[SIPS-002] A Proposal for a Sommelier Token Airdrop of SOMM to Select Liquidity Providers

Love this idea. Big support!

The need for registration would be the proposals prerogative although not necessary.

To reiterate ,dropping a 0$ token is not a taxable event .

But the clawback will be . Because the Tokens will have gained value. And the recipient will be responsible for it even if they aren’t aware of the airdrop . They would end up in a situation where they have no SOMM tokens left but will be liable for taxes .

The goal of my message above was to explain not doing a clawback will ensure that people do not end up in this situation.

I have placed my reasons above and the rest will be up to the proposer and the voters .

PS : I am not sure your reply of expressing going to the opposite extreme of kyc was a thinly veiled “you are so dumb” attack on me . If that is the case please do let me know and I will STFU :slight_smile: and not comment on this topic any further .


No attack was intended and the humor was a miss. You shared valuable information and we wanted to make some jest on something very serious. Apologies for the misunderstanding and please do not STFU. Community contributions are all welcomed. Insightful contributions are highly valued.

Obviously, we of the Hooded Towels do not understand American tax laws.

We hope we can structure an implementation which addresses the issues you have highlighted and we’ll share our thoughts here.


We the Hooded Towels believe that this SOMM token proposal does NOT constitute a gift according to US Tax law. We are not lawyers. We are not accountants. Please check with your own professionals for professional opinions. We are not giving professional advice with this post or with this proposal. Many thanks to @veeEmm for highlighting this issue

Definition of “Gift” and the Charitable Contribution Deduction


A gift is a transfer that (1) is voluntary, and (2) is motivated by a “detached and disinterested generosity.” Commissioner v. Duberstein, 363 U.S. 278, 285 (1960). “Where consideration in the form of substantial privileges or benefits is received in connection with payments by patrons of fund-raising activities, there is a presumption that the payments are not gifts.” Rev. Rul. 86-63.

A “payment of money generally cannot constitute a charitable contribution if the contributor expects a substantial benefit in return.” United States v. American Bar Endowment, 477 U.S. 105, 116-17 (1986). Generally, where some benefit is received in return, “[t]he taxpayer … must at a minimum demonstrate that he purposefully contributed money or property in excess of the value of any benefit he received in return.” Id. at 118. Reg. Sec. 1.170A-1(h) provides that no portion of the payment in consideration for goods or services is a contribution or gift unless the taxpayer can prove that he or she (i) intends to make a payment in an amount that exceeds the fair market value (“FMV”) of the goods or services, and (ii) actually makes such a payment. Where the benefit to the donor is incidental, it will not defeat the charitable deduction.

Charitable Contribution Deduction – Background

The charitable contribution deduction for a gift of money is based on the amount of money transferred. The calculation for the charitable contribution deduction for a gift of property is more complex and depends on several factors, including:

  • the FMV of the property;
  • the nature of the property contributed and the appreciation element (long-term capital gain, short-term capital gain, ordinary income);
  • the tax classification of the donee (public charity, private foundation, governmental body, other exempt organization);
  • the use of the property by the donee (related to the donee’s exempt purpose or not);
  • percentage limitations; and
  • compliance with substantiation rules.

Source: Definition of “Gift” and the Charitable Contribution Deduction – Nonprofit Law Blog


why Uniswap v3 USDC-DAI liquidity provider didn’t get a reward distribution in the proposal sir?

It to attract more future users to Somm.
The priority is CA … and the cost associated with it means a little free something to users that arent aware of Somm.

They went completely crazy, a lot of people invested in smaller pools and what now?

I agree with this, and think the Osmosis airdrop was a model example in terms of execution.

In the absence of these sorts of participation unlocks, I think a minimum criteria for distribution mechanics is that the airdrop should not be “pushed” out to users, but should require users to connect their wallet and “claim” the airdrop they’ve earned. Today’s ENS airdrop is another example of this. An approach like this would ensure a minimum level of engagement from any token holder, and could redirect any unclaimed funds to the active community.


agree with you, smalller pool liquidity provider is also the important part of the project, aybe they didnt care about this

1 Like

Guys I think there is a misunderstanding. If you provided any liquidity on UNI v2 or UNI v3 via SOMM app, (again to any pair) then you will get your share from 5.2M allocated for SOMM app users until Oct 31st.

UNI v3 Select pools are meant for increasing the community beyond existing community, which is great for the project to extend community base, and will be dropped to those specific pools where there is estimated to be a larger amount of UNI community. Again this has nothing to do with existing SOMM user base, rather is an initiative to extend the user base (by Airdropping) to others that are active in UNI v3 and Osmosis.

If you have used any pool via the SOMM app, you will get rewarded for both transaction count as well as duration and liquidity amount of your positions.

@Hooded_Towels correct if I am mistaken above pls.


This is very reasonable proposal on “how” to do it technically speaking.

I also agree with the approach that users who claim in a given amount of time (lets say 6 months) can claim the token, instead of randomly dropping the tokens to their wallets and hoping that they will use SOMM at some point


No correction needed. This is the intent of the our proposal. We are the Hooded Towels.

Thank you for sharing these insights. We will include these examples as we are aligned with a desired minimum level of engagement from all Liquidity Providers of Sommelier.

1 Like

There are ~3800 members in Sommelier’s telegram. When I think of Sommelier community, that is the first group of people who come to my mind. Many of them are just lurking, but why shouldn’t an active member in telegram be worthy of an airdrop?
For example, the lobsters community recently airdropped Lobster nfts to active members of the community (before a snapshot date) and was received very positively.


I admire the team’s approach. It’s great and considers the community.

1 Like

Update to the SIPS-002 proposal: Implementation And Analysis Of The Sommelier SIPS-002 Proposal

Let’s discuss implementation details.

i really love this project :smiley: :grinning: :smiley: :blush:


I’d like to say that I received the OSMO airdrop and it was my first time providing liquidity and my first time voting in governance. I’m now providing liquidity in 12 different Osmosis pools, and in other ecosystems like Trader Joe and Astroport. I’ve also voted in a lot of governance proposals. I credit the Osmosis airdrop for drawing me in.


Agree with all the above.

I think sending an airdrop to 881 early users does not require community support and proposals. Voting is an asshole, and an airdrop should be sent immediately!