Proportional Meta-Governance Votes

Context

After reading lots of topics on Meta-governance [references] I haven’t seen too much discussion around this topic and think it is worthy of such.

Currently, for governance votes of (eligible) protocols whose token is held in DPI, $INDEX holders vote on IC’s snapshot and the Coop then votes with the entirety of DPI’s holdings of that token in the majority’s favor (either FOR or AGAINST) (details at IC’s Docs: Meta-governance)


Proportional Meta-governance Votes

Another obvious way to exercise the Meta-governance votes would be to cast them proportionately to the $INDEX holders’ votes distribution.

  1. Aave would open a new vote on their snapshot and it would be replicated to IC’s the same way it is today;
  2. $INDEX holders would vote, say, 70% FOR and 30% AGAINST;
  3. The Coop would use 70% of all the $AAVE held in DPI to vote FOR and 30% to vote AGAINST (there is further explanation needed here as to how this would actually be done, happy to help discuss some ideas!)

Meta-governance is a way to convey, push, and make happen what the Index Coop community (proxied by $INDEX holders) believes and wants in DeFi.

Looking at it from this viewpoint, it seems like allocating the votes proportionally would better express our community’s viewpoint than the current majoritarian voting system for meta-governance. Examples:

  1. In the example above, the majoritarian meta-governance voting would discard the view expressed by 30% of the voters, thereby ending with a vote that doesn’t truly represent (only directionally) the position of $INDEX holders.
  2. Analogous to majoritarian political elections, in cases where a meta-governance vote is very one-sided already (90%+ voting FOR), there is currently little incentive for a new voter (with a small INDEX balance) whose position is AGAINST to actually vote (since it would not matter).
    If meta-governance votes were proportional, there would always be an incentive to vote if one had a position on the topic (since every single vote would directly translate to some more underlying tokens voting in that direction)

The consequence of this would be that IC’s votes on DPI’s underlying protocols would not be so “powerful” since instead of putting all of DPI’s holdings behind a monolithic voting preference they would rather “move” the voting in the exact direction the community felt.

However, maybe paradoxically, $INDEX could be seen as having more value for meta-governance, since, as aforementioned, there would be a number of AAVE/UNI/COMP/etc tokens voting directly because of an INDEX token’s vote every time. Another take is that the value of $INDEX for meta-governance would me “smoothed out” over votes instead of the current scenario where it may have extreme or no value (in meta-governance).


(I’m not coming up with anything new here! Just extremely interested in the power of meta-governance and want to 1. maximize it’s utility, 2. make it as representative/expressive of the community as possible and 3. further explore the pros and cons of different approaches).

// Love IC, DeFi and everything we’re building. LFG :rocket:

References

  1. IC Meta-governance docs
  2. Framework for Meta-Governance
  3. Meta-Governance Vision and Goals
  4. IC slide deck on Meta-Governance
  5. Leveraged (Meta) Governance
  6. Q2 Review of Meta-Gov Data
2 Likes

Hi @Carvas,

I love this idea and in an ideal world, this should be how metagovernance is implemented. This would require an immense technical lift as all governance systems we integrate with (Uniswap, Aave, Compound etc) are all-or-nothing systems.

4 Likes

Thanks for the input! The goal of creating this topic was to try to spark some discussion around Proportional Meta-governance and not so much to propose changing MG to it right now (as I fully acknowledge the difficulty in implementing).

I’d like to float two “hacks” that would make proportional meta-governance possible without needing to build any custom solution or waiting for snapshot/other mechanisms to make it feasible:

  1. IC would create another multisig without any funds and controlled by the same signers.
    Then, for each meta-governance vote, the DPI contract would delegate the respective token voting power for ‘AGAINST’ to that second multisig and keep the voting power of the ‘FOR’.
    Finally, each multisig would vote on the underlying protocol vote in its direction. (the second multisig could always vote AGAINST and the original always FOR. Just changing the amount of delegated votes for each vote taking place).
    (I believe there are some ways to make this feasible)

  2. Let’s say that INDEX holders vote 80% FOR and 20% AGAINST a given AIP.
    In a proportional meta-governance paradigm, 4/5ths of the AAVE tokens held inside DPI would vote FOR the AIP and 1/5 AGAINST. In practice, this would have the effect of swaying the AIP’s vote by 3/5ths of the total AAVE held in DPI – all that matters is the delta between FOR and AGAINST votes introduced by IC’s meta-governance.
    Looking at it from this perspective, another way of exercising proportional meta-governance could be just voting with an amount of tokens equal to: Total tokens held in DPI * (%FOR - %AGAINST). (or vice-versa if AGAINST was the majority vote by INDEX holders)

Both voting and delegation are “all or nothing” processes. We cannot choose to delegate out just a portion of our votes (nor can we delegate votes to two addresses simultaneously). We also cannot choose to vote with just a portion of our holdings. I have previously thought about ways to get around these constraints, but unfortunately there really isn’t any viable way to do this.

2 Likes