Abstract
This document is to serve as discussion material for guidance for onboarding metagovernance capabilities to additional tokens. This process has been rather random till now, and this guide should enable all INDEX contributors to explore the expansion of metagovernance and create value for the INDEX coop and utility for INDEX token
Current status
Currently, metagovernance is enabled for Compound, AAVE, Yearn and UNI. Balancer voting was lost last month due to a change in their governance structure, and the Badger snapshot is still broken.
Products
List of our products on the website and list of the tokens, and some data on Notion
Challenges
The number 1 challenge has been regulatory consideration for all products that are going to be listed on CEXs. Those products, by definition, need to be passive, and no staking or other reward is allowed. Currently, only DPI is subject to those restrictions.
The second challenge has been smartcontract locking or swaps. Technically possible, however, not very convenient is the situation when the voting is enabled only after tokens are locked or swapped. This practice makes rebalancing, minting, and redeeming the product slightly complicated, and a new process needs to be implemented.
The third challenge has been confirming the value created by metagovernance. The implementation of metagovernance needs input from many stakeholders such as legal, product, finance, gov, BD, and token holders. We need to attract their attention by proving to them that this is very important for the future of the INDEX COOP and it is in their best interest to prioritize metagovernance initiatives.
Value of the metagovernance
The value of metagovernance depends on two aspects value creation and power. This means that without any voting power, the partnership won’t generate much value and also, if there is no cooperation between the protocols, the voting power does not generate much value from voting only.
Value generation
Generation of value is the most important aspect of any organization, and metagovernance should not be an exception. There is tons of value that can be extracted from metagovernance, and we should identify those opportunities and execute on them. Here are some examples:
- Product development value from collaboration
- Value of cooperation in expanding our customer base
- Support of INDEX token value
- Creating new services to gain revenue
- Protection of the underlying assets of the product
Part of the value generation evaluation can also be total exposure as $ amount to the product. This means if 30 % DPI is locked in UNI but only 10% in COMP, our exposure is higher to UNI; therefore, we should focus more there. This aspect is more risk mitigation than value creation and can be considered only as an additional factor, but not deciding aspect.
Power
It is a determination of how much influence we have with our holding. It is definitely a good practice to vote as every vote counts, but we also need to prioritize where our vote counts more. There is a simple equation for this evaluation:
Power = token holds in Index products/total circulating supply.
And there are two important thresholds to be monitoring, reaching a quorum for submitting a proposal and reaching a quorum for approving the proposal. Those two are significant milestones for our metagovernance power. There should not be a situation where we have reached one of those milestones and are not leveraging our metagovernance power.
Cost
The cost associated with the enablement of the metagovernance should be the second step in our evaluation. For a few reasons:
- Technical resources within Index Coop are super busy
- Partial technical assessment can lead to incorrect outcomes
- Everything is technically possible if there is enough value (mindset).
I need your help the most in determining how we can generate value and evaluate the cost. Please add your views below in the comments. I will consolidate all the input and create a final metagovernance onboarding guidance for Index Coop.
Determine how to calculate the value
Product development value from collaboration
Can governance involvement help us enhance our products in cooperation with other organizations? Create some new features?
Value of cooperation in expanding our customer base
Our retail and institutional products are excellent. Can we get more customers if we are more involved in governance?
Support of INDEX token value
How can metagovernance play a key role in Index token utility value?
Creating new services to gain revenue
While executing a metagovernance proposal, can we provide some of it as a service to other organizations?
Determine how to calculate the cost
Technical implementation
How many developer hours do we need to enable metagovernance? What are the aspects that determined that?
Regulatory review
Is there any regulatory blocker we need to consider, and what does that mean in terms of cost/risk? What can be an example of such as blocker?
Execution cost
How much will it cost to maintain the metagovernance execution process? How many proposals do they have?
The next step is to finalize this guidance with you all - please include comments or even a paragraph on how you would create a value out of metagovernance and determine cost. Any suggestions are welcome, it can be broad but also very specific. This is something that will be hard to just take from somewhere else as we are pretty much leading the way in creating this new web3 coordination mechanism.
cc -a few folks that has been involved in the latest metagovernance enablement discussions, as agreed we should formalize our thinking to be able to move forward effectively - @mel.eth @Metfanmike @allan.g @Matthew_Graham @sixtykeys @shawn16400 @asira @Lavi @funkmasterflex @oneski22