Should we give back LooksRare funds or How should we incentivize building on Loot?

For those unaware of the LooksRare event. LooksRare is an NFT marketplace that incentivized wash trading in exchange for LOOKS token (their utility token). Traders were wash trading on a collection without royalty fees to farm LOOKS and Loot was one of them.

We asked dom to activate royalties on the Loot collection on LooksRare and this made us 450 ETH in a few hours before the wash trader realize it and stop trading on Loot.

There was a recent discussion to give back those funds to the trader. This question created debates in the community. Two main ideas stood out which I will try to summarize and balance. The reason for this post is to gather builders’ opinion on the situation, discuss it and then vote on it. The builders are at the core of the Lootverse and it is undoubtedly a good idea to carefully listen to them.

Discussion about the lost funds starts here Discord (for Loot owner only unfortunately, I will post screenshots).

Whole Discussion

#1 - Keep the funds

Straight to the point strategy, the trader made a bad decision and should have considered the case where we activate royalties on the Loot collection, but he didn’t and “lost” 450 ETH that have been deposited in the Loot treasury.

Keeping the funds seems like the most obvious and smart strategy. It would allow us to fund further development, easily fund projects etc …

This was my opinion at first that we should keep the money and use it to build. But I changed my mind after a public discussion with dom (screens above).

#2 - Give back the funds

Giving back the funds is also a very good strategy based on another kind of incentive. There are good arguments for that decision:

  1. It is a way to signal and express the Loot spirit

Loot started in a very special way, with free permissionless NFTs that catalyzed a very strong community of (positively) unorganized builders. No one ever created such an incentive to build on an NFT collection before and after us. This special spirit is part of our identity and is (imo) something we should always keep close to us. This is a way to stay close to this mindset.

  1. Money is not the only way to incentivize building

No project ever got any promise of funding from the Loot DAO. We only made a retroactive funding round by surprise. However, we have amazing teams working on amazing products. Money is not what is tying us together. Builders on Loot may be driven by other kind of achievement and keeping this money to throw huge amounts of money to developers is maybe not the kind of incentives we need. We need motivated people, aligned with the Loot vision, the web 3 vision that basically ties the Ethereum community, and more precisely the Loot community that extends those values in the video game industry.

As stated from dom, paying developers with this money is probably not what we need and though, giving back the funds is our best solution.

What do we do from there?

Here is the roadmap from there in my opinion.

Step 1 – If you a builder, please share your opinion (community members are invited to participate as well)

Builders are at the forefront, and this is why their opinion is so important.

Dom himself would not want to work for a DAO that receive funding this way. This is an important sign that we are maybe not taking the good direction.

This is why I ask, if you are a Loot builder (or even if you are a community member), please state your opinion below so that anyone can take it into consideration and then we can go to the second step.

Step 2 - Launch a proposal to give back the funds

Once everyone made an informed decision, we should cast a vote to know where we stand.

I think that we should not rely on the opinion of a single person for the loot DAO. However, dom is a very legitimate builder in the space, and in the Loot ecosystem. Most legitimate community builder also share the same opinion. That is why the main proposal will be in favor to giving back the funds and not the opposite.

This proposal should be casted after getting the opinion of our builders.

Step 3 - Learning from this lesson and moving forward

This event is tightly tied to other discussions in the Lootverse. We have been discussing about creating a Loot council to organize the DAO. Why is it tied to this event? Because those 450ETH have been taken for granted by the DAO, except, they are a one-time fee we got out of luck. If we want to build something durable, we need to find a way to incentivize people on the long term. And for that, we may need a council to make the DAO accountable to progress further every day. Giving those funds back will also remove 450ETH from our treasury. This will give us no choices than building a strong strategy together to move forward.

3 Likes

@dsi can you say more about what we’re looking for from builders? Will builders have a disproportionately high vote? Thanks

Hello sir, no, at the end I assume that we will all vote with our Loot.
I am expecting builders to express their vision on the situation.

  • How would they feel if we kept the funds to fund Loot ?
  • Would they be incentivize to create for a project keeping funds that they got via someone else mistake ?

Those kind of insight, because at the end, we are trying to attrack aligned builders with our vision so that they build great thing that add value to the whole community. So builders are at the center of this decision and will provide insight to the community about how to vote (imo)

1 Like

Great write up. Definitely think it would be most valuable to hear builders first and foremost as they are the ones who would be receiving the funds on the other end. Most community members wont ever touch these funds.

Personally having some ethical issues with this but always willing to go with community consensus on outcome/preference.

Removing ethics or morals aside. My argument against keeping the funds are - Would a 450 Eth gain be worth the builders lost? Losing a single one of our current closely tied projects would be catastrophic in my eyes.

1 Like

I’ll give my two cents as someone who is both a builder and a collector (who sometimes trades high value nfts).

I think we should return the funds. The people trading Loots back and forth are members of our community.

They may have been taking advantage of a loophole on a platform and I agree that they should have considered the case that Loot adds a royalty fee.

However, it’s clear that the user did not intend to make a trade that sent 450ETH into the community wallet. This was a mistake.

My view is that any mistake, however silly, should be remedied.

I can’t speak for all builders but I would not feel comfortable being paid with this 450ETH. I suggest that we return the funds and continue to make Loot an amazing ecosystem. That will drive far more value than capitalizing on this wash trade mistake ever will.

If we do vote, I will vote (with my one puny loot bag :rofl:) in favor of returning the funds.

4 Likes

Do a Vitalik - send the tokens to a charitable cause.

4 Likes

Giving it back seems to be a reasonable choice. And treasury can be stocked up in a more genuine and healthier way instead of ‘looting’…. Wait a sec….

1 Like

Really very thorough and great summary. Thank you @dsi

We believe it’s a bit unethical to consider others’ mistakes as our fortune. It would completely undermine the philosophy behind the Loot Community. We, builders, didn’t join for the fame or fortune. We all joined because of the philosophy and possibilities behind the concept. However, we understand the different viewpoints that the money is also not something we stole. So, charity didn’t sound so bad to us, at first, because there were no wrong intentions on our part for activating the royalties. But, we also think deciding what to do with the money itself seems like a form of governance, which is not what the Loot Community is about. So, having Loot Holders, the foundation of our community, decide by vote with their Loot seems best. Or asking the trader what he/she would like us to do seems like a good way to maintain our ideals as well. Either way, vote with their Loot seems best and will support whatever results comes out of it.

2 Likes

I’m a relatively new builder to Loot. What brought me to Loot was not any possibility of funding, but rather that there are many projects coordinating and composing together and there is an audience that wants to interact with those products. I view these benefits as being just as great as funding for new projects.

That said, I’d return the funds. Crypto needs more non scammy communities and this is a good PR opportunity for Loot. I wouldn’t just silently return it, but follow some of what @timshel suggested: use it as an opportunity to state Loot’s values. Loot is a group of builders, storytellers, creators, and collectors, not wild west crypto bandits. If your project is good, there’s so many other ways to get money in the crypto ecosystem, that I don’t think one needs to resort to keeping the funds.

If they get the ETH back, perhaps there is some way they can pay it forward to the Loot community. This is a collosal favor to them.

To play devil’s advocate: did the person that goofed even reach out about their lost funds? If they didn’t even reach out… How bad do they want their money back?