To create a sustainable process for meta-gov voting and proposals, a structure is proposed where $INDEX is paid to the operations account to unlock voting on meta-gov.
The proposal’s key benefits include:
Reduction in voter fatigue due to less proposals up for vote
A sustainable process, instead of a big financial burden for the Coop
Ability to capture some value from our meta-gov powers
Problem
Through DPI, MVI and future indices, $INDEX carries the voting right for tokens worth 200m$ (growing), and can meaningfully impact the governance of protocols. This is a big responsibility that comes at a significant cost. Frequent meta-gov proposals creates voter fatigue and implementation of the meta-gov votes creates significant overheads. This service is today provided free of charge. Despite our participation being of significant value to various protocols, we are unable to capture any value.
Suggestion
A meta-gov process is proposed that follows the following steps:
For each new possible meta-gov proposal, there is a pool where if enough $INDEX is gathered, a meta-gov vote will be initiated.
If the threshold is met, the $INDEX in the pool will be paid to the operations account (or other account)
The threshold cost shall be = our 50% of our overhead cost (need estimate) + 0.1% of the value of tokens voting - this way, we subsidize this process for low mcap tokens and big tokens like UNI/AAVE pay more (exact % should be adjusted)
If the threshold is met, the proposal shall go to a vote, the following modifications are suggested to our current voting process:
No quorum requirement (otherwise unfair to those who paid to trigger a vote)
The two biggest contributors unlocking the vote have the ability to make the case for why the Coop should vote yes/no on the proposal, which is included either in communications about the vote or in the Snapshot
An Index Coop committee provides guidance to $INDEX holders as to why they should vote yes/no
The outcome would likely be that most meta-gov proposals where our votes are not required, will not be sent for voting. In the case that there is an important proposal where a party wants to unlock our vote, we have the resources to make it a more structured process, gather more information and present a case for how we stand on the vote.
Additionally, using the same general principle of payment threshold to initiate a process to make new proposals such as is well described in IIP80 (up for voting now). This thread will not go into detail on that use case, but a joint proposal with both these amendments might have an easier time passing the 10% quorum requirement that has previously not been met.
Key benefits
Reduction in voter fatigue due to less proposals up for vote
A sustainable process, instead of a financial burden for the Coop
Ability to capture some value from our meta-gov powers
New revenue streams for the Coop, significant opportunity to monetize this further through sponsored information distribution from yes/no sides
A clear process to unlock the Coop’s meta-gov votes for important votes with guarantee of reaching quorum (either for or against)
Figures
In Q2 for DPI, there were 24 meta-governance proposals across 14 protocols (based on @Cedrick, @LaviQ2 report), or 6.8 meta-governance proposals per protocol/year.
Assuming an equal division of proposals per protocol, this represent ~200m$ * 6.8 = 1,36b$ of voting power per year.
On average, each meta-governance proposal impacts 14.16m$ of tokens (though there are some big votes and many smaller ones).
$INDEX circulating market cap is 80m$
Capturing 0.1% of the value of the voting power on half the votes equates to 680k$ of revenues.
Looking forward to your feedback and a constructive discussion on the topic!
EDIT 1: Changed accrual mechanism and removed false claim about IIP81
EDIT 2: Significantly altered the proposal to better address the current problem and a less controversial solution
Thx @lavi , @mel.eth , @lee0007 for your constructive feedback!
Hey @robdog thanks for your RfD and for proposing an interesting new approach to MetaGov.
Just to be on the same page, I’d like to clarify two things.
Not sure what you mean with this, but all Meta-Gov votes are on Snapshot which is highly transparent.
This is not true. IIP-81 only moves the actual execution of the vote from current multi-sig (managed by Set) to a community multi-sig (managed by the MGC). This does not change the voting process, which will still take place via Snapshot (with the MGC only stepping in, if the 5% quorum is not reached).
Regarding the idea of adding a burn mechanism for MetaGov votes, I find this an interesting read, laying out some valid arguments for why token burn is not ideal.
This burn approach would be a substantial change to our current process, in that this could turn our Meta-Gov capabilities into a vote-buy mechanism, which is a delicate topic and not something I’d be supportive of.
Further, I suppose that this would likely not be welcomed by the community, as they’d lose their ability to vote on MetaGov votes (assuming that most community members are not keen to burn their hard earned $INDEX tokens, which are also required for voting on IIP’s).
So while the idea is an interesting train of thought, I’m not in support as I don’t see any benefits for the community.
Though the snapshots are public, until the vote is completed there is no clarity as to how the vote will go. Given that most Meta-Gov votes dont reach quorum, one or a few big holders can any time sway this vote. Though to be fair this issue would remain and possibly be magnified in this proposal.
As to IIP-81, that is a very useful clarification, thank you!
I largely buy those arguments, at this point such tokens could be better spent if given to the treasury instead of burning.
It would be helpful to understand why you are not supportive of this idea? Do many $INDEX holders really value their ability to influence other protocols’ governance? I find the lack of interest to participate in meta-gov decisions kind of indicating this would not be a big loss for most, especially given the opportunity cost of having a mechanism that accrues value to the treasury.
Although I haven’t been able to think this through to the extent I’d like to offer support, yet, there are a few things that strike me:
I find the idea of a MGC (to vote in lieu of failed organic interest) to be creating unnecessary work for ourselves; we could effectively eliminate quorum, carry out the wishes of the interested voters, and it would be a better process in my opinion;
Accruing INDEX to the treasury at this stage seems like a missed opportunity given that there is an overhead cost to executing metagov functions; I would prefer to see any accrual to be split in some fair way between the MGC (or subject executive body) and the Operations Account;
While I initially struggle a bit to see a use-case for interested parties ‘burning’ INDEX for metagov votes (although it would certainly signal strong interest), I think it would also be a great consideration for the proposing use-case outlined here.
This proposal highlights the importance and ability of funding the metagov process via its own design, and that I am in support of, provided the tokenomics make sense and the execution not particularly onerous. I appreciate you giving this the thought that you have and for proposing this in the forum for discussion @robdog - in my opinion having these types of discussions truly moves this DAO toward a more sustainable future.
Thank you @mel.eth for your feedback! It is much appreciated to hear that there is value to explore this topic further and it feels like where the discussion is headed is a significant improvement to my initial idea.
Reflecting on a few of your comments:
This is a great idea, we could for example set a minimum amount of $INDEX to trigger even bringing the meta-gov to a vote, this could cover the overheads. This fee could be paid by interested parties to unlock more votes for certain topics. This could still allow the actual voting to be free and controlled by $INDEX holders. If there would be support, the $INDEX to trigger the vote could be a bit beyond our costs to provide a profit. This way it is less of just “bribing” than my initial proposal, and could also put up a barrier to reduce meta-gov voting fatigue. In this situation, it clearly makes way more sense to have funds flow to MGC / Ops account as suggested.
Thank you for linking that discussion. Are you aware of any reasons why this IIP did not pass? Barely any against votes just people did not seem too excited?
I will review and modify the proposal to reflect the feedback and potentially merge the idea with parts of the IIP 80 suggestion.
I support all efforts to minimise ‘unnecessary’ work and alleviate ‘voter burnout’ so wearing my Aragon Ambassador hat here to flag another alternative
Voteless Execution: Follow signalling proposals but avoid expensive, time-consuming votes on uncontroversial decisions.
Aragons’ optimisic governance’ is a combination of govern + court that facilitates the automatic passing of unchallenged proposals.
Rather than requiring voting or quorum, the community trust the MGC to prepare proposals that are in the Coops best interest.
Where there are any opposing interests people can challenge proposals, which then go to a 'mediation process requiring community input.
In this case, tokens ( required to propose & challenge) accrue to the side whose argument is upheld by the community.
I think this is an interesting alternative that we should certainly explore. The main issue I have is trusting the MGC to pick what to bring forward. I am not sure I fully understand the nuances of their process though but will read further and give it some thought.