Introduction — Defining Growth

To design Kleomedes retroactive compensation, there needs to be a fair and equitable system for valuing how contributions towards Kleomedes DAO led to growth. A methodology was devised which tracks the performance of Kleomedes in the context of wider market movements.

Performance Puzzle — Expected Revenue Basis

Crypto is inherently volatile and in the face of this volatility, it isn’t reasonable to define our growth purely by revenue movement on a $ basis.

Thus, we must consider performance against a volatile basis — a basis which tracks the performance of the underlying market and this underlying market needs to be tied to Kleomedes’ potential revenue base.

The first piece of the performance puzzle is defining the underlying market. To this end, the Kleomedes custom basket was put forward. This is an index which tracks the market cap of a basket of assets, currently Cosmos altcoins, both validated by Kleomedes and not validated by Kleomedes. This gives the best representation of Kleomedes current market exposure and the inclusion of not validated assets factors in market changes which can either act for or against Kleomedes revenue.

For example, if Kleomedes only validates tokens which outperform the market, which is a sign of good performance, the inclusion of underperforming non-validated tokens will make this apparent. Similarly, if Kleomedes only validates chains which underperform the market, the basket’s inclusion of tokens exhibiting significant growth will highlight the gaps for what we could have achieved.

As Kleomedes grows, we will need to alter the makeup of this basket — but this data is readily available historically, which makes this methodology robust in the face of change.

In this way, Kleomedes can assess whether changes in revenue are based solely on market movement rather than impacts of organizational performance.

Performance Puzzle — APR vs Revenue

The second piece of the performance puzzle is based on how Kleomedes derives revenue, which is the provision of validator services.

As a validator, Kleomedes is majorly exposed to changes in inflationary APR — as chains grow and mature, it is common for APR to drop over time. For revenue to stay “flat” in dollar basis terms, Kleomedes AUM needs to grow as fast as the APR drop occurs. This is particularly problematic during a bear market, where both on-chain activity decreases and APR goes down. This may be further exacerbated by delegator bear market selling, which would in turn decrease our AUM.

The change in APR that occurs over time can be estimated by the revenue/AUM ratio. In this way, Kleomedes can adjust the predicted performance to take into account the changes in APR that occurred over the performance period. Similarly, using the revenue/AUM ratio will prevent new high APR chains from outweighing more mature chains and as a result prevent possible over-estimating.

Of note, not all chains have high inflationary APRs at genesis. For example, Sommelier’s APR has been kept intentionally low and most of its APR will eventually come from vault revenues. The revenue/AUM ratio model still works in this case, as higher revenues should attract more AUM, allowing for equilibration of these two metrics.

Valuing Performance

The last piece of the compensation is determining how much of the additional benefit derived through the work should go to those enacting the work. Kleomedes and by extension stakers of $KLEO, provide the tokenomics mechanisms, environment, community, branding and capital to make the enterprise possible, whilst the contributors provide the labor and the expertise to turn Kleomedes underlying strengths into revenue growth.

Without contributors, Kleomedes will not be able to grow its revenue — similarly, without Kleomedes, contributors will not be able to provide value.

To this end, it is proposed that contributors and Kleomedes should split 50/50 the marginal benefit. The marginal benefit is the benefit which can be calculated to be above the expected market movement (taking into account fluctuations in the underlying market caps and the APR changes).

In order to align incentives — it is suggested that $KLEO be issued to split this marginal benefit and it be done on such a basis as to dilute stakers, such that stakers are still 50% better off in profit share as a result of revenue growth, whilst at the same time, contributors will be able to stake their earned $KLEO and receive 50% of the marginal benefit that they have brought to the DAO.

This $KLEO will be liquid — however due to shallow LP, aligned incentives, and the stakers revenue share, there is a disincentive to sell the $KLEO over realizing the benefits through revenue share. In the future, if necessary, it may be possible to issue non-liquid $KLEO towards this to overcome any concerns regarding low liquidity. In any case, those who opt to market sell will simply create an arbitrage opportunity for others to step in and purchase $KLEO below its fair value.

2023

To this end, the proposal for the first ever enacting of the Kleomedes Retroactive Compensation — Kleomedes performance for 2023 is derived as follows:

1. The Kleomedes custom basket was selected as follows Akash, Juno, Kujira, Fetch, Evmos, Stargaze, Persistence, Sentinel, Cudos
2. The Kleomedes custom basket market cap from the selected assets at 29–12–2023 was $2,169,281,372 whilst the custom basket market cap was $892,501,884. This represents a movement of 243%.
3. The Revenue/AUM ratio for the same time period — averaged over the first 6 weeks and last 6 weeks changed from 0.91 to 0.55 — this means that the APR at the end of the period was 60.2% of the start of the period. This allows us to adjust the expected revenue growth performance.
4. The expected revenue growth based on the above factors is 243% * 60.2% — this gives an expected revenue growth of 146%
5. Over this same time period, Kleomedes revenue grew by 205% — which is a 40% overperformance of what would have been expected solely by market movements.

$KLEO stakers represent the owners of Kleomedes DAO and the $KLEO stakers derive benefit from Kleomedes overall growth through the profit share mechanisms. With Kleomedes outperforming the market movement by 40% — it is proposed that 50% of the overperformance which was allocated to stakers go towards issuing $KLEO towards contributors from 2023. This means that based on the number of $KLEO staked in the DAO, 20% of this $KLEO will be issued from the treasury to reward contributors. By splitting the growth, $KLEO stakers receive 20% growth in revenue above market expectations and at the same time $KLEO contributors are rewarded for their work towards the revenue growth.

By issuing $KLEO rather than putting aside revenue to cover costs as would be done in a conventional enterprise, contributors are incentivized to continue to grow Kleomedes, thus aligning incentives and at the same time, maximizing the benefit that stakers receive throughout the period which is retrospectively rewarded.

tl;dr

Based on evaluation of the overall market and how Kleomedes performed within that lens, it is determined that we grew by 40% in 2023. In an effort to create balance between value distributed to stakers of $KLEO and contributors who put in the sweat equity without compensation, we are proposing that we split the value of that growth 50/50 between the two groups. Therefore, an amount of $KLEO equivalent to half the value of our growth, as defined in this document, will be issued as retroactive compensation to contributors. This will be enacted by a proposal on DAODAO utilizing the retroactive compensation module that will allow the community to vote on the ratio of distribution to all contributors, per their self-attested contributions that will be summarized in a subsequent Retrospective Analysis. Rewarded $KLEO will be vested over the remainder of 2024 to prevent supply shock and further align incentives.

Next steps:

Kleomedes is eyeing enormous growth in 2024 and to achieve this, there needs to be a fair and equitable rewards system. It is proposed that this implementation of retrospective rewards be put to a vote.

Should this retrospective reward proposal be approved, learnings and further assessment will be conducted in order to put forward a system which can incentivize contribution such that Kleomedes can encourage further growth and community engagement with a view to maximizing growth in future iteration cycles.

Discussion can be viewed in our Discord in the Governance Forum, as usual.

Be sure to check the Governance Portal to place your vote to approve this document as a Press publication on our DAO.

As many may remember, launching our initial liquidity was a bit of a process. Starting back in late 2022 we began the process of listing on Juno’s main DEX, JunoSwap. You can read more about it in our post from 6 months later, but suffice it to say JunoSwap didn’t work out.

Once Wynd was ready, we launched our JUNO/KLEO LP on Wynd and finally had things rolling. Or so we thought. The Wynd team, unfortunately, decided to go the classic route of rugging through negligence. The exact story isn’t relevant here, but the outcome can be summarized by saying the DEX is now being abandoned. This left us in a precarious situation where our LP was not serving our community to the fullest of its potential. The Wynd interface was repeatedly causing issues with trades and deposits/withdrawals due to the lack of development and bug fixing.

After significant deliberation within the community, we decided as a group to simply migrate to Osmosis to get established on a solid DEX that won’t be going anywhere. We wanted to be centrally located and convenient for users to engage with. While there were other options to be considered, none compared with the strengths of sticking with the informal ‘liquidity hub of the Cosmos’.

There was one other decision to be made, however: our pairing options. We had originally paired with $JUNO because the Juno chain was our most significant revenue source. Due to the design of our tokenomics, $KLEO price should remain relatively in-line with our overall revenue production. Being paired with our main revenue source kept our token price matched with relative ease.

Over the last year, however, we have grown significantly on many different chains. Our revenue sources being more diversified means that our token price is decoupled from any single token. This leads us down the road of needing to pair with something more objective, price-wise. The community and core team agreed that pairing with $USDC was the best path forward for the time-being. This can always be revisited later, and eventually we will have enough liquidity depth to consider multiple pairing choices.

So, in short, we’ve now migrated our liquidity to Osmosis and are paired with $USDC!

This also marks a shift in our reward distribution, where we will begin issuing revenue share in $USDC as well. More on that later!

Keep track of your Revenue Share and Backdrop claiming on our dApp. When you claim your $KLEO from the Backdrop you can stake directly to our DAO if you wish, or you can use tfm.com to transfer to Osmosis to swap. Same for the $USDC you claim from Revenue Share. It will be Noble $USDC, so you are free to use it anywhere that is accepted. As soon as Yieldmos has their Osmosis Outpost ready, automations will be reactivated for these actions.

Tracking the Migration

The migration was a bit of a process; we initially did not unbond our Wynd LP properly, so after waiting the lengthy unbonding period only to find the bulk of our LP was still bonded, we had to restart the process. We also ran into a lot of issues trying to perform actions out of the multisig, so we had to resort to using a hotwallet to complete a lot of it.

We also converted a certain amount of funds to $USDC along the way, cleaning up our Treasury per community agreement.

Here is a record of events:

Prop A51: First attempt to unbond LP

Prop A52: Unstaked remaining Juno that had been earmarked as Contributor Rewards

Prop A53: Transfer 5k Juno sitting in treasury to hotwallet to migrate to Osmosis to sell off in chunks

Prop A55: Send over remaining Juno to sell off: 355 belongs with the above Contributor Rewards, 361 goes to general treasury.

Prop A57: Claim the incomplete WYND LP that was unbonded

Prop A59: Transfer incomplete LP to hotwallet

Prop A60: Unbond full Wynd LP

Prop A64: Transfer remainder of Juno from the unstaking in Prop A52 to sell off

Prop A74: Claim fully unbonded LP from Wynd

Prop A76: Withdraw LP from Wynd

Prop A77: Transfer tokens from LP to hotwallet to migrate to Osmosis and establish new LP

See this spreadsheet for a record of relevant hotwallet transactions.

In the end we resulted in 8257.4861 $USDC paired with 10739234.32 $KLEO, putting the price at $0.0007689 in this pool. This results in us effectively getting about $0.687 for our Juno we sold from the LP.

We also received an average of $0.625 for our Treasury held Juno that was sold over this time-period.

Side-note — this leaves us with roughly 3336 $USDC in the treasury tagged for Early Contributor Rewards, among the other funds reserved for other purposes.

USDC Going Forward

We will be sharing more information in the weeks to come about what it means for us to be paired with $USDC and how the community can best engage with the LP. There may be more trading opportunities as a result of this change, but it will be up to users to decide this for themselves based on all of the transparent information we provide to the public. Liquidity is still relatively low, so there will be significant price impact for any major buys/sells.

As always, we are a contributor-focused organization, not an investment protocol.

Our POL is maintained as exit-liquidity for contributors who no longer wish to hold $KLEO. This does provide market trading opportunities for savvy community members, but the market availability of $KLEO is not intended to be a method to ‘buy into’ ownership of KleomedesDAO in any significant way. We also do not dump team tokens into the pool to raise funds for protocol development, hence our lack of trying to ‘pump’ our LP with retail support. Price and depth of our LP is intended to stay locked in-step with our protocol growth.

This is very unlike any other project token out there, and we will be writing more on how this works in the coming months.

For the short term, keep an eye on our tracking spreadsheet and watch for opportunities to snag $KLEO at good price points. Whenever there are market sells, or our revenue goes up and boosts staking APR, it’s a good indicator that there’s some discounted $KLEO on the table. Buy carefully, and in small quantities, however! It’s up to the individual to evaluate the price impact of their desired trades.

It is important to remember that providing AMM liquidity is largely a net-loss and we eat the impermanent loss as a protocol to maintain market availability for contributors to have an exit option. This is essential for any DAO.

Moloch DAOs, for example, utilize a ‘Rage-Quit’ functionality.

Without the ability to exit with some representation of their accrued value, contributors have no real autonomy in a DAO. By maintaining POL that grows in-step with our revenue production, we consistently provide a reasonable exit-value for contributors to gauge the contextual value of participating.

In short, market price and LP depth determines the value of becoming a contributor.

We also protect ourselves from having our treasury unexpectedly drained by the traditional rage-quit mechanism of taking your portion of value directly from the community treasury, or potentially fracturing the community like Nouns style DAOs do when there’s a fork. Revenue-based POL is the most seemingly fair option available at this time to ensure that contributors maintain autonomy and the community maintains integrity.

Accessing the LP

As of the time of this writing, Osmosis is experiencing a bug on their UI preventing them from adding any new tokens to their whitelist.

The LP is live, however, so TFM can be used to not only swap $KLEO, but also transfer it back and forth from Juno to Osmosis. Make sure to use Osmosis for trades, not Juno. There is some leftover Juno liquidity that users haven’t withdrawn (and they should!)

Follow this guide for details:

by mOde

Why DAOs?

In the dynamic landscape of decentralized finance and organizational structures, the distinctions between DAOs and LLCs are often explored and debated. Yet, amidst discussions of blockchain security, collaboration capabilities, and financial management disparities, one critical aspect remains obscured: honesty. In this exploration, we delve into why honesty, synonymous with transparency, stands as a cornerstone value within DAOs and the broader Web3 ecosystem.

The Unseen Advantage

Why argue that honesty, or transparency, is a paramount feature of DAOs and Web3 in general? Consider conventional businesses, even those at the forefront of progress. While they innovate, generate profits, and reinvest, the veil of secrecy often shrouds their operations. What does the public truly know about what unfolds behind closed doors? Regrettably, very little.

Unlike traditional businesses, DAOs bring transparency to the forefront. They empower stakeholders by providing a window into every operation, fostering a culture of honesty. This stands in stark contrast to conventional enterprises, where trust often hinges on the credibility of CEOs or board members.

In the realm of standard businesses, building trust is a delicate dance. CEOs must embody trustworthiness, and board members must work tirelessly to instill confidence. A single failure can be catastrophic. Studies underscore this vulnerability, indicating that 40 positive reviews are required to counterbalance one negative review. Imagine if people had the ability to peer behind the curtain, to witness the relentless efforts invested in each product or service.

Humanizing Effort

Humans understand effort better than anything else in this world. The propensity to be critical often stems from a lack of visibility into one another’s endeavors. We mistrust what we cannot see, and this lack of transparency leads to misunderstandings. Standard businesses perpetuate this by concealing their efforts, revealing only the polished end results. This, indeed, is a profound mistake.

Using Honesty as an Advantage

In essence, the key to leveraging honesty as an advantage is simple: be honest and show it. Personal experience in various technology companies reinforces this notion. The pivotal moment arrived when I chose radical honesty. When facing challenges in delivering a product, admitting faults, and outlining a plan for improvement fosters understanding and empathy.

Consider informing a customer of a delay: “I didn’t follow up on a crucial component for your order, and it’s now postponed by two weeks. I’ll implement a notification system to prevent such issues in the future.” This transparent admission (like the one that Kleomedes presented in their 7/19/23 Incident Report) humanizes the mistake, allowing customers to empathize rather than react with anger or frustration.

Contrast this with a vague excuse: “The supplier had to send it faster, but the plane was delayed due to the pandemic. We’ll be late by only five days.” The lack of context and accountability in this response breeds frustration and anger, as customers are left in the dark about the company’s efforts to rectify the situation.

The DAO Advantage

So, why DAOs? The answer lies in their openness to the public eye. Every step is on-chain, leaving no room for deception. However, caution is advised. Embracing the transparency of DAOs requires a shift in mindset. The luxury of withholding insider information, prevalent in traditional businesses, dissipates on blockchains. On-chain, lies and hidden information have no refuge.

Conclusion

In the world of Web3, honesty is a monumental advantage, but it necessitates a shift in mindset. DAOs offer unparalleled transparency, enabling organizations to build trust more rapidly. However, this trust is fragile, easily broken, and challenging to rebuild. The tools provided by DAOs are potent, but they demand a commitment to full disclosure. As we navigate this new era of decentralized structures, embracing honesty becomes not just an option but a strategic imperative.

The October Financial Report!

What we have in the kitty:

Link to Treasury

The Plan:

This is the suggested plan from members of the core team after much consideration:

We sell everything liquid into stables. That gives us roughly $1.8K to add to our $4.5k existing stables at the time of writing this report. This puts us around $6–7k (give or take based on timing on actual swaps) in stable & liquid treasury funds plus the potential of the staked Juno as a bonus.

We start unstaking the 5k Juno in anticipation of wanting to sell at this local top. If it crashes before the unstaking period, we can decide to restake or cut our losses. We are not giving up on Juno, but it is foolish to hold treasury assets in Juno at this time. We need to maximize capital efficiency for a prolonged bear, regardless of the current market action. The global economy is not yet primed to support any kind of bull-run in our estimation. We have the unstaking window to evaluate this theory and take decisive action when the time comes.

ON to liquidity!

Current LP status on Wynd:

Juno: 18956
Kleo: 7873594

We will withdraw that liquidity and migrate it to Osmosis to sell the Juno into USDC to form our new liquidity pool of USDC/KLEO. We will consider a promo event like a streamswap at a later time when we’ve done more prep for the marketing.

That means that liquidity will go offline on Wynd! Any individuals contributing LP should have withdrawn by now, as we had to wait the full unbonding period after making this community decision!

We will attempt to transition to our new LP on Osmosis as quickly as possible, but there may be some down-time while all the steps are carried out.

We highly recommend using extreme caution with the hoppers pool during this transition, as the slippage will be considerable. We will be relaunching at the exact valuation we arrive at from simply selling the Juno from the old LP, we will not supplement the pool to adjust the price to match any other valuation. So the hopper pool will very quickly arb back to our POL price due to volume.

On to Revenue Share and Expense Tracking!

We are working on creating a public-facing dashboard for tracking all of these financial details. Until that time, we will be providing regular monthly updates along with our revenue share announcement each month!

Here is this month’s report:

• Revenue: $950
• Opex: -$433
• Capex: -$431
• Profit: $86

To explain our expenses:

‘Opex’ is our ongoing operational expenses. This includes things like power & internet (which we just upgraded to dual fiber lines, zoom zoom!). This does not include any kind of salaries or compensation for time and effort, just to make a note. Simply costs incurred in the daily operation of our data center. Going forward, this money will be reimbursed to Marco from the multi-sig on a monthly basis for paying the bills. Expense reports to follow.

‘Capex’ is our ongoing capital expenditure budget. Our hardware has a limited lifespan and we need to budget for depreciation costs upfront, otherwise we won’t be able to afford to pay for them when needed. SSD’s, for example, have a specific r/w lifespan. This is a moving target, and over time we will bring this number in-line with actual replacement costs, but for now it is estimated on a conservative end to make sure we have a budget during the bear market while our treasury is tight. This money is kept in the multi-sig and will only be used for necessary hardware replacement expenses in a manner approved by the Treasury subDAO, and ultimately the community.

Staking APR

We have been working internally to upgrade our financial reporting and tracking. We have put together a system that is giving us much more accurate data that we will be putting up on a public dashboard as soon as we can get it ready. Our first month of displaying this tracking is somewhat of terrible timing for the actual numbers, however! If you know anything about Kleomedes, it’s that we don’t sugar-coat the truth! Data is data, and we all deserve to see the unadulterated version of it. This is a step closer to that, and we will continue on the path towards making every single dot and tiddle of accounting transparent for the community.

There are several things that need explaining:

1. Our Revenue is based on profit after we pay our expenses. That means we have a break-even point where the $KLEO staking APR exponentially drops to 0 as our revenue approaches our expenses.
2. Our Revenue Share Launch utilized funds earned in the time leading up to getting our distribution contracts ready to ‘kickstart’ our tokenomics and get us into motion while we toed that break-even point due to bear market price action on our commission revenue.
3. The spike in July marks the first month of profit due to the concerted efforts of key contributors to bring on new chains and earn foundation delegations that boosted our revenue.
4. The bear market trend continues, as can be seen in the chart as our launch support funds ran out, however. We have once again retreated to the breakeven point.

This is where the timing part comes in! Right now $KLEO is on a pump from Juno price. It’s been carrying $KLEO with it, and that means, since we haven’t yet claimed any rewards at this increased price, right now there’s asymmetry between token price and revenue. As token price goes up, staking APR goes down unless revenue is growing to match it. Revenue only matches price on sustained market growth, not pump and dumps (unless we happen to time our commission claims just right). This is why we need to switch to a stable pairing now that our revenue stream is more widely diversified!

This will also create potential arb opportunities for $KLEO holders as our revenue streams naturally fluctuate with the market, and we get better live-reporting of meaningful numbers. Things to look forward to!

Let’s take a look at the weekly chart after this last market pump:

Key takeaways here:

• Our Delegators hasn’t changed at all
• Our AUM (Assets Under Management) is up almost 40%
• Our Revenue is up almost 32%

Remember that since we are at the breakeven point in revenue, APR responds exponentially to any increase in revenue at this time. Our APR is an average of the monthly revenue, so random pumps do very little to impact our staking APR. Who knows how long this pump will be. Maybe prices will stay up for close to a month and we’ll actually get to sell some commissions at these increased prices. But if it doesn’t stick around long enough, it may not have much impact on our APR next month. We will just have to see.

It is, however, a good encouragement that when the market does recover we will see results! It also serves to drive home the importance of us picking chains that will grow in the coming months. Our ability to grow hinges on us staying above that break-even point so that there is incentive for making contributions to the DAO to earn more $KLEO!

This is why we have embarked on a community-driven initiative to study our chains and learn how they are doing, which ones have latent growth potential that we can help foster and support! The more our chains succeed, the more we succeed!

To learn more about this initiative see our Zealy board to find quests that reward in reputation and potentially $KLEO!

To learn more about other initiatives we are building as a part of our ICE (Inter-Community Engagement) program, check our partner Zealy board by Nearchos (WIP).

Special Notes

Cash-Basis Accounting

Up until now we have not been operating on a cash-basis with expenses. Marco has covered all of the costs of infra (hardware & services) on his own and we’ve kept a tally of those costs as a debt the treasury owes him. There were reasons this was the case which can be discussed, but moving forward we are transitioning to a cash-basis on all expenses; by that I mean each month we will pay for our Opex directly out of our revenue instead of just tacking it on the debt.

Our Capex allotment will serve as our ‘buffer’ for the undesirable event where our revenue drops below our expenses. We will still pay our bills to keep the lights on, but our hardware budget will not grow as needed. This will be recorded as a ‘debt’ against future revenue that will be repaid before revenue share resumes, so that when times are better we replenish our hardware budget!

Treasury Debt

This means moving forward we have locked our debt accrual to Marco at $16790. As soon as we have revenue to support repayment, we will add a repayment line item to our monthly accounting or perhaps pay it off in a lump sum once the funds are available.

Extra Bonus

We are sending an extra $250 USDC from treasury funds to Marco this month to cover last month’s power bill (paying that amount off the total debt) as a part of transitioning to paying off debt vs accruing it. Also as a thank you for his hard work enduring the rolling blackouts they’ve been experiencing. He has been putting in double-time.

Buybacks for last month

Last month we weren’t technically profitable. We voted to use funds from our ‘price support fund’ from our Revenue Share Launch vote to support our revenue share for the month to keep tokenomics active while we examined the situation. This did not, however, include an allotment for buybacks. Buybacks will resume as revenue supports it.

Creating a minimum threshold for paying out Revenue Share

There is some merit to creating a revenue share threshold. This means even if we have profit, we won’t pay out the revenue share unless there’s a certain amount to distribute. Logically this already exists, as we wouldn’t pay out 3 cents in profit. But should we pay out $86 worth? That’s going to just be fractions of a penny for many. Is the juice worth the squeeze?

A community discussion around what this threshold should be is warranted. There are several options for how it could work, but we’d love to hear community ideas!

Stop in the Discord and share them!

Our initial tokenomics whitepaper can be reviewed here for reference.

Starting out, we launched with a total fixed supply of 740m $KLEO.

Initial distribution is as follows:

Since then, our airdrop has concluded and we’ve clawed back all the unclaimed $KLEO from this airdrop: 253,540,529

This leaves us with the resulting numbers for our final launch tokenomics:

Not a bad distribution!

What has happened since then?

The community has voted to issue $KLEO from the Community Fund into circulating supply on several occasions, with a majority of that being clawed back as it is not claimed by recipients. Exact numbers are not always clear due to the way the clawback works, so some numbers are aggregated averages or estimates.

We also have the beginning of vesting for founder’s tokens. Founder’s tokens release on a constant drip over the course of 12 months. So it’s roughly 9.25m $KLEO/month getting added to supply over the next 12 months.

So that leaves us with the following numbers for our tokenomics as of the time of writing this article:

What’s up with Founders Tokens?

While it was clearly documented in our whitepaper how founder’s tokens were to be handled, it’s relevant to review what this is, as it has a significant impact on our circulating supply.

As can be seen on our outdated about page, we have a diverse team of individuals behind Kleomedes. Some of the original founders have already moved on and are no longer contributing. Some founders are still working on their initial contribution, as their roles didn’t come into play until after initial launch. And, of course, we’ve added an additional founder and still have room for another to be added, should someone provide a significant enough contribution to earn it!

Our Current Lineup of Active Founders:

Founder & Sys Admin: Marco/tsulhc

Dev Team: Jazz, Blacks, Cman

Business & Community Support: Avi, Trigs, mOde (and Cman here too!)

Enterprise: Apapaya, Thor, Hood73

It’s important to note that the Founder’s token allocation for these members has a two-fold purpose:

1. Incentivize founders to get MVP ready for Kleomedes as a proof of concept
2. Create a solid foundation for governance to be secure from malicious capture

This was accomplished with two features of the Founder Allocation:

1. Tokens were locked for 12 months before starting a 12 month linear vesting release. This meant founders couldn’t just dump their tokens soon as there was liquidity.
2. A special contract was made so that the locked tokens would still count as governance weight in the community DAO. This created the safety net for governance to prevent any malicious proposals going through until token distribution achieved adequate distribution among the community.

As these tokens are vesting and releasing into circulating supply, the question remains, what was done to earn these tokens by our contributors? An important question with some pretty good answers!

Launch Goals:

• Bare Metal hardware to run multiple validators + infra support tools
• Validators in the Active Set on 30+ Chains
• Foundation Delegations from numerous chains
• $KLEO token for distributing revenue and governance weight
• Functioning Website with dapp for claiming token-holder rewards
• Governance portal for onchain execution of DAO actions
• Community Growth Activities (Zealy, etc)
• Treasury subDAO
• coDAO structure (Nearchos & AtlasDAO)

Ongoing Responsibilities:

• Monthly Revenue Collection & Distribution (still many manual steps)
• Infra Support & Maintenance
• Community Management
• Social Media Activity
• Weekly News Podcast & other Twitter Spaces
• Website & dApp improvements & support
• Chain promotion and pursuing Foundation Delegation/Grants

Future Growth Plans:

• Set up legal entity for DAO to interface with external partners
• Expand Data Center Capacity
• Automate Revenue Collection & Sharing
• Improve Website & dApp
• NFT Program
• Expanded Community Engagement Activities
• Create a fundraise mechanism to build capital for future growth

So there you have it! That’s what the Founder Allocation is all about, and a breakdown of what has been delivered, what’s continuing to be done for upkeep, and a glimpse of what’s coming down the pike.

Final Housekeeping:

There’s one other item of housekeeping that needs to be addressed: mOde needs to be added to the founder allocation vesting contract!

There is an active proposal for this live here: https://daodao.zone/dao/juno1mue2xdl05375tjc4njux5c6mkxltun3h0p33qtpx4utrwtnh949sxutcxy/proposals/A16

Please vote to get mOde added for all the hard work he’s put in!

In our exploration of DAOs and building decentralized communities, there have been many experiments. First, there were token-managed treasuries and governance. Then there were Governors/Delegated Reps. Then there were SubDAOs. Now there’s a new acronym on the block!

CoDAOs!

What is a Collaborative DAO?

The idea behind this stems from the need for DAOs to collaborate seamlessly in order to foster a composable ecosystem. DAOs being built in silos only reduces the likelihood of inter-community engagement, which is the fuel that feeds the growth of web3. By working together, DAOs can become more than the sum of their parts.

Separate Sovereign Entities

The most crucial component here is that each DAO retains its sovereign control of its assets and codebase. This is very unlike a SubDAO, as SubDAOs are subjects of the parent DAO. The parent DAO can nullify any onchain action, or push their own onchain actions through the SubDAO. This makes sense for a lot of structures, but for collaborating projects it does not make complete sense. Hence the need for a new paradigm!

Individual Communities

Each community retains its agency over their DAO. While Inter-Community Engagement will be an essential building block of the collaboration, there will not be a full merger between the two groups. This is to encourage the retention of identity within each community, and foster a sense of collaboration rather than simply a merger where uniqueness is lost.

Shared Goals and Resources

The main purpose of this kind of collaboration is strength in numbers. It takes a LOT to build a web3 project, especially an unfunded community led project. By combining resources and taking advantage of efficiencies of scale, both projects can leverage their strengths and account for their weaknesses. There many ways to synergize code development, contributor activity, business development & protocol growth, and social engagement. Together both projects can become more than the sum of their parts! A true web3 ethos inspired pursuit!

How will Atlas and Kleomedes Collaborate?

The opportunities here are really endless. The creativity of the community will come into play here tremendously. To set the stage for this, however, let’s take a look at the roles each project plays within their own ecosystems:

Kleomedes:

Validator Enterprise

• Running Validators on 25 and counting chains across IBC networks, expanding to EVM and beyond.
• Active Revenue Distribution Program
• Designed to reward contributors and supporters of the Enterprise with profits and incentives earned by the actions of the Validator. Real Yield only!

Community Focused Growth

• All goals and actions of the Enterprise are focused on giving contributors opportunities to get involved and be rewarded for their contributions.

AtlasDAO:

Community NFT Project

• Totally community led project with full governance controlled by NFT holders
• Community contributed art is used for the DAO NFTs

Revenue Distribution Plan

• All revenue from mints is held by the DAO and staked with chain validators
• Proceeds from this will be distributed to NFT holders

Collaboration:

• Kleomedes can help AtlasDAO set up their revenue distribution
• AtlasDAO can delegate their mint revenue to Kleomedes Validators instead of spinning up their own or picking random ones on each chain
• Kleomedes revenue will grow from Atlas staking
• Atlas will receive $KLEO rewards for delegating to Kleomedes
• Atlas can stake or distribute their $KLEO to NFT holders. Staked $KLEO will earn a share of Kleomedes monthly profit from operating the validator

As you can see, there is a strong flywheel effect here for both communities. Not only will Atlas have a reliable validator without any new overhead, and Kleomedes will have an avenue to support expanding their position on existing and new chains. Both projects will support each other in ways that provide positive feedback loops for each other’s projects!

What Does the Future Hold?

Moving forward there will be many stages of collaboration. Here is a rough roadmap of ideas by our project leaders:

Joint Twitter Space for Cosmos News

• Members of each project will collaborate to start a new weekly space to talk about relevant news from the ecosystem.
• Community engagement will be paramount for this, so fun games to get people involved will be implemented.

Revenue Share

• Our devs are working to figure out how best to get revenue share live for AtlasDAO as well as integrate their treasury into the Kleomedes Reward System.

New NFT Mints

• As we deepen our collaboration, we will put together plans to expand existing NFT collections and issue new mints, as well as put together all-new NFT collections to explore other areas of growth
• These mints will be focused on growing delegations on chains Kleomedes validates. The more profitable Kleomedes is, the more value Atlas will earn as our staking partner.

What Do?

Wondering how you can be a part of this epic collaboration? Great question!

Make sure to follow for announcments:
Twitter: AtlasDAO & Kleomedes
Discord: AtlasDAO & Kleomedes

Our first Twitter Space goes live tomorrow at 3pm EST!

For now all suggestions for weekly Cosmos news are being collected in the Kleomedes discord under Contributor Content. We will formalize this process as we build out a custom Zealy experience for this Inter-Community Engagement!

Hello! I’m Marco, also known as tsulhc, and I’m responsible for building, maintaining, and administering all of Kleomedes’ infrastructure.

I’m writing this article both as an incident report and to analyze my processes to understand where I can improve and make our infrastructure even more resilient.

On Tuesday night, between 11 PM and 3 AM GMT+2, the entire block where our machines are located experienced a complete blackout, resulting in approximately 4 hours of downtime.

Before continuing, I want to clarify that none of our delegators suffered any slashing.

Almost all global media outlets covered the unprecedented heatwave that hit Italy. Yesterday, the center of Rome recorded a temperature of 42.5 degrees Celsius. In this situation, due to both temperature limits and the immense demand for electricity, service lines were experiencing abnormal stress, leading to blackouts in various Italian cities for many hours.

Now, let’s go through the timeline of the incident, all times are GMT+2.

10:30 PM: The electricity is cut off throughout the block, and the UPS kicks in with an autonomy of about 20/30 minutes. I immediately report the issue to the power line manager, who has set up a dedicated task force to restore 24/7 services.

11:00 PM: The UPS is about to run out, so I shut down the machines to avoid data loss. The disaster recovery procedure begins.

In our facility, we have a 3KW gasoline-powered generator, more than enough to power all our machines for about 4 hours.

11:30 PM: I add motor oil and gasoline to the generator and proceed to turn it on. There’s one aspect I hadn’t considered — the generator makes an enormous amount of noise. Our machines are located in a residential area, and keeping it running during the night would likely lead to discussions with the police at best. So, I decide to turn off the generator.

12:00 AM: The next move is to deploy the backups we keep in a canonical data center, precisely to deal with such situations. Once again, I face a scenario I hadn’t considered. My phone’s battery is almost dead, and my car and motorcycle are trapped in the garage, thanks to an electric gate. Without a hotspot with mobile data, and unable to move, I’m officially stuck.

12:30 AM: The first estimates for the repair come in, with technicians guaranteeing restoration by 2:00 AM. Since slashing in most Cosmos chains occurs after 8 to 16 hours of downtime on average, I decide to wait.

1:30 AM: There are no signs of restoration attempts, and I start to think that waiting wasn’t a good plan. With the last 5% of phone battery, I read a tutorial on how to manually open the gate.

2:00 AM: The blackout continues, so I pack up everything I need, manually open the gate, and head to a Tennis club of which I’m a member and have the keys to. A few minutes later, the backup restoration process starts, which, for about 25 validators, will take several hours.

3:00 AM: I receive an SMS, and the issue has been fixed. I rush back to power up the machines. About 10 minutes later, almost all validators are active again. Kava is the last one to go in sync.

5:00 AM: The entire infrastructure has been restored, and I’ve earned a few hours of sleep.

I believe this timeline illustrates the challenges faced by those who believe in true decentralization without relying on a canonical data center. Choosing to own all our machines and host the validators in our own environment was certainly not the easiest or most profitable path.

I’ve also learned a valuable lesson; I thought I was prepared for anything, but I found myself in an immensely stressful situation where I couldn’t think clearly.

What are my considerations in light of what happened?

• A simple power bank costing €50 for my phone and notebook would have allowed me to start the backup restoration process with at least an hour’s headstart. Needless to say, I’ve already ordered one.
• Although the costs are significantly higher, we will also equip ourselves with a large battery to power our infrastructure for at least a couple of hours. The gasoline generator is suitable only as a last resort, especially at night.
• Our backup restoration strategy is very fast, but not fast enough. Due to stress and indecision after more than 3 hours of power outage, I hadn’t managed to bring a single validator back online.

Fortunately, most Cosmos chains are rather lenient regarding slashing for downtime. In the end, we didn’t even exceed 30% of the slashing window.

A one-man-show is not sustainable in the long term. As a DAO, one of our most challenging tasks will be to decentralize our infrastructure across locations and individuals — which is why it has always been an item on the roadmap to expand our data center capabilities. Lessons like this are good reminders that there are steps we can take today to mitigate risk, as well as plans for tomorrow that will provide even more resiliency for our validators!

Discussion around these ideas and how they can be implemented can be had on our discord, as always!

Join the Kleomedes Discord Server!

Fresh off the back of our successful Akash push and straight after the launch of our Archway push, we’re looking at a Stargaze push!

We’re currently in the active set, so this could be the easiest push we’ve ever done!

Delegate to Kleomedes on Stargaze and earn big $Kleo rewards!

Share the news and earn big $Kleo rewards!

The better Kleomedes does in the active set, the better the rewards for everyone involved.

The push will be open for 1 month, just like the Archway push, you can join in the fun by delegating to Kleomedes and the sooner you do, the more $Kleo rewards you will earn.

Push Details

We’re starting out either in the Active Set, or just below! This means that from the very first day, you earn $Kleo via the Snapshots and you wont miss out on a second of $STARS rewards.

The better Kleomedes does, the more delegators earn.

The push will be open for 1 month from launch date — the sooner you get in the better!

If we miss our targets, we’ll still pay out 50% of the lowest tier reward and we’ll use our learnings from the push to shape our future attempts.

Marketing Details

Lets push this marketing to the next level!

Individuals will have the ability to earn $Kleo by getting the word out — we’ll release tasks each week and if you do them, you’ll go in the draw to earn $Kleo!

We want everyone to have the opportunity to benefit from the DAO’s success and the better we get the word out about the incentive, the better the DAO performs and the more revenue we can secure to distribute amongst $Kleo holders.

The proposed marketing distribution is as follows:

How to Join

Kleomedes at the time of writing is in the Active Set — but there is a chance we drop out before the push goes live — so keep an eye out!

To join, all you need to do is delegate to Kleomedes on Stargaze

Go to:
https://www.stargaze.zone/stake?validator=starsvaloper1kztn4xapr3mah9nc05wvvqhsg60t2l6txr3472

And either delegate or redelegate to Kleomedes to be eligible.

If you want to maximize your rewards, you can delegate to Kleomedes on other chains where we already have $Kleo distributions each month!

As always, check in our Discord for the most up-to-date information on Kleomedes activity!

Join the Kleomedes Discord Server!

Delegate to Kleomedes on Archway and earn big $Kleo rewards!

Share the news and earn big $Kleo rewards!

The better Kleomedes does in the active set, the better the rewards for everyone involved.

The push will be open for 1 month, you can join in the fun by delegating to Kleomedes and the sooner you do, the more $Kleo rewards you will earn.

Push Details

As with all validators, Kleomedes will start out in the Inactive set. Rather than relying on big institutional holders, whales or deals to boost Kleomedes into the Active Set — Kleomedes puts it to the individual to support Kleomedes and to earn a share of the rewards for doing so.

$Kleo rewards snapshots are taken from the very first day so delegators who support us whilst we bridge the gap for joining the active set earn $Kleo for doing so. Once the active set is hit, delegators earn both $Kleo and $ARCH.

The better Kleomedes does, the more delegators earn.

The push will be open for 1 month from launch date — the sooner you get in the better!

Marketing Details

Drawing on the learnings from the previous push, the more people know about the incentive, the better it is for everyone. To this end, we’re putting aside $Kleo to get the word out.

Individuals will have the ability to earn $Kleo by getting the word out, even if they don’t have ARCH to delegate.

We want everyone to have the opportunity to benefit from the DAO’s success and the better we get the word out about the incentive, the better the DAO performs and the more revenue we can secure to distribute amongst $Kleo holders.

The proposed marketing distribution is as follows:

Each week for 3 weeks, we’ll be giving out 1/3rd of the total marketing distribution for completing tasks that help Kleomedes get the word out!

Keep an eye out for the tasks and check back each week to maximize your chances of getting a share of the $Kleo on offer.

How to Join

Kleomedes at the time of writing is in the inactive set — it’s recommended to delegate to Kleomedes to help us get into the active set ASAP. We are confident that our push will get us the numbers required to hit the active set — but even if we don’t, we’ll pay out 50% of the base $Kleo level regardless to make up for the lost staking APR.

To delegate to Kleomedes on Archway Website:

1. Go to https://connect.archway.io/staking

2. Select All in the list of Validators as below

3. Using Ctrl+F or Search, put in Kleomedes to find us in the validator set

4. Click Delegate

Or alternatively, through Silk Nodes directly in one step:

1. Go to https://explorer.silknodes.io/archway/staking/archwayvaloper1sgkplgzgt72a8zm20spum8y6ztjnusqvem6xf4

2. Click Delegate

That’s it! Be sure to check in our Discord to keep on top of this event as it unfolds and to get information on how to claim your rewards!

Join the Kleomedes Discord Server!

Our commission policy has a relatively simple starting premise: We are utilizing our position in the active set, represented as a percentile to accommodate different sized active sets without special formulas for each chain.

• Below the 80th Percentile we can lower down as far as 1%
• Between 80th and 10th Percentile we run a baseline rate*, usually 5%
• When we become a staple of the community and are rocking above the top 10 percentile, we start increasing up to a max of 10% if we get to the top slot in the set.

There are a few other simple features to our policy:

• If we have a foundation delegation we bump up to our baseline rate immediately, regardless of where we sit in the active set.
• We only change by 1% a month while below the 80th percentile. This is to ensure we don’t raise the commission too fast and lose early delegators while still getting established.
• We change by 1% a week while above the 80th percentile. This is to ensure our commission rate is in the desired range while we are secure in our position, which keeps revenue flowing at an optimal rate.
• *If the average commission, excluding 0% and >20% outliers, is greater than 5% we will adjust our baseline commission rate up from 5% to match the industry standard on that chain.

How Commissions Work

This is a basic and essential component of POS systems, and specifically on CometBFT chains. Delegators choose validators to ‘stake’ their delegations of native tokens with. This secures the chain by locking up tokens and distributing governance power to those committed enough to the chain to lock up their tokens.

The incentive for delegators to stake with the network is that they receive staking rewards– usually inflation at first, but long term the intention is a portion of fees collected from network traffic when the network’s ‘fee switch’ gets turned on. The incentive for validators is that they receive a ‘commission’, or basically a cut of the staking rewards their delegators receive. Validators have a choice, however, as to how much of a commission of these rewards they receive, much like a tax, for their efforts running the Validator. Validator revenue(Vr) is a calculation of commission rate (Cr), staking reward rate(Sr), and delegator count(Dc).

Vr=Cr*Sr*Dc

What’s in a Commission Policy?

For centralized validators there is often little incentive to disclose the reasoning behind their commission policy. They can arbitrarily set it and change it as they see fit, as they have no obligation for accountability to their delegators. For a decentralized organization like Kleomedes, it is more important to have a public policy that is clear and transparent. This enables our infra-managers to know exactly what the commission rates should be on any given chain at any given time without having to constantly consult governance to make necessary changes. It also provides clarity to the community on how we are managing our main revenue source for $KLEO distributions. Our commission rates directly impact our revenue, and as such the price of $KLEO itself.

Why Change Commissions?

This is an important question. The community spent a considerable amount of time digging into this question earlier on before we had full governance set up to vote on changes like this. There were several points brought up that came into consideration:

• Low commission rates can act as a marketing tool. New delegators often look for the lowest commission validators to stake with– out of a desire to maximize their staking returns. These delegators have their own reasons for this behavior, and it is debatable whether or not they have the network’s best interests in mind. The fact is, however, that a lower commission tends to help new Validators get out of the bottom percentile of the active set. This is a useful tool for getting ourselves launched on competitive chains and we lose a competitive advantage by not implementing a dynamic policy around it.

As we have noticed with our incentivized active set pushes, we have very low conversion from existing delegators to our new chains. It is possible that gaining delegators through low commission advertising reduces the likelihood of them becoming delegators on other chains, as they are not engaged with our community and don’t know about our incentivized activities.

• Using low commissions to push a validator into higher rungs of the active set, beyond just getting out of the bottom where it can be a feeding frenzy, is often viewed as extractive behavior. Some chains have even set a minimum commission of 5% to prevent this kind of competition.

Obviously on these chains our minimum is set to the chain-minimum. We are not circumventing community-agreed on-chain policies.

• As our validator moves up the active set, recruiting through commission incentives becomes a losing proposition. Our validator revenue is based on commission rates. There are far more important and effective ways to attract delegators for established validators, rather than relying on the low-hanging fruit of low commissions. As our validator gets established and gains notoriety on the chain, it is in everyone’s best interest for us to keep our commission at a reasonable level. This maximizes our revenue for the chain, which funds our contributor incentives to encourage more high-quality activity that supports the chain as well as our validator. There is more growth to be had with a higher commission rate when we have a significant amount of delegators already supporting our validator.

Our goal is to have our baseline commission rate in-line with the average rate of all validators in the active set so we aren’t undercutting and losing profit, or running rich and discouraging delegators (which also loses profit).

• Having a 0% commission is shooting ourselves in the foot, as we rely on commissions to fund not only the Enterprise, but also $KLEO rewards.

We can raise the floor someday to 2 or 3%, if the community decides it is best.

• Having a low commission on chains where we have a foundation delegation is basically throwing the foundation delegation away. Commissions are how Validators get paid, and we should use them as such.

Any chain with a foundation delegation goes to the base-line rate on the chain immediately.

Community Feedback

As with all things, this policy is set by the community! As stated before, this policy was devised through a community discussion activity way back before we had a DAODAO portal or a token. We will put this policy up on DAODAO in the coming weeks to officially ratify it, but we wanted to give the community time to provide feedback first.

If you have any suggestions or questions, please hit us up on Discord and we will hash it out so we can have the best commission policy possible!

Also, if anyone ever notices that our commission on a chain doesn’t match our policy, there may be rewards for bringing it to our attention! This is not an automated process yet, so it is ripe for human error! Such a crucial component to our tokenomics needs everyone keeping an eye on it!

Join the Kleomedes Discord Server!