The Phonon Brief #8: Feb 11-Feb 24

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Phonon DAO

9 min readFeb 24, 2022

Welcome to the 8th edition of The Phonon Brief. Our aim with this newsletter is to keep the Phonon and the wider crypto community informed of the latest news, including product launches, governance changes, and ecosystem updates. If you’re interested in learning more about Phonon, follow our official Twitter and Medium accounts.

Summary

ETHDenver
PDBG 2/16 Recap
PDBG 2/23 Recap
PheverDreams
Chain Analysis

ETHDenver

The Phonon Brief and the many members of the Phonon DAO are back from ETHDenver. Last week you may have noticed there was no Brief last week so we will be doubling up on recaps!

Despite the DAO not having its own booth at ETHDenver, it did not stop discussion of the project. The GridPLus booth helped distribute Phonon hoodies around the event. If you were not able to make it to ETHDenver and would like a Phonon hoodie, you can purchase them here or by messaging me in the discord.

Dr. Karl Kreder was on a panel discussing scalability and the Phonon protocol. Below is a short clip from a longer discussion that you can find here.

PDBG 2/16 Meeting Recap

Community Call

The Bootstrapping group will be hosting the first community call. See 2/23 PDBG recap below for more information.

Communications/Marketing

The communication team had a meeting earlier this week that went over updates to our website and core messaging. There have been some strides on creating an updated vision and messaging which will be added to the website in the coming weeks. Some statements about the use of secure hardware as a key messaging point were brought up as a concern due to the fact that it could be off-putting that additional hardware is needed. The suggestion was to use more attention grabbing statements, such as, feeless, perfectly private, supports all assets, limitless TPS, and instantaneous.

Product

Native Phonons have been a huge discussion in the discord this week. There are two arguments, one side saying nPhonons are distracting from the core work of the network and that nPhonons will take value away from the PHONON DAO token. The other side believes that nPhonons solves a lot of issues on the network such as change making, it is strictly off-chain and requires no connections to the outside world. An additional benefit that was brought up is the bootstrapping aspect that will entices users to get on the network and speculate the future nPhonons price.

The argument that native phonons are replacing other goals such as private DEXs and p2p payments was rebutted by Karl saying that this was already built into the initial design and is not taking additional resources. The current cards could ship with this mining capabilities but separating them opens up opportunies for the DAO.

To expand further on how the nPhonons will work inside the network. As past post have mentioned there will be different bit nPhonons that will be able to be mined. Early on it may be most apporapriate to only mine 8 bit phonons but as the use of these tokens increases price of the 8 bit which take the longest to mine could be less appropriate then ining 7 bit phonons and that cycle could continue down as it becomes more economical to mine lower bit phonons.

While nPhonons are a speculative asset initially, value is expected to come from the use cases they play in the protocol. The network will require change makers for swapping of different value tokens. If I wanted to swap one btc backed phonon for the equivalent value in eth backed phonons I may route through a change maker who takes my btc trades it for nPhonons then takes the nPhonons and purchases eth backed phonons to send back to me. This could also be done with any backed phonon but native phonons give you the ability to have smaller units of account since they are mined directly on the network and do not require gas from the L1 to transfer to the network.

A second way that nPhonons will bring value to the network is that they are the ultimate private form of currency. While all backed and native phonons are transacted privately on the network, backed phonons have their prior history from the L! attached to them.

PHONON Tokenomics

One of the main value propositions the DAO is looking to capitalize on is through the sale of mining cards for native phonons. The DAO will control the number of mining cards that are produced each year which will then be sold via a reverse dutch auction for PHONON DAO tokens. If the DAO only produces 5000 cards a year that will limit the number of nPhonons that can be mined. If the nPhonon price is increasing this would make it more economical to buy the mining cards which would first require the purchase of the PHONON DAO token then a subsequent burn or sale to the DAO treasury for the mining cards. The second value proposition is that the DAO token governs this monetary policy of the mining cards which creates a positive feedback loop.

PhononGod gives a breakdown of what the reverse dutch auction would look like in one of his PheverDreams that you can find here.

PDBG 2/23 Meeting Recap

Community Call

The Phonon DAO is hosting its first community call. This will allow the entire community to sit in an hear a high level overview of what the four working groups have been working on and what they have achieved over the past 2 months. Then the call will be opened up to the community for an AMA.

There community call will take place on Thursday March 3 at 1PM EST.

The meeting will not be recorded so if you are interested please find time to attend.

ETHDenver Recap

Some meaningful takeaways when explaining Phonon were that the network would be able to run on smartphones and that there is not a huge hardware requirement to use. Another lightbulb moment was that this does not require users to adopt a new network and phonon works along side your existing tokens.

Phonon Website Updates

The DAO is working on hiring designers to update phonon.network. Currently we are in discussion with the designers who created the GridPlus website. They are a traditional company who is not accustom to working with a DAO, and we are struggling to have ongoing communication because they are use to working with one point of contact.

In regards to payment the DAO would prefer to pay in PHONON tokens and preferably on a vesting schedule. These current designers would likely charge a stablecoin or a real world wire transfer. Estimated costs are $5,000-$10,000 and the PDBG reaffirmed that we have a $50,000 budget to complete some of the tasks that we are looking to achieve.

Another option for the website would be via a request for proposal where anyone can show us their portfolio and bid for the job.

Next steps will be to meet with current team and explain what we are looking for and if they can help us accomplish that. We will also open this up to the community to gage interest in self funding the website.

Roadmap Funding and DAO Expenses

There was more discussion about potentially selling some of the treasury either to a VC or to the community both requiring some form of lock up. The group was all in agreement that this is not something that should be rushed. If we were to go the VC route it would be important to go with a fund that provides as with the most value add. To determine this we would want to listen to multiple parties explain how they could benefit our DAO. It would also be important to look for a partner that would come on board for a lesser amount of tokens rather than selling a large amount of the treasury at a low value.

The PDBG understands that there are some objections to going the VC route which is why we believe this discission is not something the PDBG should make and we will bring the conversation to the community before moving to a formal proposal and vote.

Another topic that was brought up is the DAO’s largest current expense, paying the PDBG. It was brought up that if the PDBG term is extended past the initial three months we should consider cutting the monthly payouts. This acts as an accelerant to moving towards a more formalized structure and away form the bootstrapping group. Multiple members agreed that this should be done and there were no objections at this time.

PHONON Tokenomics pt.2

This past week a summary of potential tokenomics was published in a google doc and then discussed in this meeting.

Before jumping into the document a question was raised about the 10b PHONON cap and if that is set in stone or if a vote could be passed to change it. The supply is currently capped at 10b but this contract is a fork of the ENS contract which allows for minimal change. There are three options the DAO could make. It can vote to add a maximum inflation rate of 2% per year, it could vote to solidify the 10b cap and get rid of the potential for inflation, or it can do nothing.

nPhonon RDA Example — The aforementioned google doc has much of the information discussed in the meeting so please read that as this post will only address the parts that were specifically discussed.

The above image is an estimate from the document of what the token burn could look like. A question was raised about how these numbers were estimated and it was stated they were just a framework for thinking about it. For example the price of nPhonon cards could be 135,000 PHONON per but selling 7500 cards may be unlikely since our community is relatively small right now.

Manufacturer Bonding — The next discussion point was in regards to manufacturers bonding of PHONON tokens to be a part of the protocol. The PDBG agreed that is is necessary for GridPlus to be required to bond tokens, otherwise it could look bad when approaching other manufacturers. No special treatment should be given to GridPlus in any phonon related activities.

Discussion continued with how much PHONON should these manufacturers be required to bond. One area of note was that bonding based on a perceived value would not have to be overcollateralized because there is no way for a manufacturer to rug all the funds held on cards they created, they would only be able to maliciously double spend before being caught by the network.

One option for bonding was to require the manufacturers to bond a certain amount of PHONON based on the perceived value of the cards they were selling. If the community was willing to buy 1000 cards at $600 per card they should have to stake a percentage of that.

Next a question about how many manufacturers would be willing to join the protocol. Justin mentioned that there is a manufacturer of NFC crypto cards that mentioned at ETHDenver they are interested in becoming a manufacturer and investing in the project.

Governance Staking — A governance staking model was briefly discussed and the group seemed to be in-favor of this idea but the discussion was not pushed forward. The funding of this staking and other potential mining opportunities could come from the PHONON left in the redeemer contract at the end of the year.

Pheverdreams

Our fearless community member Phon/ongod has been grinding away with daily well-thought-out posts about Phonon and their views of the protocol. While their content is not for the faint of heart as they hold nothing back and do not subscribe to the current norms of society. In a very internet native/4chan way they provide great insight and work hard at furthering the discussion and excitement of Phonon. If you have not checked out their post yet, do yourself a favor and head over to the Pheverdreams substack.

If you are not a fan of their style of writing, a fellow community member has been publishing the Phriendly Pheverdreams as a suitable for work alternative.