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🦙 dimi's notes

Here you will find some thoughts and notes about the projects I'm working on.

June 23, 2023

Why I'm still bullish on Juno

Hello! I'm Dimi 🦙. For those who don't know me, I helped found Juno, contributing to its launch phase with my protocols and engineering abilities. I'm now one of the 7 multisig members of the Juno Treasury, better known as Core-1. In this note, I'd like to explore the current status of Juno, where we're headed next, and share more transparently what's happening behind the scenes.

Origins - The idea behind Juno

Juno started as a community initiative. From the very beginning, every single parameter of the chain has been shaped and configured to prioritize the community and individual holders as the primary focus of the network. Unlike many other blockchains, we decided to go the hard way - taking no money from VCs and implementing a token distribution heavily in favor of the individuals supporting the project.

The genesis allocation was as follows:

The objective of the network was simply to become one of the major Cross-Chain Smart Contract platforms, using community funds to attract builders and drive token demand through transaction fees.

Of course, this was a very naive vision that could only work in a bull market, especially considering the high inflation we have.

Mistakes down the road

Almost two years have passed since genesis, and a lot has happened. Many mistakes have been made, by Core-1, other SubDAOs, and even some independent projects. Here are some examples:

..and probabily more.

I will not spend time explaining why these were mistakes and I invite you to reach out to me if you want more explanation around a specific event or topic.

Token price

The token price has been free falling for about a year now, making new lows every day. The downtrend of JUNO is similar to those of other blockchains in the ecosystem, but slightly amplified due to our truly decentralized holder base. Having retail holders owning the majority of the tokens makes it far more volatile compared to others, and this is just a natural outcome.

Trying to identify a single cause of the selling pressure is very shortsighted. More likely, this is happening because of a combination of factors which include: loss of faith in the leadership, unfavorable tokenomics, grants, rising competition, and a general bear market.

On the other hand, there's also a lack of demand. The small demand we do have comes from existing holders, passionate about the project and still trying to make it successful.

The demand for a token, as in every other network, is driven mostly by expectations of returns and the utility of the token itself. If both expectations and actual utility are lacking, demand will decrease.

These points may seem obvious, but they will be useful in understanding why I'm still bullish on the project.

Juno Strengths

While reading the paragraphs above may cause an initial reaction of "omg it's a sinking ship! we'll never recover from this situation," let me also emphasize the major strengths of Juno. In my opinion, these strengths significantly offset any mistakes and will allow us to progress with a solid foundation to fix any possible issues.

Social structure

We are the only blockchain, besides Bitcoin and memecoins, without a company dictating the roadmap and vision. As of today, the few individuals who received a token allocation in genesis hold a very minor part of the token supply. This leaves full governing power to retail investors and holders. Our SubDAO structure, designed to handle every aspect of the chain, is the most innovative in the space. Anyone can contribute by offering their services to the existing SubDAOs or even create new ones if there's a specific need. This effectively makes Juno a "modular" DAO, capable of adapting to any need. Is it perfect? No. We still need to work together and standardize many of the processes in place so that the mechanism will operate smoothly.

Community passion

The reason why Juno experiences so much drama is because our community is heavily involved in discussions and truly wants to see the project succeed. They have direct skin in the game and are ready to support projects built in good faith with fair economies. The marketing advantage for projects deciding to build on Juno is substantial compared to other networks, allowing them to immediately reach a broad audience from the beginning.

Builders & Technology

Even though Juno's builder community is not the largest, the ones who are still building are among the best in the space and all have a significant stake in the game. Simultaneously, Juno has a unique approach to new features and technology. We've always provided the latest and best technology for smart contract building, and we'll continue to do so.

Battle Plan

Now that you understand both the mistakes and strengths of Juno, you can see that we have some issues that need addressing as soon as possible.

Leadership

At the current moment, the community is strongly requesting more leadership, despite this being something we initially tried to avoid in the interest of decentralization. This request is entirely understandable, and I agree that more direction could be beneficial, but we must not forget that we remain a DAO and everything should be conducted in the most transparent manner possible.

I'm unsure if Core-1 is the appropriate group to assume this role. We have always been closely aware of nearly everything happening on-chain and likely have the deepest understanding of the situation. If the community believes we need new figures to guide Juno, I would be more than happy to assist in drafting an Election System. We could convert Core-1 into a basic treasury management multisig, or even disband it entirely, returning funds to the community pool for a different approach.

If, on the other hand, you believe Core-1 can continue to play a significant role in Juno, we need to make some changes.

  1. Work Log - The SubDAO should report back to the community on the work completed within a set timeframe.
  2. Feedback Platform - We need to provide a way for the community to directly propose ideas to Core-1 or give feedback.
  3. Clear Objectives - We need to define the goals we want to achieve and establish a means to measure progress towards them.
  4. Transparency Disclosures - Every member should provide their own transparency disclosures about project involvement and other operations that might create a conflict of interest.
  5. Automatic Diversification - Instead of waiting for grantees to sell the tokens we grant at any time they want, we should implement an automatic diversification smart contract. This would allow the emission of grants in tokens that impact sell pressure in a more controlled manner.

Token Economy

As I've previously mentioned, the original token economy of Juno was naive and not adequately balanced to perform optimally during both bear and bull market periods.

I believe the overall economy should be rebalanced as follows:

  1. Reduce overall inflation (perhaps something dynamic similar to Cosmos Hub).
  2. Automatically allocate a percentage of inflation for protocol incentives, as described in my old Commonwealth post.
  3. Reduce and introduce dynamic unbonding periods - the longer you lock, the larger share of inflation you receive.
  4. Distribute tokens based on a curve determined by validator position, incentivizing decentralization of stake.
  5. Separate governors and validators.

Token demand should be driven by a clear vision, a path towards a long-term objective, and tangible utility. The Juno Evolution article briefly explains this, but I'll share more thoughts if you continue reading.

SubDAOs

I firmly believe the decentralized structure we're building is excellent and the best way to scale. However, we also need to tackle some inefficiencies.

The main issues are budgeting, accountability, and, yet again, leadership.

One lesson that has become clear since the inception of the first SubDAO is that without a coordinator and someone to take responsibility for decisions, it's incredibly challenging, if not impossible, to create something productive.

This problem can be resolved by drafting more standards and procedures. Any SubDAO can follow these to request a budget, define objectives, communicate progress, and be accountable to the community itself.

The Incubator Vision

One potential driver for token adoption and demand is fulfilling the "DAO incubator vision." Here, by DAO, I mean any crypto project that wants to launch in a decentralized way, taking advantage of our top-tier DAO toolings.

The community will be compensated by any project that decides to bootstrap in this ecosystem.

To achieve this, we need to implement more core features and additional guidelines for participating in this movement.

  1. Clearly define how projects can request funding and what they must return to the community. For example, 10% of token supply in exchange for the funds required for an MVP. These guidelines should be adopted by both the community pool and the various investment SubDAOs we have.
  2. Provide all possible tools to clearly demonstrate that Juno is the best place to launch a project. These include features like fee share, dao dao, advanced CosmWasm hooks, advanced gas management, and even a tool to export your smart contract state and run it as an independent chain using mesh security.
  3. Build a launchpad UI where individual investors can help fund ideas and show support for upcoming projects.
  4. Start accumulating tokens in the community pool. Some will be worthless, some will moon. Just as any traditional incubator does, we should invest in multiple projects simultaneously to minimize risk and maximize potential returns.
  5. Distribute the accumulated tokens along with Juno staking rewards by leveraging the x/drip module.

Considering the limited funds we can currently invest, we might contemplate vested grants or special collaborations with projects willing to test and prove this system. Once we have a few projects that have succeeded using this path, many more will follow.

FYI: Not many people know this, but the community pool currently has 12M $LOOP tokens allocated. The deal with them was not very favorable, but it's an example of what we can do.

Recap and Action Items

So, why am I bullish on Juno? Even with a multitude of issues to fix, I don't see these as impossible but rather quite manageable if we work together. Once solved, we can focus on the incubator vision and create the first truly functional DAO with real "interchain yield" for all stakers.

My action item list is the following:

Most of these action items have always been ongoing, but poorly communicated.

Now I'd like to hear your feedback, and together, if you like the plan, we can start collecting more data, expand the ideas further, and shape the governance proposals needed to make it happen.