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

First of all, thanks for writing up what looks like a fairly good airdrop distribution. My only contention is that while the goal of Sommelier community is to build the community as wide as possible, i am not sure if early users of Sommelier will be fairly rewarded if only 7% of overall tokens are distributed to them. In my individual case, i used Sommelier to open 3 Uniswap V3 positions spending around 1200-1300 USD gas fees. These V3 positions are not included in the select LPs in the list. So i would miss out on receiving those additional tokens while i used Sommelier more than most. Maybe an increase in percentage of Sommelier users would be more fair in my opinion. But ultimately community should collectively decide what is fair for all.

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The Hooded Towels token airdrop proposal is not meant to cover ETH gas fees from the community. The SOMM tokens are worth $0.00 as they are not listed and do not trade. The goal of our token proposal is to direct the Sommelier network to first reward Sommelier app participation on Uniswap V2 and V3 pools by users and then reward Liquidity providers where they live.

The goal of the Uniswap V3 LP token drop is to incentivize large liquidity holders to come over to Sommelier with their liquidity and increase the value of the SOMM token. The goal of the OSMOSIS airdrop is to do the same.

If there is strong demand to increase the SOMM token rewards for participation, then you may copy and paste our proposal with your proposed changes to the allocations, but we think the community wants more reach of the SOMM token to large liquitiy providers that will drive demand for SOMM token up as they stake and collect fees from the network.

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Thanks for the proposal! I don understand that the primary purpose of this proposal is to broaden community and bring in additional impactful players in the industry, and no one objects that.

I would add 2 amendments to this draft (not an additional SIP or SIMP as we called in early days :slight_smile: )

  1. UNI v2 Phase, was the riskiest part of the project, and I personally put tons of effort to provide feedback and became #1 transaction on it. (have the NFT as proof). It looks like we aren’t valuing V2 use case at all, but my thought is that it played a crucial role for 6 months, when team was validating the idea, up until May 2021. So can we take the snapshot of V2 up until May 2021 (before V3 rollout) and airdrop based on volume for those as well.

  2. Increase overall early participation rewards, from existing 7% to 15% of allocation. The rationale behind this isn’t just to reward early users blindly, but enabling most loyal and early adopters will incentivize them to participate more and bring in other players as well.

Thanks again for putting so much effort to detail this out

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Well i understand that it is not meant to cover gas fees. I am part of lot of other communities, so i think i know what i am saying. If you think that this is the fairest way then ok but my opinion as pointed in the earlier post is that it rewards in much larger number those who do not even know Sommelier and not sure if that results in big dump once token starts treading and disincentivizing people who actually used the product to hold the token once it starts trading. I think airdrop should be distributed to as many like minded communities but proportion must be given a look. Thanks.

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I think it should be distributed like this

Sommelier app 30%
Osmosis 20%
Uniswap v3 50%

These people(Osmosis+Uniswap v3 ) can only receive token rewards after adding liquidity to Sommelier app。

Early participants have contributed to the development of the project and deserve to be rewarded more

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This sounds more fair to me. But the community must raise an edited distribution proposal and see if community agrees.

UDPATE The Hooded Towels have listened to the Community and proposed an increased distribution to Sommeliers relative to Uniswap V3 Liquidity Providers. Please read the updated proposal and see the updated pie chart.

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Very thoughtful follow-up. We think your view that we update the proposal with an acknowledged approach to the UNI v2 phase participants. We have also increased overall early participation rewards substantially. We invite your review and comment on the updated.

@Hooded_Towels Thanks for consideration , much appreciated!

I think what you have modified is very satisfactory from my point of view (as one of the leading early contributors) and again this is a very well thought approach to the team, early contributors, broader ecosystem in UNI and Osmosis.

I for one would love to keep my SOMMs( if I get any :slight_smile: ) to participate in governance, actively participate in Cellar deployments as well and possibly become validator down the line.

Again I think rewarding early contributors with your offered amount, will help to build strong foundations and decentralization around SOMM protocol.

thanks again!

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Happy with the updated proposal. Thanks for your consideration. Appreciate it.

great job, guys. your team shows how the governance should work :relaxed:

We have updated the status of the proposal to PROPOSED and we have used the 10SOMM gifted from the Foundation to start the VOTING PERIOD. We call on the early holders of SOMM tokens to consider this proposal for their YES vote at Explorer | Sommelier. We ask the Validators of the network to also cast their vote.

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The proposal sounds great! Glad that OSMO LP participation is considered! :slight_smile:

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Hello sir, I’ve provide DAI-USDC pair liquidity in the uniswap v3 pool, but I didnt find the distribution plan of DAI-USDC liquidity, can we which provide DAI-USDC liquidity ppl on board?

That is the plan . The idea would be to do as much CA as possible by reaching out to those who are doing similar activities , but are not aware of Somm.

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Super excited about this and think this is a great idea.

However, one suggestion I have is to use a similar process as Osmosis airdrop, where recipients must perform some activities within some time period in order to receive the airdrop.

As one of the goals of this airdrop is to increase awareness and usage of Sommelier, I think tokens should only get distributed to recipients who successfully convert into users. Also, this serves as an educational process for recipients, forcing them to experiment and try using the product. Don’t we want the governors of our protocol to also have experience using it! Exact airdrop challenges to accomplish are open-ended. Obviously, “deposit into a cellar”. But open to brainstorming more!

Also, if recipients don’t claim their airdrop within a certain amount of time, then it should be clawed back. The Osmosis airdrop was to ATOM holders, a community who is relatively pretty aware of Osmosis. Even then, as of now nearly half of airdropped OSMO has not been claimed. Within another 1.5 months, this unclaimed airdrop will be clawed back into the community pool so it can be used more effectively than being given to lazy or inactive addresses. Given that many of the airdrop recipients in Somm’s case (the Uniswap LPs especially) might not claim the airdrop, would be better to reclaim those tokens to put them to more effective use.

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I recently learnt this from my CPA.

The IRS considers the airdrop (if it had a non 0 price on any exchanges) when available to be claimed… a taxable event. This is ok and expected .

But , if they are clawed back over a period of time after those tokens have established value, the person is now responsible for taxable events on a daily basis (after 15,000$) because that is considered a git tax to a non 501(c)(3) enitity … aka … the community pool. Even if the receipient had no idea that they had an airdrop available to them and is being/has been clawed back , they will be liable. This is because in theory , they had dominion over those tokens.

Granted we are talking about the US , but other jurisdictions may have similar scenarios. A lot of people on Osmosis unfortunately are going to have to deal with this issue come tax time and may not even be aware of it.

This is the precedence that was cited to me
.:There's A Catch: The Tax On Catching A-Rod’s Home-Run Ball | Publications and Presentations | Arnold & Porter

I was told this also applies to assets that people come in possesion (without their knowledge)of and have value.

So , I would suggest not doing a clawback whatsover for these potential reasons. While it works in terms of bootstrapping community & increasing the community pool, it does have a severe effect on people who hold wallets and aren’t paying attention.

There is no guidance on any of this now and thats the problem because existing laws will apply.

The good news is that the recipients can still perform tasks when they decide to claim it .

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What does this mean? How do I send a signal?
“please send a signal with 10 SOMM tokens at this Sommelier Address: somm122mg296uvu7yd7v8tzfq3v8ruhrah4vkhfg0gz”

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This is very helpful information and we really feel sorry for those Americans who have yet to move to more friendly crypto venues.

We will amend the proposal to outline that all Sommelier, Uniswap v3, and Osmosis LPs will need to EARN their airdrop from the proposed pool allocations via some type of registration and Sommelier engagement activity so that it will fall under regular US income tax rules.

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Hi, do not forget the token holders of Cosmos

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