I think Scaleweb3’s last explanation is directionally correct in emphasizing experimentation and validation but makes a few key errors that I think lead to an opportunity to make suggestions on how committees can go about their work.
I’ll take this opportunity to show where I think this review is lacking context or due consideration. All quotes from Scaleweb3’s explanation of his committee’s conclusions.
Fee rebates.
we are a bit worried that they may largely accrue to the current power users…want to see their impact and how well they do in onboarding new users
If I understand this correctly, the fear is that Overtime will not deliver on getting new users to the door and thus that rewards are recycled by current players. Here’s the thing: you can’t evaluate this grant the way you would liquidity mining.
To explain why, I’ll start by highlighting a fundamental misunderstanding of the protocol:
If pricing & fees are already better than on centralized platforms and aren’t holding back adoption
This is incorrect and is the first presumption that should have been validated in the course of assessing the grant. Overtime have demonstrated that fee rewards are required to make the protocol economically competitive at both the small and large bet level with the objectives of bootstrapping 1) volume growth and 2) user growth. The question isn’t whether organic user growth is achievable without rewards; user growth demonstrably requires fee rewards due to the need to compete with centralized book spreads before a threshold of userbase and volume is met. Determining this threshold isn’t straightforward but even getting a rough idea is essential for understanding what’s at stake. When asked, the Overtime team said that they can be economically competitive at $1mm weekly trade volume, which translates to an achievable but not easy 4x increase in use (this would also roughly get to 240 daily traders).
In other words, what Overtime are asking for is a textbook example of a catalytic grant. The subsidy ensures competitiveness until enough scale is reached for the protocol’s economics to independently continue to attract users. It is unlike, for instance, liquidity mining, where what was initially uncompetitive in most cases becomes uncompetitive/undifferentiated again and the target users go somewhere else.
The position that you’re not sure about the strength of Overtime’s adoption because they’ve used some incentives so far is like saying “yes, the plane looks well-built…let’s see it fly without the wings.” The fact that the World Cup is happening next month, as is the capability to let LPs feed into the AMMs, means that withholding a grant for three weeks is setting Overtime up to fail because they simply can’t get the competitiveness they need themselves.
More thorough DD would also have encouraged Overtime to reveal the source of this competitiveness, which the Shadow Committee did (and resulted in that table being generated), or determine what sort of balance between scale and volume would have to be reached to get to that independent competitiveness (answer: you need lifers and about $1mm weekly volume).
Go-to-market and Onboarding
If these users are indeed your target audience, you have to do a lot of education, wallet onboarding sessions and much more (also good use of grant money) - we lack a bit of fantasy to see the impact on non-existing crypto user onboarding.
A cursory look reveals an interesting fact about sports bettors (and gamblers in general): they are among the most crypto-savvy populations out there. Centralized gambling sites have been taking crypto from wallets for at least twice as long as the ScaleWeb3 Twitter account has existed. As far as new onboarders to crypto-based betting go, they’re some of the lowest-hanging (and most valuable!) fruit you can get. They also are a very unique kind of userbase, which requires a vertical-specific GTM – i.e., you need to follow the expertise of people who know what matters to these players, and a lot of it in this case has to do with pricing in an arguably commoditized product. You also want to go to where the majority are and solicit participation from some of the largest players.
An experienced sports bettor himself, Spreek, who works closely with Overtime, will tell you this.
Even though Scaleweb3 hasn’t intuited this fact despite his experience with prediction markets (which have also been taking crypto for years), it’s still important to be able to substantiate your claim with a question or two to the proposing team.
Co-incentives
This was not detailed enough in our opinion as it completely depends on your governance. From a young project, we don‘t expect huge monetary co-incentives but certainty on incentives, potentially a pre-approval from your community to match x% (or not), would help the evaluation of the proposal.
I’ve been on this for weeks so I won’t belabor the point, but I continue to question the need for too much definition up front when there is inherent uncertainty in Thales’ need to build up their own resources and ensure an appropriate backstop for their operations. I’d go so far as to say that it’s on committees to have proposal-specific explanations for why they want to see co-incentives if they’re going to vote one way or another on them.
A final point, because I think we ought to hold ourselves to a higher standard when assessing these proposals (after all, these are enormous grants) –
Overall, each of these initiatives is good use of grant funding (and we don’t want to judge the merits of the different initiatives) but there was some detail missing to get a clear picture for the use of funds & onboarding.
Unfortunately, there was little time for feedback and discussion of this proposal as our committee took it over on a short notice. That said, I, Julian, personally looked into this proposal probably longer than into any other on this forum as we saw great value but were keen to understand the details.
Scaleweb3 says that he conducted exhaustive due diligence but also didn’t have time for basic details to be surfaced. You can’t have it both ways. Get enough information to make a review or punt on the recommendation.
Overtime posted their review at the very start of this voting cycle, and they were the only proposal initially assigned to Scaleweb’s committee. If they find that they didn’t have enough time to manage even this proposal, that’s a problem.
A final note: this is not an attack on Scaleweb or Committee B. I am (and have been) trying to demonstrate the kind of work and understanding I believe ought to go into these recommendations. The stakes are high.
) and looking forward to see great adoption in the coming months.