Proposal: 🧧 Basic Income for Nation3 Citizens

[aahna]

To make it more attractive to become a Nation3 passport holder, we can introduce a type of Universal Basic Income (UBI) for Nation3 citizens.

This is a proposal to spend 0.086% of the total $NATION supply on building a Basic Income for Nation3 Citizens (“N3BI” for short).

The proposal builds upon the thoughts already published in UBI as a public good - or unleashing human creativity

Basic Functionality

• All 420 GENESIS passport holders will be eligible to receive Basic Income for Nation3 Citizens, even if their citizen activity is zero (a perk for being an early supporter).
• For the STANDARD passports (ID > 420) however, only active citizens will be eligible to receive Basic Income for Nation3 Citizens.
• The income token used in the smart contract will be $WETH, and will initially be funded by fee revenue from the Nation3 Court system.

North Star Metric

Metric: Number of active citizens.

Current metric: 16 citizens voted in the last Snapshot proposal (N3GOV-17).

Goal: Grow to 50 active citizens by the end of Q4 2022.

Implementation of this proposal will produce an incentive for citizens with STANDARD passports to be active, so that they can become eligible to receive the basic income.

Measurable Objectives

• Code smart contract and UI where Nation3 citizens can view and claim their basic income.
• Code smart contract for getting a citizen’s activity (NationCred rank).

1. By end-October:
   • Deploy N3BI smart contract on Goerli.
   • Deploy version 1 of the NationCred smart contract on Goerli.
   • Start user testing of UI.
2. By end-November:
   • Update UI to visualize stats like total number of citizens receiving basic income, etc.
   • Deploy version 2 of the NationCred smart contract on Goerli.
3. By end-December:
   • Deploy N3BI smart contract on Mainnet.
   • Deploy version 3 of the NationCred smart contract on Mainnet.

Note: The NationCred smart contract can be updated/replaced in the future. This means that we can continue to tweak what it means to be an active citizen, even beyond the completion of this 3-month project.

Implementation Period

Q4 2022 (October, November, December). Start date: October 1st.

Estimated Labor

400-500 hours.

Budget

36 $NATION tokens (0.086% of the total supply).
= 12 $NATION tokens per month
= 2.8 $NATION tokens per week

Project Members

Who will implement this quixotic idea?

@aahna, @yukiw, @anastasiya, and the utopian @johnmark13

Governance Pull Request

N3GOV-19: Basic Income for Nation3 Citizens

Poll

Should Nation3 fund this proposal to introduce a Basic Income for Nation3 Citizens?

• Yes
• No

[johnmark13]

The Utopian I may update all my profiles. I think that this is a laudable and important project for Nation3 and links right back to the basic philosophy and it gets my vote; I note however that it is not a constituent part of the recent slides posted by @luis (Discord) and it is an additional compelling reason to join N3.

I can see that it would directly impact our NSG though in driving active citizenship. Are there any, apologies in advance, implications that we have to take seriously as a DAO - like IRL tax for our citizens for receiving WETH?

I note that the proposal does not include a definition of what BI might look like in absolute terms, do you have thoughts?

@aahna

Code smart contract for getting a citizen’s activity (NationCred rank).

Do you have an idea on how to achieve this? I guess a Chainlink oracle, but, that probably doesn’t scale well - maybe a weekly calculated merkle of the active citizens wallet addresses that could be published at the same time as the SourceCred output and used to update the contract directly?

[anastasiya]

Love the proposal too and 100% in for it!

There might be some things that might be worth spending some more time discussing, eg what UBI should be paid in (a stablecoin might make more sense?). Could be USDC initially, with a view to migrate to $NATION-backed stable coin as soon as feasible.
@luis also flagged another idea: if UBI is distributed in the form of the DAO topping up the locks of its citizens with more $NATION, this would effectively enable them to enter into more agreements / participate in the economy more.

@johnmark13

Are there any, apologies in advance, implications that we have to take seriously as a DAO - like IRL tax for our citizens for receiving WETH?

Regarding tax, probably depends on the jurisdiction and circumstances of each citizen, and likely Nation3 can’t do much about it? At least until we all move to physical Nation3 citizens that will be zero-tax

[luis]

@johnmark13

maybe a weekly calculated merkle of the active citizens wallet addresses that could be published at the same time as the SourceCred output and used to update the contract directly?

This makes a lot of sense.

@anastasiya

Could be USDC initially, with a view to migrate to $NATION-backed stable coin as soon as feasible.

Exactly, I’d be supportive of that.

@anastasiya

if UBI is distributed in the form of the DAO topping up the locks of its citizens with more $NATION, this would effectively enable them to enter into more agreements / participate in the economy more.

I can expand on this (I’ll expand into it even more on the upcoming State of the Nation call): if citizens could stake their passport into Nation3 agreements, both their reputation and the collateral backing the passport become valuable. The more collateral, the more agreements and high-stake agreements you can enter, meaning more economic opportunities you can seize. Therefore topping up a citizen’s $veNATION becomes a way to reward citizens but ensure that some value remains within the jurisdiction (e.g. citizens don’t market-sell).

I am very supportive of this proposal @aahna, since it can:

• Push forward the active citizens North Star metric
• Help us experiment with unleashing our citizens’ creativity by providing them with some steady income
• Help us bootstrap economic activity within the jurisdiction, if we implement a system similar to topping up the citizen’s passport and they can stake their passport in Nation3 agreements

Some risks:

• Before the Nation3 Court is out and reaching PMF, this might be an added expense without necessarily producing revenue
• We might not have a clear call-to-action to the citizens that join in for the N3BI, and start having tons of noise as people want to “participate”

I think we can remedy both risks by:

• Starting off with N3BI that tops up the passport’s stake, instead of just sending free-floating tokens
• Tie its launch with the launch of the Nation3 Court, so that there are very clear call-to-actions and topics that newly active citizens can help with

Let me know your thoughts!

[maydayfeihuan]

More and more like nation3, I like this big family. Really good.

[aahna]

@johnmark13

I note that the proposal does not include a definition of what BI might look like in absolute terms, do you have thoughts?

@johnmark13 Yes, and I intentionally left out the implementation details so that other people can feel more comfortable sharing their own ideas/thoughts. Do you have a BI definition in mind that you would like to share?

[aahna]

@anastasiya

There might be some things that might be worth spending some more time discussing, eg what UBI should be paid in (a stablecoin might make more sense?). Could be USDC initially, with a view to migrate to $NATION-backed stable coin as soon as feasible.

@anastasiya Yes, good point. The incomeToken can be any ERC-20 token, and changing it in the future will be possible.

[aahna]

@luis

Some risks:

• Before the Nation3 Court is out and reaching PMF, this might be an added expense without necessarily producing revenue

@luis To remove this risk, the idea is to not promise basic income for a citizen until after the smart contract has received enough funds for doing so.

And I imagine that in the future there will be more Nation3 products/services (besides the Nation3 Court) that will also be producing revenue.

[luis]

@aahna

smart contract has received enough funds for doing so.

Do you mean once there are revenues that would make it sustainable? In general the DAO shouldn’t promise infinite basic income because it’s not an immutable protocol (market conditions can vary, a governance proposal can pass stopping BI), but it can say that it will do its best to keep it running.

[aahna]

@luis Yes, exactly, that’s the idea. We will not promise infinite basic income for all Nation3 citizens. Instead, the smart contract will calculate how much funding it has received for covering basic income for 1 year for X number of Nation3 citizens, and only allow for that number of citizens to be enrolled, no more.

[luis]

Gotcha. So is it first-come, first-serve? Or whoever has the highest NationCred score, for example?

[aahna]

@luis

So is it first-come, first-serve? Or whoever has the highest NationCred score, for example?

@luis Yes, I would recommend using first-come, first-served just to keep things simple.

Something like this:

contract N3BI {

  function enroll() public {
    if (account has no passport)
      revert Error
    
    if (passport is expired)
      revert Error

    if (passport is about to expire within the next year)
      revert Error

    if (nationcred for account is not active)
      revert Error
    
    ...
  }
  
  function claimIncome() public {
    if (is not enrolled)
      revert Error
    
    ...
  }
  
  ...
}

The NationCred smart contract can return a boolean for an account, indicating whether or not the citizen is active:

interface INationCred {
  function isActive(address account) external view returns (bool);
  function rankOf(address account) external view returns (uint256);
}

This will give us some wiggle room when implementing the calculation of a citizen’s NationCred score/rank.

[0xGallego]

Hey!
Sorry for catching up with this proposal so late, but I’m focused on building these days.

I love the initiative and would love more workforce to advance in the research of N3BI. However, I miss a few details and found some issues I can’t ignore. I will try to expose these issues below.

All 420 GENESIS passport holders will be eligible to receive Basic Income for Nation3 Citizens, even if their citizen activity is zero (a perk for being an early supporter).

Two things worry me about this paragraph.

This is more a personal perspective, but I don’t think the genesis passport holders should have economic privileges over the standard passport citizens long term. I see the Genesis passport more as a status signal of being an early member of the Nation3 movement.

And while we don’t issue standard passports, I don’t see this N3BI implementation as an incentive for the current holders to be more active in the short term.

I also miss mentioning Sybil resistance strategies to avoid incentivizing the same people to hold more than one genesis passport only to abuse this distribution.

The income token used in the smart contract will be $WETH, and will initially be funded by fee revenue from the Nation3 Court system.

I don’t think we are prepared to commit any possible revenue from the Nation3 Court to finance public goods like this. Any potential revenue generated from the Nation3 Court should be reinvested to improve the service and cover its operational costs.

Hopefully, once we achieve PMF and grow enough the Nation3 jurisdiction, we can start generating revenue for the DAO and, so, funding public goods with that revenue. But there is a long way before that.

Anyways, I don’t feel this should be included in the basic functionality as it feels like approving the proposal means implicitly agreeing to use the revenue from Court to fund the N3BI. I think that should be discussed in its own proposal when that revenue exists.

Code smart contract for getting a citizen’s activity (NationCred rank).

I miss a deeper explanation of how we would achieve this. As @johnmark13 exposed previously, relying on oracles for this doesn’t scale very well and could be unsustainable.

---

That being said, I find a couple of very promising topics in the line of this proposal that I would love to fund a workforce to research.

• Sybil resistance strategies based on cred and how they compare against other solutions.
• A more detailed spec on how N3BI should work, specifically in the distribution method and its governance.

I think focusing the effort on this line would be more valuable for the DAO.

[maydayfeihuan]

Have an idea can be abolished passport please creation, us to design again, so long as has the contribution to participate in ubi, creation passport now feel chicken ribs.

[aahna]

@0xGallego

This is more a personal perspective, but I don’t think the genesis passport holders should have economic privileges over the standard passport citizens long term. I see the Genesis passport more as a status signal of being an early member of the Nation3 movement.

@0xGallego We can theoretically change the code so that the requirement of being an active citizen will apply to any type of passport holder. But I was under the impression that there would be economic differences between the GENESIS and STANDARD passports based on previous Nation3 communications. Maybe I misunderstood?

How many passports are currently available?
Only 420 Genesis Passports will ever be available. There is still an opportunity to claim yours.
Ordinary passports will likely be issued at a later stage, requiring a lower $veNATION balance.

[aahna]

@0xGallego

The income token used in the smart contract will be $WETH, and will initially be funded by fee revenue from the Nation3 Court system.

I don’t think we are prepared to commit any possible revenue from the Nation3 Court to finance public goods like this. Any potential revenue generated from the Nation3 Court should be reinvested to improve the service and cover its operational costs.

Hopefully, once we achieve PMF and grow enough the Nation3 jurisdiction, we can start generating revenue for the DAO and, so, funding public goods with that revenue. But there is a long way before that.

Anyways, I don’t feel this should be included in the basic functionality as it feels like approving the proposal means implicitly agreeing to use the revenue from Court to fund the N3BI. I think that should be discussed in its own proposal when that revenue exists.

@0xGallego I can see now that I should have formulated myself better, because I only meant to include the Nation3 Court as one example, out of many. So let’s re-phrase that part to the following:

“The income token used in the smart contract will be any ERC-20 compatible token, and could initially be funded by revenue coming from other Nation3 services (e.g. the Nation3 Court), or even from sources outside of Nation3.”

[aahna]

@0xGallego

I also miss mentioning Sybil resistance strategies to avoid incentivizing the same people to hold more than one genesis passport only to abuse this distribution.

@0xGallego This depends on the value of the basic income. As an example, let’s say we set the basic income to be $150 per year. In this case, people would probably not pay $1,500 for a passport just to get that basic income.

On the other hand, let’s say we raise more funding and can offer a basic income of $1,500 (or more) per year. Then we need to think more carefully about sybil resistance, and in this case I would say that NationCred is the sybil resistance. Why? Because there are only 24 hours per day, and if NationCred is based on value creation that requires time, someone looking to game the system will eventually run out of hours. As @luis suggested earlier, we could define an active citizen as

a citizen devoting 1h/week to Nation3

We just need to figure out how to convert SourceCred cred scores to hours. Maybe it’s 5 cred per hour or something like that. So if someone has an average of 5 cred per week (21.5 per month) or more, that could be considered an active citizen.

[aahna]

@0xGallego

Code smart contract for getting a citizen’s activity (NationCred rank).

I miss a deeper explanation of how we would achieve this.

@0xGallego Added a README here: GitHub - nation3/n3bi: Basic Income (BI) for Nation3 citizens

[0xGallego]

@0xGallego This depends on the value of the basic income. As an example, let’s say we set the basic income to be $150 per year. In this case, people would probably not pay $1,500 for a passport just to get that basic income.

Distributing $150 per individual per year would lose the point of N3BI and would be more like paying dividends for holding a passport.

But, to clarify, giving basic income per genesis passport builds an economic incentive to distribute your NATION between multiple locks and claim a passport with each one. It’s not that you can’t do that right now, but we would be building an economic incentive to do so that I don’t like. This has an easy fix, applying the same rules for all passport holders and requiring proof of participation as you describe below.

On the other hand, let’s say we raise more funding and can offer a basic income of $1,500 (or more) per year. Then we need to think more carefully about sybil resistance, and in this case I would say that NationCred is the sybil resistance.

Continuing the previous answer, I think this is an excellent mechanic to try out, and in this line is where I would like to fund more R&D. We need to specify what an “active citizen” is and why, extend the nationcred system to fit our needs, and also would be valuable to do deeper research in how NationCred works for Sybil resistance purposes on how it compares to other strategies.

[0xGallego]

With the text included in the current submitted proposal I don’t feel comfortable giving my support. Still, I would support a proposal to fund the research and refinement of the N3BI system on its own before implementing any distribution mechanism.