IIP-153: Implement Dynamic Quorum for Metagovernance

[mel.eth]

IIP Number: 153
Title: Implement Dynamic Quorum for MetaGovernance
Status: Proposed
Author(s): @mel.eth
GovReview: @pujimak_in
Required: Modifies IIP No. 51

Simple Summary

Quorum for metagovernance voting will be reduced linearly from 5% down to 1% as support increases (on a per-proposal basis) to inspire greater decentralization and allow for greater participation in Index Coop metagovernance by the community. At present, the 5% quorum is a holistic blocker to participation given it is rarely achieved. This change allows for overwhelming support of a proposal to be executed directly; both reducing the workload on the MGC when a majority opinion is clear and creating a more decentralized decision framework for metagovernance voting.

Abstract

This proposal changes the quorum calculation for metagoveranance voting from a flat 5% (with quorum failures going to the 5-member MGC to decide) to a linearly reduced quorum number as the percentage of votes cast FOR or AGAINST deviates from 50%.

Motivation

‌
At present quorum is rarely achieved during metagoveranance voting. At issue, non-whale interest is not sufficient to pass metagovernance votes despite regular INDEX voting. The fallback mechanism of the MGC will remain in place for contentious votes with low participation; however, the lack of ability to influence metagovernance by a majority of INDEX holders with no clear path to influence is suppressing the price of INDEX by creating a non-competitive metagovernance environment, currently advantageous only to large token holders and MGC members.
‌

Specification

Rationale

Quorum is a hurdle-rate that is in place to ensure that there is sufficient contextual input into a vote (using voting token amount as a proxy for interest+context). Quorum being too low means not enough context from the voting body has been aggregated, too high means that even well-considered voting by many won’t effect the desired outcome without MGC assistance.

A dynamic quorum essentially calls for greater participation depending on the binary diversity of opinions on that proposal. With the benefit of a fallback mechanism (the MGC) we can maintain the necessary forcing function (IC can’t re-run another protocol’s proposal due to insufficient quorum) so that a considered decision is registered in every case.

For example: At full support, quorum drops to 1%; meaning fewer voters can influence the vote. Quorum increases up to a maximum of 5%, should diversity in the cast-votes develop. In this way, contentious votes require greater participation and therefore context to pass without the MGC stepping in.

The drawback here is that achieving quorum on a typical proposal has finality (beyond a static quorum, the indeterminant result is considered executable prior to the end of the voting period). Dynamic quorum means that achievement of quorum cannot be determined until the end of the vote. The MGC would need to be prepared to render a decision should the calculated quorum not be achieved once IC voting has ended.

Technical Specification

‌
The calculation for Quorum on binary votes will be:

Q = -0.1*S + 0.1; Q >= 0.01
S = the greater of: |FOR| or |AGAINST|  (as a percentage value of all votes cast)

Dynamic quorum examples:

Quorum %	% FOR or AGAINST
1%	100%
2.5%	75%
5%	50%

‌
On votes with greater than two choices, quorum will remain at a static 5%.

Add the following text to posted metagovernance votes:
This metagovernance proposal is subject to a dynamic quorum requirement. Quorum for the INDEX community voting on this metagovernance proposal will increase from 1% to a maximum of 5% as support for the majority result decreases from 100%. Should quorum not be achieved voting here will be rendered void and the MGC will decide on this proposal as outlined here. More on dynamic quorum calculation can be found here.

Changelog

• Rev 1: 09 May 2022 Changed minimum quorum from 0% to 1% and updated proposal body accordingly.

Copyright

‌Copyright and related rights waived via CC0.

[mel.eth]

Gm @GovNest -

Please assign an IIP number and review. I’d like to run this vote on 02 May 2022.

[GovNest]

Hey @mel.eth , an IIP number (153) has been assigned to this proposal, thus beginning the 48 hour formal discussion period for this IIP. A GovRep (@pujimak_in ) has been assigned to review and run this proposal through the IIP Process.

For reference, an overview of the IIP Process can be found here.

[pujimak_in]

Hi @mel.eth, I’ve completed the review. Noted on start date of 2 May 2022 (1800H UTC).
Please do confirm on this and I’ll proceed to queue the vote on snapshot (after the 48hrs has lapsed).

Will report back here with the link to snapshot once it has been queued.

Thanks.

[mel.eth]

Confirmed. Thanks @pujimak_in

[pujimak_in]

Thank you for confirming ser.

48 hours has lapsed, thus the Snapshot vote has been queued;
Here

[rtree]

I am FOR for reducing quorum because there should be some good point which ratio the context of underline tokens to be propagated within index holders, and if current quorum rarely met, it should be smaller amount to express our decision. Under quorum means we did chose “abstain” passively, but the choice should be explicitly. I think blocking by quorum in metagovernance means passively chosen abstain, whereas blocking in $INDEX governance means we chose abstain actively.

But I am not sure dynamic quorum is the path to take, because it revokes from index holders, to express opposite to major vote by making it blocked by quorum. I think trying to decrease of quorum is sufficient to change currrent situation.

Sorry for posting this while direction of vote is gradually clarified, but I think blocking of quorum on metagovernance is issue, so I did this post as some medium for a hope that other holders will share what they think to community.

[pujimak_in]

Confirming that this IIP has FAILED with 189K INDEX (86.62%) voting AGAINST
Snapshot here

[mel.eth]

Gm @pujimak_in -

I have revised the proposal, raising the lower bound from 0% to 1% for the proposed quorum calculation. I understand this materially changes the proposal and that a new 48-hour discussion period may be required; please review and queue this for voting at the earliest possible time. Thanks. cc: @GovNest

[pujimak_in]

Noted on this, @mel.eth . The new 48 hours discussion period is already in effect with @GovNest reacted to the post. Thus in regards to the timing of the voting start, would 11 May 2022 (1800H) worked for this?

The voting will go live from 11 May 2022 (1800H) for 72 hours.

Please do confirm the timing above, once confirm & the 48 hours has lapsed, will revert back here with the queued Snapshot link.

Thanks

[mel.eth]

Confirmed; thanks @pujimak_in.

[catjam]

Hey @mel.eth — given the very strong opposition to this vote (86%) I’m surprised to see it going back to IIP so quickly with such minimal changes. Could you elaborate on why you see this as a substantial enough improvement, what feedback you took, and alternate approaches considered?

Full disclosure, as it currently stands I’ll plan to vote against.

[mel.eth]

Gm @catjam -

I appreciate your interest. While raising the minimum quorum from 0% to 1% may appear minimal, it is a substantial change to the proposal. For reference, here is the representation of voting power on the initial failed proposal:

As you can see, at near-zero voting-power a vote could be influenced to detrimental result. The idea here is to safely unlock the voting-power of the INDEX token at lower unit-supply levels so that retail can engage in metagovernance voting and potentially effect a desired result (unlocking the ability to influence at all levels creates INDEX demand at all levels). INDEX demand is essential to positive context creation within governance (those that value governance will acquire/hold; those that don’t will sell, influence increases as AUM increases, increasing relative value for those that value governance properties - INDEX is currently over 200x leverage on governance at other protocols but quorum prevents exerting influence below ~150k INDEX or currently approx. $870k).

I appreciate your elevated communication around your voting intentions; however, I challenge you to provide a counter to the insurmountable hurdle-rate that a 5% static quorum currently provides. It’s absurd to pass metagovernance to INDEX token holders, frame metagovernance as a value-driver, and then make sure that no one with less than nearly $1MM can play even at depressed INDEX prices . . . you can commit to voting down positive policy, but it won’t change that everything you say around the value of the INDEX token is lip-service if you can’t actually vote with it. I’ll continue to try and have a conversation with this DAO about the importance of unlocking governance for all, but as it stands a lot of power is centralized in the council and quorum only helps those that can surmount it.

I urge you to explore the value of allowing our governance token to actually be used to govern . . . it’s not valuable because we don’t allow it to be . . . because you’re not going to allow it to be. We’re getting a bit of press on this, and I’d like to keep the conversation positive . . . we’re only as decentralized as our governance processes and a 5% quorum suppresses interest to the extreme. Dynamic quorum ensures that support is high even if participation is low, but prevents a negative result if a vote is contentious. No voting mechanism is or should be 100% safe but this balances all considerations well and the parameter change is meaningful; if influence can’t be exerted to effect either result it’s not a open process, that’s currently what we’re operating, and it’s well-reflected in token-price, imo. Happy to speak more on this; let me know if an AMA would be helpful.

[catjam]

Thanks for your reply @mel.eth ! Given the tone of your response (quotes below) it feels like a conversation would be the next best step – I’m certainly not trying to be adversarial or have a negative impact on our governance token. I am still interested in hearing about the feedback you received and alternative approaches to be considered, as well as making sure that Gov Nest, Index Council, and our DAO are aligned on the priorities and current issues surrounding metagoverance. Will reach out via Discord!

@mel.eth

you can commit to voting down positive policy, but it won’t change that everything you say around the value of the INDEX token is lip-service

@mel.eth

I urge you to explore the value of allowing our governance token to actually be used to govern . . . it’s not valuable because we don’t allow it to be . . . because you’re not going to allow it to be.

[funkmasterflex]

I’m shocked to see a rerun of a proposal so overwhelmingly voted against by INDEX governance. Mel you say “I’ll continue to try and have a conversation with this DAO about the importance of unlocking governance”. I find this contradictory to recent actions including ICC delegation and Governance House efforts.

The tail risk of this proposal is the real concern. Considering INDEX metagov power can be levered up, I find it unnecessary to introduce such unnecessary risks to ourselves and partner protocols. This type of quorum change is not commonplace in current defi governance and is at best a short term solution considering recent efforts to delegate voting power. I appreciate the intent of unlocking and driving adoption to INDEX governance power, but I find the following statement at worst to be false and at best unproven “that retail can engage in metagovernance voting and potentially effect a desired result (unlocking the ability to influence at all levels creates INDEX demand at all levels)”.

I’d urge those involved to suspend this revote considering the original feedback from INDEX voters.

[mel.eth]

Suspend a vote? You don’t get to decide that and I’m the one responsible for telling you so. Try not to scare so easily Funk; using INDEX to vote IS the point of democratic org. I get that the MGC feels safe but it’s all just ‘voting’ at the end of the day. The MGC is in shambles, if you place greater trust there than in our community at large vote your conscience, but don’t you dare call for a denial of our governance process to me for no reason.

The worst part about all the minds made up on these points ahead is that the move here is toward greater context parties having more influence, but also buidling context so the long tail can understand and adopt products, become community, and accumulate INDEX for metagovernance. Currently no one with less than 150k index cares and it shows, mainly in token price, but you can’t stop, read, consider, discuss, and see that no one wants to buy a token with no effective utility; yet just you keep voting to suppress it.

You’re putting ecosystem sustainability above Coop sustainability; we can “protect our partners” by making sure it takes $1mm to move the needle on them, and kill our token’s value prop, sure. We can form cabals and push VCs toward delegation, sure. My vision is giving every INDEX holder not the right, but the ability to influence. Either we’re pushing toward greater decentralization (ability to influence) or centralization (reduced ability to influence) but there is no coasting. If the delegates that can break quorum commit to doing so, the point here is still not moot: all votes should count if someone is interested enough to vote. If apathy causes a bad result that affected community should get their governance in order, but we’re not world police and give an avenue for change: go buy INDEX and vote. But stop calling for protectionism it’s not DeFi and it kills INDEX price.

[mel.eth]

Great example of our last metagov vote. 100% community support, 27 voters, ~140k INDEX voting; still need to MGC to make sure all of us IQ60 folks are making the right call. Snapshot

Applying the dynamic example above, quorum at 100% support would be 30,279 resulting in a community decision AUTOMATICALLY. This IIP essentially removes the MGC’s veto power when the community is supportive of a result. It also reduces the need to pay for deciders when we have a community of engaged deciders making actual impact by voting already.

Using math to solve problems is the way here Funk. Using unprincipled committees is the old way. I’ll try and continue to get you comfy with the change; genuinely appreciate the engagement on this topic.

[pujimak_in]

Hello @mel.eth,

Looking at the current discussion (given the first run; more then 80% voted AGAINST), I would recommend pushing the live voting to Monday 16 May 2022 (1800UTC).

This would give more time to deliberate and discuss further in the forum with all relevant stakeholders.

Please do confirm.

Thank you.

Cc @GovNest

[mel.eth]

In light of the result of the vote with a 0% floor being against, I’ll be holding an AMA on Thursday 12 May 2022 at 1415 UTC (2022-05-12T14:15:00Z) to build context. Given the short notice please drop questions here to be addressed if you cannot attend; the session will be recorded and posted here. @pujimak_in please schedule voting to start on 16 May at 1800 UTC to allow time for the AMA. Thanks.

Short Presentation + AMA w/ mel.eth: IIP-153: Dynamic Quorum [ recorded]
Thursday, May 12 · 10:15 – 11:00 ET
Google Meet joining info
Video call link: https://meet.google.com/rtr-ztky-pft
Or dial: ‪(US) +1 307-622-9209‬ PIN: ‪261 575 290‬#
More phone numbers: https://tel.meet/rtr-ztky-pft?pin=9151252734193

[shawn16400]

@funkmasterflex

but I find the following statement at worst to be false and at best unproven “that retail can engage in metagovernance voting and potentially effect a desired result

Hey Funk, you are absolutely correct, this is unproven - the current quorum discourages participation because minnow votes do not matter. So lets prove it, or disprove it.

@funkmasterflex

This type of quorum change is not commonplace in current defi governance

Yeah, you are correct here as well. This is really innovative and no one is doing this. I see this as a variation / improvement on the negative confirmation voting and and if it works, it could get adopted on a wider scale given its appears to be safer than negative confirmation voting, it hits back at voter apathy, eliminates reliance on whales, and allows for low friction voting on no-brainer proposals. or the MGC. Which is kind of the point of decentralization.

@funkmasterflex

is at best a short term solution considering recent efforts to delegate voting power.

I struggled with this one too. Part of me just wants to rely on the 415K delegation to the ICC to solve the metagovernance issue, because it will. But at an extreme view, the delegation for metagovernance just replaces the MGC with the ICC. Do not get me wrong, the delegation is a step in the right direction and will definitely help our leaders build better ecosystem awareness, but it ends with metagovernance still reliant on whales.

@mel.eth

Suspend a vote? You don’t get to decide that and I’m the one responsible for telling you so

Dial it back there big dog… : ) Our principles instruct us to act with empathy, seek to understand, and respectfully challenge each other. Funks comment may feel like an attack on the decision making process, but its likely just a chance to educate.

I appreciate the forum discussion this time around. Recall during the last vote there were no forum comments at all, however there was strong sentiment from GovHouse addresses against the proposal. I reached out to @Matthew_Graham to understand the background and @oneski22 reached out to explain his position as well. I don’t know if this change will address their delegates concerns, but this proposal is an example of where we need to get better at high-speed low-friction decisions.

I will be voting for this proposal. The ICC delegation may make this process moot, but I am here because the vision of IC speaks to me: Create decentralized financial products that unlock prosperity for everyone
That last word, “everyone” gets lost, but to me it is the key for long term passionate growth and success. I believe we have a right to experiment, we must to continue down the path to decentralization, and we have to be diligent at empowering the disenfranchised / minority voices of our contributors, our community and our tokenholders. This proposal takes a cut at empowering that last group.