A frequent discussion topic within the DAO over the last several months has been creating utility for our token, GTC. From an existential standpoint, it’s crucial that we build utility for GTC so that it holds value and continues funding the DAO’s efforts towards our mission. We’ve dedicated words and code to experimenting with how we could make our token useful, but something that’s been missing (for me at least) is a shared understanding of what GTC should be useful for. Utility is defined as “fitness for some purpose” — my goal with this post is to suggest a core purpose for GTC.
What is our MVI?
Part of our challenge is that GTC was originally conceived as a governance token — it wasn’t designed to have functionality beyond DAO decision-making, and we are now trying to retrofit a utility component for our fledgling protocol ecosystem. To help us navigate this design space, I’d like to introduce a concept from Packy McCormick and Tina He called Most Valuable Interaction (MVI):
When consulting with new DAOs or crypto projects contemplating the launch of a new token, Tina tends to start with a simple question: What is the one most important reason why people are in your ecosystem? This is the Most Valuable Interaction (MVI) of the network, and the focus of the token design is to incentivize a sustainable feedback loop for such MVI.
Agreeing on an MVI enables us to navigate fundamental questions around functionality and drivers.
So, what is the MVI of the Gitcoin network? One of the most common themes that has come up in product research for our protocols is the idea of trusted reputations. Our purpose is to empower communities to fund their shared needs, and our community members often highlight that there needs to be trust between parties in our ecosystem for that funding to be successful. Communities using quadratic allocation mechanisms need to trust that voters aren’t sybil attackers, round operators need to trust that grant recipients are legitimate projects, and projects need to trust that a given community will actually fund their work. We’re in the process of building protocols that enable our different participant archetypes to create the profiles that they will use to navigate our network (Passport for voters, Grant Hub for projects, etc) and I propose we consider GTC a unit of trust that enables network participants to enrich their reputation in our protocols.
Cool, so now what?
Aligning on GTC as a unit of trust allows us to think about the token itself as a product — meaning that we can frame utility discussions with questions like “what is our core user need?” or “what problem does our ownership experience solve?” (h/t Jesse Walden). Thankfully, much of our ideas for GTC utility already hint at trust as a purpose:
- Staking on trusted identities in Passport
- Staking on project legitimacy via the Curation Game
- and so on
With that intellectual foundation in place, we’re in a position to design sustainable feedback loops around our core interaction. As this piece highlighted, that will also require us to determine an effective balance of risk and reward in our utility systems. In order to sustain GTC’s value as a unit of trust, we will need to examine our utility ideas and make sure that they incentivize GTC holders to use it for this new purpose. My suggestion would be that the DAO aligns on this core function, then we discuss what we think appropriate risk and reward levers are for our system before jumping further into utility ideas.
Does this resonate with people? Would love your thoughts.