entertaining way and ultimately the little guy can score points against the big fish, who almost always end up taking themselves far too seriously…

This approach has worked in bringing three new people to the forum to defend their initative, explain it better to the community and ultimately help shine a light on an issue many people complain about privately, but refuse to do anything about.

Yes I am being direct, and yes I am trying to get a reaction, but this is part of the process of driving up the collective intelligence of the collective, not just insulating some specific group from exposure to critique.

In the US satire is protected under freedom of speech - in the UK, it is part of our national identity - comedy is a vital, but underrecognised element of democratic societies.

If people are going to be so sensitive about their ideas that they call foul everytime someone outside the clique critiques, we’re not gonna get very far.

I could point to some people’s track record creating multiple accounts, using ChatGPT and trying to influence opinion under the cover of anons, but this is again all part of the game… choose your weapons and good luck to you :slight_smile:

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This is outrageous, and I have never done such things, ever, nor would I. Please do not make dishonest claims about my behavior.

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I’m really disturbed that you think outright false accusations are an acceptable “approach,” rich, really. Super dispiriting that you’d resort to lies like that, regardless of our disagreements.

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I have amended my text, i stand by my position.