I may not quite get this, but I am keen to hear more about the steward role - specifically how the stewards are driven by & evaluated on their support the mission of IC. That, to me is key. Metagovernance driven by clear principles and guided by the mission of Index Coop.
Indeed, INDEX holders are incentivised to want any available income directed to them. (see COMP rewards and FLI products).
A few thoughts occur:
- I believe that our marketing indicates that many holders don’t care about the streaming fee as they want board exposure to the asset class. So yield is not a buying factor.
- We have another class (more DeFi native?) who are looking for exposure and yield. Many of the strategies that capture this would not easily capture meta governance power (e.g. xSushi and stAAVE do have governance, cUNI, aCOMP would not ???)
- If the goal is to attract AUM to $DPI etc by capturing metagov income, then we could use the income to offset the streaming fee (on that assumption that $DPI with a 0% fee is effectively that same as $DPI with a 0.95% fee when it comes to regulators / CEX etc.)
A couple of historical ideas from me.
If the goal is to reduce the overhead of governance (and not capture income from it). Then we could:
- Delegate to known members of the underlying communities (e.g. $AAVE is delegated to a $AAVE contributor).
- Some protocols allow an Abstain vote option (Bancor just added this feature to snapshot). This allows passive participation that helps reach quorum and lets the active community make decisions. This may need changes to underlying project governance (and I’m not sure it works with on-chain votes)
In either case, INDEX meta gov only needs to act when there is something we have a strong opinion on.
We could create a web page that lists: Project, voting power, who it is delegated to / default vote. (voting history available on boardroom?). Then third parties who want to influence a vote can contact the coop and open discussions.
What happens if someone borrows DPI’s UNI voting power via a delegate lending platform and does a treasury raid with it ?
What would this do to Index Coop’s good standing within the broader ecosystem and will other protocols want to work with us if something like that occurred. To me the goodwill and reputation damage is inflicted on INDEX holders, not DPI holders. The social liability flows through to Index Coop if something goes wrong.
I would place responsibility for that outcome in this order:
- Uniswap for providing a protocol-upgrade feedback mechanism with easy access to their treasure
- Uniswap again for not providing better guardrails given that voting-markets are a natural extension of portable-governance (we’re doing this in the open, everyone will know it’s coming)
- The person raiding the treasury
That’s it. If protocols don’t like it they can turn off delegation or blacklist, but that will effectively create another permission-layer . . . not very web3.
The implication seems to be that selling votes is OK as long as it’s permissioned, or that we are the guardians of ecosystem voting-power. In my view, it is incumbent upon protocols providing decision-mechanisms to provide safeguards, not The Index Cooperative. We are here to build and ship great products, not get bogged down in some protectionist ethos, and great products make holders more prosperous over time which is really what this proposal does.
You asked a what-if question, and while I agree that Index Coop would be viewed as largely responsible, code is law and we’re pushing the limits of how we can leverage that for users . . . that’s just innovation. We’re already extracting the value from users and have proven we can mishandle it . . . why not give it back to them directly in their chosen asset and let the market be open? If we do this in a permissioned way, someone will just do it permissionlessly and beat us out long term . . . imo.
While I think this is an interesting proposal, I’m not sure it is worth it. A quick look at the Paladin markets for AAVE, UNI, and COMP shows that the yields are all below 0.05% (two of them are at 0.01%). To make matters worse, our contribution would likely dilute the yield even further. If the yields on paladin offer any insight into how much we would make on this strategy, we would likely lose money after gas.
To further complicate matters, integrating with Paladin would require us to integrate it with our planned intrinsic productivity system since Paladin needs its lenders to deposit the governance token in its contracts. If we are going to do intrinsic productivity on DPI (which I personally think we should not), we might as well do a more profitable form of it.
I would also like to reiterate @Matthew_Graham’s point that we should position ourselves as good custodians of the protocols we govern. At the moment, we have a great rapport with many protocol’s core teams, and often make proposals with our tokens. This has allowed us to get support from core teams on our proposals, and code review of the actual on-chain code. So far this has been incredibly valuable, most notably with Aave where we have passed three (somewhat selfish) proposals using our proposal power. As much as we love to talk about decentralization, most proposals would not be possible without the support of these protocol’s core teams and communities. I am sure we will continue to use our proposal and voting power to build on synergies between ourselves and the protocols we help govern, and I fear that selling our votes will quickly make us lose the favor of the communities and core teams of these protocols.
This seems like a critical difference between lending and delegation. Perhaps the language of ‘steward’ caters better to my bias against bribery. I feel like you make a good point @mel.eth by highlighting that a the marketplace for governance is largely software upgrades. Is this to say that there is some way we can limit/define the type of meta gov votes lending is available for?
I find applied scenarios are an effective way of communicating the application of the lending vs delegating scenarios. Straying off-topic here but in response to vote-lending markets what safety rails does the Coop have against the treasury raid scenario?
Thanks for sharing @overanalyser the applied use of “abstain” to pass quorum without the need for high-level context or delegation - in combination with push notifications all my barriers to meta gov voting would be mitigated.
Thanks to all who attended the AMA; your feedback was incredible! @anthonyb.eth and I will endeavor to bake it in to make this whole thing better.
2:00-20:00 Context-building (existing/proposed|benefits/challenges)
20:00-67:00 Open discussion
If this makes sense or seems interesting and you’re interested in contributing here at IC or learning more, please ping me on discord (mel.eth#0001) or attend the open Governance Nest meetings on Thursdays; see shared calendar for updates.
Very interesting proposal. I see that a lot of the questions I had on my mind are being discussed live above, so I will refrain from echoing them for the purposes of organization and simplicity. What I agree with from your argument: (1) metagovernance is awesome but currently untapped, (2) there are always ways to improve the products, (3) dedication to the customers. Where I disagree: (1) giving up metagovernance power now, (2) doing so in exchange for something that, as others have mentioned, might not make a noticeable difference for the product customer base.
Metagovernance is awesome - we all agree with this here. And to date, it hasn’t been delivering that value, I see this too. But we are early, governance only just started heating up these last couple of months. Why give a valuable call option away to potentially low yield? Also, would the customers really even care if their prime motivation is asset-base exposure and not an additional 1% yield? Honing in on the customer value prop is key in my opinion.
Let’s first have an active discussion about improving metagovernance. How do we create better awareness, how do we change the paradigm? How do we capture the essence of these whole curve wars better to the advantage of the immense strategic value the INDEX token has? As I detailed a bit in my post (link) on the value behind $INDEX, I can see $INDEX akin to Tokemak in some ways. Just as projects buy $TOKE (acquired through either a treasury swap between Tokemak and the project’s DAO, or a direct market buy) to direct 1:10 more liquidity to their protocol, projects can buy $INDEX to direct 1:x (x depends on AUM) more voting power in order to realize a strategic objective. Zoom out and it becomes apparent that $INDEX should be an important holding in projects’ treasuries. It is power to conduct strategy…
There may be something very valuable here, and I urge us to keep discussing and innovating before doing this first, especially given the low yields on voting power at the moment (opportunity cost of not doing this is quite low). I argue that patience is important here, but recognize pushback from those frustrated with $INDEX market performance. I know it has been very tough
In conclusion, the tradeoff is harder for me to fully back. The long-term call option value on metagovernance is greater than the benefits of losing that to additional yield for a product built for asset exposure and management.
Thank you so much for your thoughts, work, and effort!
I think these are the marching orders for the GovNest - and why trying to figure this out could lead to a core competency of Index Coop. Sure we have great products, but BlackRock can (and does) move the Dow Jones. If we do metagovernance well, our mission statement (Create decentralized financial products that unlock prosperity for everyone) is too small.
Sharing Soulbound from a thought leader in the space
there are very bad things that can easily happen to governance mechanisms if governance power is easily transferable . This is true for two primary types of reasons:
- If the goal is for governance power to be widely distributed , then transferability is counterproductive as concentrated interests are more likely to buy the governance rights up from everyone else.
- If the goal is for governance power to go to the competent , then transferability is counterproductive because nothing stops the governance rights from being bought up by the determined but incompetent.
If you take the proverb that “those who most want to rule people are those least suited to do it” seriously, then you should be suspicious of transferability, precisely because transferability makes governance power flow away from the meek who are most likely to provide valuable input to governance and toward the power-hungry who are most likely to cause problems.