**Updated** Proposal to form a MetaGovernance Committee

Title: Proposal to form a MetaGovernance Committee
Contributors & Feedback: @Lavi, @cedrick, @ncitron, @Kiba & @gregdocter
Date: May 28, 2021

UPDATE: Please see addendum at the bottom for updates to this proposal.

Summary

  • We don’t reach quorum on a majority of meta-governance votes. There appears to be voter fatigue around meta-gov related votes, which are increasing in frequency.
  • By not engaging in meta-governance for most votes, we are missing an opportunity to further build trust and rapport with the protocols within DPI and build value for Index Coop.
  • UDPATE: We propose to continue community MetaGov voting as is, and delegate all DPI-related meta-governance votes to a dedicated, elected committee, in case we do not reach quorum on the regular vote.
  • This committee will consist of well-informed governors that cast their votes on behalf of Index Coop. This is a change from the current meta-governance process as detailed here: Meta-Governance
  • Members of the committee are voted in for a 3 month period, with a backstop to recall or replace members in case needed.

Problem
While the current meta-governance process is not generating major problems, it’s not ideal either. Some issues are highlighted below:

  • High manual effort - The current voting process requires a few hours of work from Greg, Cedrick and others, each time a new vote is live or a vote ends. This effort exists, whether we reach quorum or not (which we often don’t). Further, most of the effort is done by the Set team and we see a potential to hand over some tasks to the community.
  • We hardly reach quorum - An analysis of the most recent meta-governance votes shows a clear picture:

Finding: Looking at the last 15 votes, we only reached quorum 4 times. That’s only 27%, meaning the Index Coop has not participated in 73% of the most recent meta-gov votes.

Often, even when IIPs and meta-gov votes are added to Snapshot at roughly the same time, the meta-gov vote has dramatically lower engagement.

Why? While we haven’t done a thorough analysis, we can make a few educated guesses.
First of all, the frequency of meta-gov votes has increased quite a bit over the last two months. We can assume that we already witness voter fatigue, as there is a declining voting participation. The voting frequency will only increase more, now that Balancer and Yearn are live and others may come online in the future.

Another reason might be the nature of these votes. Most of them are “house-keeping votes” that are not met with great interest or cause much debate. The only time we saw disagreeing votes was for “Adding renFIL to Aave” and “Add TUSD to COMP”.
Even though most of the votes are “just” housekeeping, it still takes time and brain juice to get properly informed about the Pros and Cons of each vote. Hence, we conclude that meta-governance is becoming less important (or even a burden) for most INDEX holders.

Proposed Solution

We propose to form a Meta-Governance Committee (MGC) that is given full delegation of all meta-governance votes. The MGC is inspired by the Spartan Council implemented by Synthetix. The MGC will become a subset of a larger Meta-Governance Working Group (to be proposed separately) to house all meta-gov efforts, including the MGC, the Protocol Ambassador Program, voting operations and execution (to the extent not addressed by this proposal), and further designing, expanding and experimenting with meta-governance at Index Coop.

Below is a break-down of how this committee will be structured:

  • All meta-gov votes held by INDEX holders are delegated fully to this committee
  • Committee members are voted in by the IC for a 3 month period
  • It is the MGC’s responsibility to thoroughly review, analyze and execute votes to fulfill Index Coop’s meta-governance duty and privilege
  • The committee initially will consist of 5 people
    • We want to ensure we reach the right balance of agreement, security and efficiency
    • This number should hold, even if more protocols are added, as the MGC will be supported by the advice of the protocol ambassadors
    • The number can be adjusted later if needed
  • A 3 of 5 majority is required for the MGC to vote on meta-gov proposals
    • Votes will then be executed directly by the Set team or by the committee itself via multi-sig [to be discussed with the Set team]
  • The committee will adhere to our meta-governance principles
    • These are general guidelines for voting that will be published in a separate forum post
  • The committee is supported by the protocol ambassadors
    • Each ambassador is a “protocol-specialist”, ideally with some experience or social capital within the underlying protocol and who is actively keeping up with each protocol’s latest developments
    • Each protocol ambassador will serve as an advisor to the MGC should there be a vote that isn’t getting clear consensus or needs to be better understood
  • Each MGC member monitors all new meta-governance votes, each with a focus on a particular protocol(s):
    • The MGC members collectively discuss new proposals and analyze them on their merits and against the meta-governance principles
    • The MGC connects with the ambassador for that protocol to discuss the vote, if it is non-routine housekeeping or to get a sense of community sentiment
    • The MGC executes the vote
    • The MGC reports back to Index Coop as to how the MGC has voted, providing an explanation of the decision in case there was a notable reason to do so
  • INDEX holders can call for any or all MGC members to be replaced at any time via IIP and Snapshot vote as a backstop in the unlikely case of major MGC / Index Coop disagreement
  • The MGC will report all decisions/votes back to Index Coop in a transparent way (e.g., at minimum, announcing each vote to Index Coop and, for any votes which are more controversial or disagree with the majority, providing an explanation for why MGC voted in the way it did.

Motivation - Why a Meta-Gov Committee

  • With all meta-gov votes delegated to the MGC, INDEX holders are relieved from having to participate in the growing number of meta-gov votes, freeing time and energy for other tasks, including voting on IIPs
  • We believe that this will ensure informed decision-making (which is not solved with lowering quorum or rewarding votes as described above). There are generally no discussion on Discord or the forum regarding live meta-governance votes, so it appears most votes are either (i) cast without much research about the topic, (ii) are obvious, such as with simple housekeeping proposals, or (iii) are not cast, and we don’t reach quorum.
  • Technical implementation is very simple and fast, as it only requires turning off Snapshot support for meta-governance and delegating the votes to 5 addresses (one multisig, and 2 EOAs)
  • This solution is a first initiative to solve the current problems, and does not exclude any other ideas from being explored or implemented (e.g. governance mining or staked meta-gov Index)
  • Consistent, thoughtful and well-informed meta-governance participation is key to building trust with each of the protocols underlying DPI.
    • When it becomes clear that Index Coop is going to show up to each meta-gov vote with the millions of dollars of votes of each protocol held by DPI, and there being a specific group in charge of executing those votes, each protocol will be encouraged to reach out and work with us, especially as DPI grows.
    • When there are proposals at underlying protocols which bring direct value to Index Coop (e.g., listing of DPI as collateral, etc.), we know that we will be able to adeptly vote DPI’s tokens in support.
    • This fits within our greater meta-governance framework and is key to building an unforkable moat around our products and DAO.

Who is the MGC?

We believe that the MGC should consist of dedicated Index Coop community contributors (silver and gold owls, or people from Set and DFP).

First of all, we want to ensure that votes are cast with the best intent for the IC and the DeFi ecosystem in general. And secondly, while we still rely on specialist knowledge, we want to keep a certain neutrality and prevent too much bias towards one single protocol. This is very important as we do have competing protocols among the underlyings.

Below sets forth our proposed initial make up of the MGC:

IC MGC Member Background
Cedrick Core contributor to Index Coop meta-governance efforts
Lavi Core contributor to Index Coop meta-governance efforts
Greg Core contributor to Index Coop meta-governance efforts, member of the Set team
Kiba Long-standing Index Coop contributor with strong ties to many protocols underlying DPI
Noah (Ncitron) Long-standing Index Coop contributor who has built and been deeply involved with IC’s technical meta-governance execution

Rewards

We believe that MGC members should be compensated for their involvement, and will detail rewards if/when this proposal converts to an IIP based on community feedback.

Conclusion

The MGC is our solution for meta-governance as both Index Coop and meta-governance scale. By having the MGC, Index Coop will be able to participate in every meta-governance vote. As a consistent, thoughtful participant in meta-governance with tens of millions of dollars worth of votes per protocol, we will be able to strengthen our ties with each protocol, expand our influence in the DeFi ecosystem, and support those proposals which are most important to Index Coop.

The delegated meta-governance voting committee proposed here is obviously a departure from how Index Coop currently conducts meta-governance, so please provide any feedback or concerns (and apologies for the long post).

Sentiment Check

  • Yes let’s proceed with this proposal
  • No, we want to keep our voting power

0 voters

UPDATE June 7th 2021
After a great discussion in the weekly planning call on Monday and taking into consideration the forum discussion, we recognize that part of the community is not fully comfortable with the approach we proposed in this post. Main concerns are:

  • Meta Governance is part of the value proposition of the $INDEX token
  • Some people like to vote and want to participate
  • There should be a way to opt-in / -out of delegation to the MGC

While we recognize these valid concerns around HOW we solve this, it seems that everybody is aligned with the goal about WHAT we want to achieve: That is, to vote on every meta-governance vote and doing so in an informed way.

Taking into account the inputs from the community, we would like to iterate on the above approach by proposing a new solution, where delegation of voting power only occurs, if quorum is not reached via the regular community vote. In summary:

  • If we reach quorum on a MetaGovernance vote, the vote is executed accordingly (as done today)

  • If quorum is not reached, however, we propose that the MGC has full discretion to decide on the vote, as described above

This iteration will ensure that the community keeps its full voting power. And at the same time, this also ensures that the MGC is able to step in on the votes that the community does not care enough to participate. We think that this should strike the right balance between community voting power and IC participation in meta governance.

7 Likes

Since this post was already long enough, I’ll post a summary of the current meta-governance process below. This is just for people interested in how it operationally works.

  1. Informing about votes

    • Set Labs’ bot does frequent pull requests from Snapshot to check for new votes
    • If a new vote is live, a notification is published on Discord
    • Greg, Cedrick and others inform INDEX holders via Discord and Twitter that a new meta-gov vote is live
  2. Vote on Snapshot

    • The vote is opened on Snapshot for off-chain vote collection (avoiding gas fees)
    • Votes are also live on Boardroom
  3. Cast vote

    • INDEX holders express their votes
    • Voting on Snapshot ends 24 hours prior to the actual vote to allow the Set team to execute the vote according to the outcome on Snapshot
  4. Vote execution

    • Greg calculates quorum (5% of circulating INDEX supply according to Coingecko)
    • After vote closes, Greg informs the Set team about the outcome
    • The Set team executes the vote on-chain via a multisig for COMP, AAVE and UNI, and via an EOA for YFI and BAL (it is not technically possible to use a multisig to execute YFI and BAL votes)
    • Transferring the multisig which executes these votes from the Set team to a few members of the community is discussed in this post as an interim measure to streamline operations
2 Likes

This catches me between a rock and a hard place. I like to vote but I also want the votes not to be wasted by not reaching quorum. Moreover, I see good voting from the Coop being a huge add for the wider crypto community and the Coop’s reputation.

Additionally, it is also worth pointing out that by taking away a significant chunk of the functionality of holding INDEX, it may diminish the token’s worth in the community and lessen its value overall. It depends on whether the value add of becoming a strong meta-gov voter outweighs the loss of utility to the regular holder.

On the one hand, I think people will want this to pass and for governance to really get off the ground but on the other, looked at another way, would they support INDEX becoming more speculative as a result? Am I being over sensitive?

Finally, just from a point of interest, there’s almost a catch 22 in this vote. The people voting, I would bet, are quite likely also the people who vote on snapshot. Am I right? (Answers below :slight_smile: )

All that said, I happily believe that whatever the outcome is here it will move the Coop into a better position and I fully support and believe in the nominated people for the role.

3 Likes

Very much stuck in a similar place as @mrvls_brkfst as metagov voting is a very key feature of the INDEX token.

I really do want to see more metagov votes pass and think it is essential to the long term success of IndexCoop, but don’t want to diminish the value of the INDEX token or its powers.

I think we can take a lesson from the legacy finance world and look at proxy voting.

INDEX holders are given the option to delegate their MetaGov power to the MetaGov Committee (or another protocol politician in the same way there are multiple proxy firms). [Can be added to the claim flow i.e. Gitcoin]

The Index Coop MetaGov Board publishes their recommendation & research on a vote. Giving holders time to either a) remove delegate and vote if they disagree with the recommendation, or b) vote if undelegated [or delegated elsewhere]

We could add some incentive to delegate to the MetaGov committee via a campaign [0.X INDEX if you delegate to them, or if you (or your delegate) votes for Y consecutive proposals].

This could allow for many of the benefits of the streamlined process outlined, while still giving INDEX holders the rights to vote as they see fit.

Fully support and believe in the nominees for the committee and look forward to the Coop taking a more active role in broader DeFi ecosystem.

1 Like

This touches the core of what I most would like to see; a nice feedback loop where the protocols in DPI find themselves cross-invested in their competitors and incentivized to hold INDEX in their treasuries to vote and also to participate in our meta-governance conversations.

I agree. I think we can solve this by changing the quote in the OP from “all” to something that also allows for votes to be handled on an individual basis.

Hi all,
Thanks a lot for adding your feedback and raising your concerns. These are very valid points and I’ll try to explain why we went with the solution we proposed.

First of all, I wouldn’t say that we’re taking away any functionality of the token. It’s just delegating some of the tokens voting power to a dedicated group. This change is not irreversible and the delegation can be lifted at any time. Plus, the current proposal is convenient as it does not require any action from INDEX holders (e.g. delegating, staking, etc.).

This problem is something we can’t solve in a way that fits everybody’s preference unfortunately. First of all, many of these votes only have a time window of 2 to 3 days. This would mean that the MGC has to make a decision within 24 hrs (potentially in coordination w/ the protocol ambassador), then inform the community, so that they have 24 hrs to vote agree/disagree.
In addition, the delegating functionality AFAIK, requires the user to pay gas. So each time a governance vote comes up, and someone would like to delegate their vote to the MGC, they’d have to pay for that and also pay to undelegate again. This is not a viable solution.

To sum it up, we currently don’t have the technical ability to implement a “partial delegation” to the MGC, so that the few token holders that actually participate in MetaGovernance can keep their voting power, while the other 98% of token holders delegate their votes to the MGC.
However, as we pointed out in the post, we are also looking to form a MetaGovernance Working Group that is dedicated to explore new methods for the Coop to improve our MetaGov tools. While we can’t guarantee that we’ll find the perfect solution, we’ll 100% look for ways to include the community into these votes and provide a way for INDEX holders to express their opinion or participate in MetaGovernance votes.

1 Like

Thanks @Lavi , I appreciate the extra info on the decision making. If it is 98% that don’t vote, then there seems little option other than auto-delegation for getting meta-governance running solidly. Perhaps there could be a commitment during the inaugural three months of the group to work on finding a solution that allows members to opt out of delegation and to vote. And, that if unresolved, each new 3 month group makes that commitment.

With regards to announcing the decision after the vote and to @oneski22 concerns - could there be a ‘half-way’ house? Such that the quick votes are executed in this way but the lengthy ones, 7 days or more, could be up for forum discussion? The longer ones are often more philosophical, non-urgent, and about big changes in direction. Not a super strong request, as I realise that anyone could see an upcoming vote and start a forum discussion anyway if they felt super strongly. But at least this might formalise it.

1 Like

It depends on the vote of course, but in the latest Aave-21 vote we had 37 people voting. With over 3400 token holders, that’s ~1% participating. There were also votes with over 100 participants (~3%). So the 98% is just an average for token holders (not voting weight though). But voting weight is probably similar, as we often miss the 5% quorum.
We are aware that the current proposal still leaves some potential for improvement, but we believe that this approach is the most pragmatic and efficient solution to solve current shortcomings.

Regarding the commitment:

Without having discussed this with the group, I personally agree with you and I think we should dedicate some efforts to explore ways to provide this option.

Yes, absolutely! As pointed out in the post, we want to make sure we’ll report back to the community about the decision making process (see below).

We want to prevent a siloed group. However, we still have to work out the details for how the reporting process will look like in detail. I suppose that this is something we want to work out before moving along.

2 Likes

Thanks all for this feedback so far, @mrvls_brkfst @oneski22 @blurb . @Lavi has outlined a lot of the practical and technical reasons that have led us to this solutions, in short:

  • We don’t meet quorum in most meta-gov votes
  • Most INDEX holders don’t participate in meta-gov votes
  • Our current delegation structure doesn’t allow meta-gov votes to be delegated without also delegating normal gov votes
  • Even if we were able to delegate just meta-gov votes, practically INDEX holders would not be able to delegate and un-delegate their votes for every new vote because (i) Snapshot reflects delegation as of a certain moment in time, which cannot be updated too close in time to the vote (and many of these votes have just 48 hour turnaround times), and (ii) delegating and un-delegating incurs gas costs

Beyond these practical concerns/limitations, we think creating the MGC is an exciting next evolutionary step for Index Coop as a DAO. We are growing, gaining new holders and members, and meta-governance is scaling with us. As we grow, I think we’re going to reach a point where we need to continue to think about how we best leverage delegation, as we have been discussing in relation to the Yearn governance post.

The MGC, as proposed, is delegation to elected body for a specific term, with the ability to recall members at any time. In my view, this means that true meta-governance power is still held with each INDEX holder (and this unique characteristic of the INDEX token remains present), but is merely delegated to the MGC. In consideration for this delegation, Index Coop receives tangible benefits:

  • INDEX holders are ensured that each meta-governance vote is being considered thoughtfully and carefully
  • Index Coop is able to participate in each single meta-gov vote; given the number of votes we hold, once protocols realize that we are going to be consistently participating and voting, we will become more important to them

We think these benefits are significant and, although this structure is new, think this represents the next step in our growth and Coop-wide delegation.

3 Likes

Bumping this to flag that an addendum has been added to the bottom of the main post to reflect community feedback. We think this is an important improvement and aligns the MGC with the community.

TL;DR: under the amended proposal, the community continues to vote on meta-gov like it does currently, but for any votes that do not reach quorum, the MGC steps in to decide and execute the meta-gov vote.

7 Likes

This seems like a good solution if it is hard to delegate each vote!

2 Likes

Big fan of this update. Great addition and appreciate the fast turnaround.

5 Likes

Great stuff guys, really thoughtful discussion.

I support the recent amendment that the MetaGovernance committee would use the delegated voting power only if quorum isn’t reached.

One thing I would like to see you expand on is regarding long term membership of the MetaGovernace committee:

After this first three month trial period - I would be keen to see the opportunity extended to any member of the community to join the committee.

A process could looking something like this:

  • Number of MetaGovernance committee positions determined by the current MetaGovernance committee
  • Nominations process for MetaGovernance committee open.
  • 7 days for any community member to volunteer (nominate themselves) for a role on the MetaGovernance committee.
  • Nominee names are collated.
  • Nominee names are put to the community to vote on.
  • Individuals with most community votes as appointed to the second round of the MetaGovernance committee.

Supporting a democratic approach like that would help this MetaGovernance stay true to its guiding principals of accountability, transparency and openness.

4 Likes

Thanks, @Pepperoni_Joe. Agree, I think that’s important to include - will reflect that when we convert this to IIP.