IIP-80: Meta Governance Proposals [MGP] Process

IIP-80:
Title: Meta Governance Proposals [MGP] Process
Status: Proposed
Authors: @oneski22 @Lavi
Created: 27th August 2021

Summary

We’d like to propose a new process for Meta Governance Proposals (MGPs), that is separate from the IIP process.

We expect more requests to use some of the underlyings in the DPI to come in from a variety of stakeholders, and having a structured process in place that defines how to treat these requests is key for the Index Coop’s meta governance responsibility.

Introduction

With Index Coop’s products growing at a stunning rate, so does the potential influence the Coop has on the protocols for which meta governance is active. We are already seeing this regularly in our current votes. For example, in the recent Aave votes, IC was in top 4 or even the top 3 in terms of voting power. On Compound votes IC is usually among the top 12, and in the most recent Yearn vote, the over 250 YFI in DPI led to IC being the biggest voter.

Motivation

This strong influence does not remain unnoticed and naturally, people start to think of IC when the need for voting power arises. One recent example was IIP-67, where crypto analytics firm Flipside reached out to IC with the request to delegate 1.5M UNI tokens within the DPI contract to Flipside, in a one time delegation act. Flipside needed enough UNI in order for them to create a proposal (minimum UNI required to create a proposal is 2.5M UNI). This use case of the UNI token within DPI has led to some discussions and the vote was contested with only 64.3% voting FOR.

However, we do expect more of these requests coming in and in order for future proposals to have a clear path and to provide some orientation, we’d like to establish a dedicated Meta-Governance Proposal (MGP) track.

What is a Meta-Governance Proposal (MGP)

In order for us to have a common understanding, we first want to define the main points of what differentiates an MGP from an IIP. There are four points that define an MGP:

  1. Tokens under IndexCoop control - An MGP is a proposal that targets the use of the governance powers of tokens that are under the control of the IndexCoop.
  2. External requestor - An MGP is a request that comes to the IndexCoop from a source that is not the relevant underlying protocol. With the intent to use the Index Coop’s meta governance powers in any way other than voting for an existing proposal. (e.g. use AAVE to create a proposal for adding a token onto the Aave market).
  3. Use the tokens to create a proposal - An MGP is different from a normal meta-governance vote, in that it aims to use the underlying tokens to create a proposal, not to vote on a proposal (as that’s done by $INDEX holders).
  4. One-time delegation - An MGC is the request for a one-time delegation of tokens for a short period of time to the requestor’s target, in order for them to create a proposal.

Proposal Creation Process

  1. A forum post is created outlining the Meta Governance Proposal [MGP] to the Index Community. In addition to the full details of the proposal, the proposing party should explain the benefits to the IndexCoop and the underlying protocol.
  2. Should within 30 days, 1% of the circulating supply indicate support of the MGP via publicly verified messages, the MGP will receive a number [MGP-XX] and proceed, otherwise, it shall be canceled. A wallet can only signal support for one (1) proposal for each protocol at a given time. [Example: if there are 2 Compound proposals, a wallet can only signal support for 1 at a given time]
  3. Once the 1% threshold is reached, similar to our product assessment, 3 different IC groups: the Meta Governance Committee, the BDWG and the relevant protocol ambassador, will work together to produce a “governance assessment” 4 days after the threshold is reached.
  4. 7 days after the 1% threshold has been reached, the proposer can conduct a community call, and then call for a Snapshot vote which will go live for 72 hours.

Quorum Requirements

For an MGP to pass, it needs to fulfill the following quorum requirements:

  • 10% of all $INDEX in circulating supply must have participated in the vote
  • 66% (2/3) of the participating votes must be FOR the MGP

Execution of the Vote

If the MGP passes, the MGC and EWG will work with the proposer to ensure the proper steps are taken to execute the MGP.

Fees

Due to the various gas costs and engineering effort that is expended in executing an MGP, a proposer will be required to pay the IndexCoop 2 ETH (payable to the Index Coop Operating Account). The MGC has the discretion to waive this fee. Such a waiver and the reasons for granting it will be outlined in the “governance assessment”.

Specification

  1. Establish a new class of governance proposals, Meta Governance Proposals (MGP), that are exclusively used for proposals that use the IndexCoop’s meta governance power in any way outside of voting on existing proposals.
  2. MGPs will require 1% of the circulating supply to signal support within 30 days of them being posted on the IndexCoop governance forum, otherwise, it will be canceled.
  3. After 1% is reached, the proposer will wait at least 7 days, before having a community call and then calling a snapshot vote. A community call must be held prior to a snapshot vote.
  4. The snapshot vote will be live for 72 hours, a quorum of 10% of circulating supply must be reached, and 66% (2/3) of votes must be FOR in order for the MGP to pass.
  5. The proposer will pay 2 ETH to the Index Coop Operating Account (or other address specified by the Treasury Working Group) prior to execution, unless otherwise waived by the Meta Governance Committee.

Vote

For

  • Adopt the Meta Governance Proposal framework as described above.

Against

  • Do not adopt the Meta Governance Proposal framework as described above.

Elevated Quorum

This proposal introduces a large change to our governance structure and therefore the authors are requesting an elevated quorum of 10% circulating supply, with 60% voting FOR in order to pass this IIP. These thresholds are in line with the DG2 requirements, which is the most major decision we presently make via governance.

Extras:

Current IndexCoop Token Holdings & Proposal Thresholds

Protocol Tokens required (/delegated) to create a proposal # of tokens IC has % of threshold requirements Governance Tool Comment
Aave 80k (0.5%) 102k 100% Aave Governance V2 (short time lock) Controls Aave V1 and V2, risk parameters, token distribution, fees, etc.
320k (2%) 102k 31.8% Aave Governance V2 (long time lock) Controls changes to the AAVE and stkAAVE token and updates to governance parameters
Compound 65k 42.8k 65.8% Governor Bravo DPI holdings only
Uniswap 2.5M 1.76M 70.4% Governor Bravo
Yearn 1 283 100% Snapshot
Balancer 0 85.8k 100% Snapshot

Copyright

Copyright and related rights waived via CC0.

7 Likes

@Pepperoni_Joe @sixtykeys requesting an IIP number. No voting yet.

1 Like

Could we put up an example MGP template to guide proposers?

2 Likes

MGP-XX

title: [MGP] Use IndexCoop’s AAVE to list DPI on Aave V2 Market
status: template
author: Cooper The Owl (@cooper)
created: <date>

Simple Summary

This MGP requests the IndexCoop’s Aave voting rights to be used for the sole purpose of submitting an AIP and for voting on listing DPI as a collateral asset on Aave V2, and voting FOR said proposal.

About the Requestor

Cooper is the mascot of the IndexCoop, he has been an owl for his whole life and has been dutifully serving the IndexCoop since its founding.

Proposal Details

The proposal calls for the addition of DPI to the Aave V2 market with a 65% CF, 10% RF, and X interest rate curve.

Benefits for the Protocol and the DeFi Ecosystem

Listing DPI on Aave will unlock entirely new classes of trades. There is a lot more I should write here if this wasn’t a template.

Benefits to IndexCoop

This would give more extrinsically productive use cases to DPI, an IndexCoop product. There is a lot more I should write here if this wasn’t a template.

Fee Waiver Request (optional)

Since I am an owl submitting this on behalf of the Coop and it directly benefits Coop products I am requesting the 2ETH charge be waived.

Votes Signaling For

I, Cooper the Owl, am signaling for this proposal with my 1M INDEX. The signed message is here (would be a link).

(If this isn’t enough to reach 1%, governance folks will edit this post to show tally, as folks signal in comments)

4 Likes

Apologies if I’m in the wrong place, is this the best spot to post feedback or a request for comment?
If not, if someone could point me in the right direction I’d appreciate it.

If I could speak to every single individual against this proposal via speaking, I absolutely would love to.

This is the right place to comment, as to voice while we have a voice channel in discord we cannot force folks to use it.

1 Like

@Pepperoni_Joe @sixtykeys requesting this go to a vote on Wednesday with the elevated quorum requirements specified.

1 Like

Hey @oneski22 @Lavi , this proposal has been queue for snapshot and is set to go live on Wednesday, 1st September.
Snapshot here

2 Likes

Thanks for writing this up! Exciting to see the growing influence of Index within the broader ecosystem.

Just curious, why 80% and not a lower threshold like 2/3?

2 Likes

60% was the originally proposed number. During both community calls (Western and APAC) there was broad consensus to raise the threshold.

As stated on those calls and in all public discussion these parameters represent a first draft, and will require data from this process being live to hone in. Much like how UNI and COMP have changed various governance parameters.

2 Likes

Makes sense! I suppose we could start at 80% and adjust downwards if issues pop up

2 Likes

The 1% proposal threshold; 10% quorum and 80% approval should all be looked at as we get data and see how this is used, especially as more Index is distributed and governance actors become aware of this pathway

2 Likes

This IIP failed to pass as quorum was not reached. Only 121k INDEX voted whereas the quorum requirement was 208k INDEX.
Snapshot

1 Like

What a shame.
There a breakdown of which actors voted for and against yet, or does that need to wait until the attack vector workshop?

Hi @Stefan all voting records can be seen at the snapshot

https://snapshot.org/#/index-coop.eth/proposal/QmRpucw5B4EfUXoRMpnSYLBBQVbssQXX3eJn74ra16JhRi

1 Like

Thanks for that, “I’ll” take a closer look.
Shouldn’t be hard, just need to check who didn’t vote.

I’m going to assume a wallet address doesn’t count as personal information, right?
So it shouldn’t be difficult to check which wallets received contributor rewards and didn’t vote on the proposal?

Am I understanding the situation correctly?

Hey, Christopher from 1kx here,

We’ve made a mistake in voting against this proposal and have accidentally voted against IIP-81 instead.

Our main reason for wanting to vote No on IIP-80 was that we felt that an 80% threshold was far too high. The highest practical thresholds for a supermajority in traditional voting is 75%, with 66% being the most practically used example of a supermajority.

We also feel that there would be no practical path to reduce that threshold in the future because every failure in the voting threshold would be easily justifiable as not a good proposal in the first place. We would therefore propose to start with a supermajority threshold of 66%, with the optionality to raise this further to 75% should this be abused in the future.

Furthermore, we are really excited about this opportunity that IndexCoop brings to decentralised governance.
Far too many protocols are too centralised, such that only a few individuals selected by the protocol can create proposals, and IndexCoop can provide an outlet for more democratic participation in these protocols through meta governance proposals. So while we agree that this needs to be treated carefully, we also wouldn’t want to practically restrict IndexCoop from becoming an important meta governance proposal creator.

We are in agreement with the 10% quorum and 1% INDEX proposal threshold requirements though and feel they are appropriate given the sensible nature of meta governance proposals.

Christopher

12 Likes

Thanks for your feedback @HeyChristopher ! We are hoping to schedule another community call to discuss changes (including the lowering of the approval threshold) ASAP. With a revised framework going to snapshot Monday.

cc: @sixtykeys @Pepperoni_Joe @mel.eth

2 Likes

Community call is 3:30PM UTC (11:30AM ET, 9:30AM PT) on Friday Sept 10.

Snapshot vote on the revised IIP will be on Monday. Changes will be posted here after the community call should consensus be reached.

4 Likes