Thanks @davebalter , that's good to know there is at least the check of an oversight board. My view is that it would be better that it be a resubmission to governance, as this gives more leverage to governance to find a better value option. I think this is warranted for the large contract size involved ($12.5M in NPV to the protocol).

I do look at the $12.5M as a real cost because Uniswap is indeed giving up 50% of the yield on $12.5M worth of Uniswap in today's value. Indefinitely allocating yield from a minted asset is indifferent economically from minting an asset and allocating a share of ownership. Minting and allocating an asset is not free for the protocol (despite the fact that many protocols mint tokens as though minting is free).

I would be supportive of the following two approaches: i. A one year deal where Flipside gets 50% of yield. Governance then votes to renew or give the contract to another firm after one year. ii. A three year deal where Flipside gets 30% of yield. Governance then votes to renew or give the contract to another firm after three years.

I think the two above options are great deals for Flipside (although I'm still not sure they would pass a UNI governance vote).

Thanks @davebalter. I certainly think your post is helpful in outlining the scope of the work proposed. Indeed, if the value Flipside can provide to the Uniswap protocol is big and there are no other comparable providers of such a service, such a high fee could be warranted, particularly in the short term until other providers emerge.

My question for Uniswap governance is:

• Are there other companies/partners that could bid on providing a similar service? How can we encourage other bidders? The net present value of the payment to Flipside here is $12.5M*, which is a big enough ticket size that we should be able to get bidders (if not now, then next year or soon thereafter).

My recommendation to Uniswap governance is:

• Adjust this vote so that the program is limited to one year in duration. After one year, Uniswap can go out and tender for other applicants to perform the same service. Over time, if crypto does well, there should be more crypto service providers and Uniswap should get a better deal (hopefully getting yield share down towards 10-20%, or maybe lower if we made the program bigger).

My recc for flipside:

• If Flipside is the only real option this year, then Flipside would get a head start with the above proposal and will be at the advantage of having a track record when it comes to tendering next year. For Flipside, I appreciate the appeal of high yield share, but I think it is important for reputation that Flipside work in a model where service providers are not seen to be juicing the reserves of DAOs. As a UNI token holder, I would be concerned at having substantial amounts (and this amount is substantial) of the reserve attributed to projects where 50% of yields are signed away indefinitely.

In summary: My position is that I could support this proposal for one year, and the service is reopened to bidding companies for the next year.

*Uniswap indefinitely providing 50% of yields to Flipside is financially equivalent (in net present value terms) to paying a one-off lump sum payment of 50% x $25,000,000 = $12.5M. An asset equals the value of its future cash flows. So if you sell half of the future cash flows (to infinity), it's equivalent to selling half the asset.

Excellent feedback, @Pinotio.com, thanks for offering.

Many years ago someone told me, ‘if you pay peanuts you get monkeys’. I always wondered if monkeys ate peanuts (shouldn’t it be elephants?), but...well...you get the idea. Ultimately, value-add service requires fees. Here’s what ours are comprised of:

Data Management and Transformation:

This includes pipelining, node management, and enabling the data to be analytics-ready. There is a significant amount of IP here, which has been honed across 40 blockchains over the last 3 years. It enables the ability to make the data clean and easy-to-query (and read-ready, in essence simplifying code to be able to access any historical data at any time); it includes extensive labeling, proprietary algorithms, a fully-developed API and product tooling, which makes it accessible to analysts in training, while also robust enough for DeFi natives and data wizards.

Community Education and Management:

In order to deliver Community-Enabled Analytics, it’s critical to have active, inspired analysts, as well as a structure to motivate them to deliver effectively. This includes traditional community management frameworks - ie: SLA for response times in discord - but also solutions to grow analysts to become better and more effective at understanding the data and creating powerful outcomes with it. A critical part of the process is growing active community members, educating them, and inspiring them to maintain activity within the ecosystem.

Query Sourcing, Analytics Validation and Bounty Delivery:

This is the dark horse: surprisingly complex and very time consuming, but delivers huge dividends. Includes gathering analytical needs from the protocol itself (Uniswap Labs and others who maintain the technology) as well as from the community - identifying opportunities called out in social forums. One very difficult component is then transforming asks into clear bounty-structures (some questions require PHD-level inspiration to ask effectively) and then a magnified task is to QA the outcomes. We pride ourselves on ensuring the data, whether visualized or API, meets quality standards. Finally, we need to deliver the bounties themselves. There is considerable data tracking, wallet management and accounting here.

Interactive [Premium] Analytics:

In addition to managing analysts to deliver via queries and bounties, the program includes special programs for premium analytics. The Uniswap v3 Calculator is part of this. It requires our team of data scientists plus the top 1% of the analyst community to focus on special cases. Ultimately we scope interactive modules (like the Calculator) and will keep delivering these.

Investment Management:

As called out in the question, yes a portion of this is managing the assets in the liquidity pools, or other effective structure to create yield. We have a team that works on this specifically - in addition to the actual monitoring of this, there is asset custody and tracking, and other technical issues to ensure there are checks and balances on the assets we maintain. Your question seems to call out these fees specifically, aligning them with a venture fund structure or otherwise. We actually don’t consider this a critical part of the fee structure > it’s all of the details above that make the program incredibly special.

A final note on the recommendation of an up front fee or fees that decline over time. We actually performed the up front work for this program pro bono, to enable early analytics access to v3 when it launched. We then received a small grant from the Uniswap Grant Program to run a few bounties [we self funded close to $100k in bounties ourselves to prove the model]. We wish our costs declined over time, but as you can see from the above, the fees are all linear. We can’t reduce the time on query sourcing (which actually becomes more difficult as more questions get answered) or data management or any of the others.

In a nutshell our fees consist of technical requirements (plus IP), program delivery and management and, yes, investment management. Believe us, we wish there were days it was simpler to deliver a premium service --- but we believe strongly in enabling blockchains to live up to their full potential, and this is the way to do that.

We have structured this as a 1:1 strategy, whereby every time we get paid UNI it is put into the hands of the community. That feels appropriate and aligned to continue to build a great ecosystem together.

Thanks @davebalter , that's good to know there is at least the check of an oversight board. My view is that it would be better that it be a resubmission to governance, as this gives more leverage to governance to find a better value option. I think this is warranted for the large contract size involved ($12.5M in NPV to the protocol).

I do look at the $12.5M as a real cost because Uniswap is indeed giving up 50% of the yield on $12.5M worth of Uniswap in today's value. Indefinitely allocating yield from a minted asset is indifferent economically from minting an asset and allocating a share of ownership. Minting and allocating an asset is not free for the protocol (despite the fact that many protocols mint tokens as though minting is free).

I would be supportive of the following two approaches: i. A one year deal where Flipside gets 50% of yield. Governance then votes to renew or give the contract to another firm after one year. ii. A three year deal where Flipside gets 30% of yield. Governance then votes to renew or give the contract to another firm after three years.

I think the two above options are great deals for Flipside (although I'm still not sure they would pass a UNI governance vote).

Thanks @davebalter. I certainly think your post is helpful in outlining the scope of the work proposed. Indeed, if the value Flipside can provide to the Uniswap protocol is big and there are no other comparable providers of such a service, such a high fee could be warranted, particularly in the short term until other providers emerge.

My question for Uniswap governance is:

• Are there other companies/partners that could bid on providing a similar service? How can we encourage other bidders? The net present value of the payment to Flipside here is $12.5M*, which is a big enough ticket size that we should be able to get bidders (if not now, then next year or soon thereafter).

My recommendation to Uniswap governance is:

• Adjust this vote so that the program is limited to one year in duration. After one year, Uniswap can go out and tender for other applicants to perform the same service. Over time, if crypto does well, there should be more crypto service providers and Uniswap should get a better deal (hopefully getting yield share down towards 10-20%, or maybe lower if we made the program bigger).

My recc for flipside:

• If Flipside is the only real option this year, then Flipside would get a head start with the above proposal and will be at the advantage of having a track record when it comes to tendering next year. For Flipside, I appreciate the appeal of high yield share, but I think it is important for reputation that Flipside work in a model where service providers are not seen to be juicing the reserves of DAOs. As a UNI token holder, I would be concerned at having substantial amounts (and this amount is substantial) of the reserve attributed to projects where 50% of yields are signed away indefinitely.

In summary: My position is that I could support this proposal for one year, and the service is reopened to bidding companies for the next year.

*Uniswap indefinitely providing 50% of yields to Flipside is financially equivalent (in net present value terms) to paying a one-off lump sum payment of 50% x $25,000,000 = $12.5M. An asset equals the value of its future cash flows. So if you sell half of the future cash flows (to infinity), it's equivalent to selling half the asset.

Excellent feedback, @Pinotio.com, thanks for offering.

Many years ago someone told me, ‘if you pay peanuts you get monkeys’. I always wondered if monkeys ate peanuts (shouldn’t it be elephants?), but...well...you get the idea. Ultimately, value-add service requires fees. Here’s what ours are comprised of:

Data Management and Transformation:

This includes pipelining, node management, and enabling the data to be analytics-ready. There is a significant amount of IP here, which has been honed across 40 blockchains over the last 3 years. It enables the ability to make the data clean and easy-to-query (and read-ready, in essence simplifying code to be able to access any historical data at any time); it includes extensive labeling, proprietary algorithms, a fully-developed API and product tooling, which makes it accessible to analysts in training, while also robust enough for DeFi natives and data wizards.

Community Education and Management:

In order to deliver Community-Enabled Analytics, it’s critical to have active, inspired analysts, as well as a structure to motivate them to deliver effectively. This includes traditional community management frameworks - ie: SLA for response times in discord - but also solutions to grow analysts to become better and more effective at understanding the data and creating powerful outcomes with it. A critical part of the process is growing active community members, educating them, and inspiring them to maintain activity within the ecosystem.

Query Sourcing, Analytics Validation and Bounty Delivery:

This is the dark horse: surprisingly complex and very time consuming, but delivers huge dividends. Includes gathering analytical needs from the protocol itself (Uniswap Labs and others who maintain the technology) as well as from the community - identifying opportunities called out in social forums. One very difficult component is then transforming asks into clear bounty-structures (some questions require PHD-level inspiration to ask effectively) and then a magnified task is to QA the outcomes. We pride ourselves on ensuring the data, whether visualized or API, meets quality standards. Finally, we need to deliver the bounties themselves. There is considerable data tracking, wallet management and accounting here.

Interactive [Premium] Analytics:

In addition to managing analysts to deliver via queries and bounties, the program includes special programs for premium analytics. The Uniswap v3 Calculator is part of this. It requires our team of data scientists plus the top 1% of the analyst community to focus on special cases. Ultimately we scope interactive modules (like the Calculator) and will keep delivering these.

Investment Management:

As called out in the question, yes a portion of this is managing the assets in the liquidity pools, or other effective structure to create yield. We have a team that works on this specifically - in addition to the actual monitoring of this, there is asset custody and tracking, and other technical issues to ensure there are checks and balances on the assets we maintain. Your question seems to call out these fees specifically, aligning them with a venture fund structure or otherwise. We actually don’t consider this a critical part of the fee structure > it’s all of the details above that make the program incredibly special.

A final note on the recommendation of an up front fee or fees that decline over time. We actually performed the up front work for this program pro bono, to enable early analytics access to v3 when it launched. We then received a small grant from the Uniswap Grant Program to run a few bounties [we self funded close to $100k in bounties ourselves to prove the model]. We wish our costs declined over time, but as you can see from the above, the fees are all linear. We can’t reduce the time on query sourcing (which actually becomes more difficult as more questions get answered) or data management or any of the others.

In a nutshell our fees consist of technical requirements (plus IP), program delivery and management and, yes, investment management. Believe us, we wish there were days it was simpler to deliver a premium service --- but we believe strongly in enabling blockchains to live up to their full potential, and this is the way to do that.

We have structured this as a 1:1 strategy, whereby every time we get paid UNI it is put into the hands of the community. That feels appropriate and aligned to continue to build a great ecosystem together.

So it would be 50% of the yield (30% x $25M x 50%), which is $3.75M (plus or minus UNI appreciation/depreciation) per year that would go, indefinitely, to Flipside? This seems like very high weighting towards management and away from community disbursements.

Intuitively, I'm thinking of a benchmark of 1-2% management fee as a % of AUM ($25M), which would be $250k-$500k/yr. Translating this to % of yield gives 3-6% share of yield. So, I would think that maybe 5% of the yield going to Flipside would be reasonable.

I would imagine there will be quite some upfront cost, so I would think that maybe some upfront payment would also be appropriate. I think this payment should be based on a more clearly laid out scope of work for which we can lay down some benchmarks.

EDIT: I guess VC firms will have a profit take of 20%, which is higher than the 5% I suggest above. Still, 20% is a lot lower than 50%. Plus, the management strategy for the investment of the $25M here is pretty passive, which would take the management fee to much below a 20% share. Counteracting that is the work to manage disbursements. Still, any fund that requires 50% of monies to disburse the other 50% seems highly inefficient. I would like to see overhead kept down towards 10-20% (maybe higher short term and then lower).

So it would be 50% of the yield (30% x $25M x 50%), which is $3.75M (plus or minus UNI appreciation/depreciation) per year that would go, indefinitely, to Flipside? This seems like very high weighting towards management and away from community disbursements.

Intuitively, I'm thinking of a benchmark of 1-2% management fee as a % of AUM ($25M), which would be $250k-$500k/yr. Translating this to % of yield gives 3-6% share of yield. So, I would think that maybe 5% of the yield going to Flipside would be reasonable.

I would imagine there will be quite some upfront cost, so I would think that maybe some upfront payment would also be appropriate. I think this payment should be based on a more clearly laid out scope of work for which we can lay down some benchmarks.

EDIT: I guess VC firms will have a profit take of 20%, which is higher than the 5% I suggest above. Still, 20% is a lot lower than 50%. Plus, the management strategy for the investment of the $25M here is pretty passive, which would take the management fee to much below a 20% share. Counteracting that is the work to manage disbursements. Still, any fund that requires 50% of monies to disburse the other 50% seems highly inefficient. I would like to see overhead kept down towards 10-20% (maybe higher short term and then lower).

Thanks @Pinotio.com, helpful to understand your logic here. I’m a big fan of clean presentation of thought, so this was really useful.

On the cost analysis, I believe you’re suggesting the “cost” to fund the program is $12.5M which is the present value of all future annual cash flows of $3.75M, discounted at a rate of 30%? Correct me if I have that wrong.

Assuming so, a few quick thoughts:

• There is actually no “cost” to Uniswap. We don’t sell any underlying UNI, so it feels inappropriate to classify it as a “cost” [especially when the rest of the treasury is earning zero currently]. This could just be semantics...so onto the second bullet….

• The NPV perspective is assessing a “cost” on a notional dollar basis, classifying it as expensive - without comparing it to some level of return. Please realize the program does provide actual measurable return: liquidity to community members and onboarding new users into the Uniswap ecosystem [not to mention unquantifiable return such as analytics insights, information-awareness, product solutions, etc]. We measure all of this and will provide as part of publicly available data related to program return.

Frankly, we love the idea of identifying other participants who would provide this service, or something similar with equal value. The more quality analytics and community growth for Uniswap the better!

As a solution: we have recommended an Oversight Board who is set to automatically re-evaluate this program at 36 months. With the effort we’d need to develop a great program, the staffing requirements, the opportunity cost of NOT working on other protocols; this feels an appropriate watermark. Additionally, the nature of our programs (particularly interactive, premier analytics) lend themselves to multi-year terms to drive adoption & value, and can be greatly diminished if development is time-boxed.

To your recc: the Oversight Board can trigger a re-evaluation at any time - even before 1 year if they so choose. They would enforce a resubmission to the governance process. We hope that is helpful in acknowledging the right check-and-balance without overly constricting our planning for a successful program.

Looking forward to continued thoughts, and thanks for taking the time to lay out your recommendations so far.

Thanks @Pinotio.com, helpful to understand your logic here. I’m a big fan of clean presentation of thought, so this was really useful.

On the cost analysis, I believe you’re suggesting the “cost” to fund the program is $12.5M which is the present value of all future annual cash flows of $3.75M, discounted at a rate of 30%? Correct me if I have that wrong.

Assuming so, a few quick thoughts:

• There is actually no “cost” to Uniswap. We don’t sell any underlying UNI, so it feels inappropriate to classify it as a “cost” [especially when the rest of the treasury is earning zero currently]. This could just be semantics...so onto the second bullet….

• The NPV perspective is assessing a “cost” on a notional dollar basis, classifying it as expensive - without comparing it to some level of return. Please realize the program does provide actual measurable return: liquidity to community members and onboarding new users into the Uniswap ecosystem [not to mention unquantifiable return such as analytics insights, information-awareness, product solutions, etc]. We measure all of this and will provide as part of publicly available data related to program return.

Frankly, we love the idea of identifying other participants who would provide this service, or something similar with equal value. The more quality analytics and community growth for Uniswap the better!

As a solution: we have recommended an Oversight Board who is set to automatically re-evaluate this program at 36 months. With the effort we’d need to develop a great program, the staffing requirements, the opportunity cost of NOT working on other protocols; this feels an appropriate watermark. Additionally, the nature of our programs (particularly interactive, premier analytics) lend themselves to multi-year terms to drive adoption & value, and can be greatly diminished if development is time-boxed.

To your recc: the Oversight Board can trigger a re-evaluation at any time - even before 1 year if they so choose. They would enforce a resubmission to the governance process. We hope that is helpful in acknowledging the right check-and-balance without overly constricting our planning for a successful program.

Looking forward to continued thoughts, and thanks for taking the time to lay out your recommendations so far.