Idea: Additional financial incentive to get people to participate in governance voting

I’ve been thinking about how we can get more people involved in governance and the more I think about it, the more I end up with the conclusion that it needs to be an additional financial incentive on top of the potential price increase from the MKR burn.

Currently anyone who just owns MKR benefits from a stable system, governed by the few, by the burning mechanism but it seems clear to me after a year, that that by itself is not enough incentive to get the majority of (small) MKR holders to participate in voting.

So what’s the idea, increase the amount of MKR needed to pay off the stability fee when a CDP get’s closed by a little, like 1% or only burn 99% of the current fee and keep 1%) and instead of burning that 1% like the rest, immediately send it to a random address currently voting for the most recent governance poll (nomatter what option they are voting for).

  • People will be incentivised to keep up with voting since the faster they are voting for it, the more chance they have to receive 1% MKR of a payed SF. (every payment of a SF would immediately reward a random current voter voting for the most recent governance poll)

  • Every extra amount of MKR matters to smaller holders so they should be extra motived to participate.

  • Reduces incentive to delegate your vote (which is a good thing IMO)

Yeah but whales will just spread their MKR over a 1000 addresses to increase their chance of getting extra MKR

Technically they can, but who in their right mind would want to start voting from a 1000 different addresses?! Even assuming it would be possible to automate this in some way, they would still have to pay for gas for a 1000 voting transactions don’t they (? actual question) and I don’t think the amounts of potential MKR “profit” I’m talking about here makes it worth while to do this for anyone already owning more then 1000 MKR. (anyone holding +1000 MKR should already have enough financial incentive from a stable systems burn mechanism)

There would obviously need to be some conditions to reduce the benefit of such “spreading” behavior so I would suggest (just some ideas to start from):

  • only addresses voting with +1 MKR have a chance of receiving this “voting fee”.
  • if the amount of (1% of the fee) MKR to randomly reward exceeds x.xx MKR, it gets split up and rewarded over multiple random voters (according to a formula to be defined).

Combine this idea with @mrabino1’s idea to have a weighted voting system and I think you will have a lot more smaller voters, who’s vote also actually moves the needle, if only a little.

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Can’t wait to hear what loopholes I didn’t think of you greedy bastards :wink:

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I once ask on the Governance call about incentivising MKR holders to come out and vote and receiving some type of financial payout. And I think @cyrus would totally oppose your idea–can’t remember the reason why, but somewhere along the line of vote buying. But IMO your idea has been well thought out so it will be interesting to see what the rest of the community thinks.

Hmm, don’t remember the conversation exactly. I just know that incentivized voting is a tricky subject, and almost definitely out of my domain.

But this is crypto, and our community has so many bright people. I’m confident people can cook up something super clever. I am optimistic that we can improve the voting system over time.

Knowing the executive “ratifies” a poll… I do like a weighted voting system (RE interest rates). I get that people may pick more extremes to sway the vote; however, I believe the inclusive nature of knowing your vote counts (at least a little) has a large “selling” point and the easiest way to get more folks to vote.

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Why?
The voting process is working right now, but with a very low percentage of total MKR voting. The system is working, but just not exactly as hoped for/imagined.

Paying people to vote is concluding governance has failed and admitting to the general principle that people are not capable of acting in their own interest. Paying people to act in their own best interest is an oxymoron on multiple levels.

Long before anything like this is tried the following should be attempted:

  • governance automation. Take people out of the loop using code.
  • structural changes. Possibly there are elements that now is envisioned using voting that could be replaced with MKR staking. Collateral onboarding is one such example.
  • structural simplification. Refusing non-fungible assets as collateral (just one example) would most likely greatly reduce governance overhead.

Right now however I am just enjoying this experiment and seeing my voting actually mattering for once.

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well I would vote if I could but the ethereum UX is awful. I’m using Gnosis Safe wallet that is still not supported on governance portal. Ethereum composability is broken

Why?
The voting process is working right now, but with a very low percentage of total MKR voting. The system is working, but just not exactly as hoped for/imagined.

Is it actually working if it’s not as hoped/imagined? My suggestion is about adding extra incentive to fix that “not as hoped” issue.

Paying people to vote is concluding governance has failed and admitting to the general principle that people are not capable of acting in their own interest.

I disagree with the fact that this is concluding that governance has failed but participation is just too low and an extra incentive might help.

Paying people to act in their own best interest is an oxymoron on multiple levels.

It’s not paying people, it’s adding a chance of receiving an extra reward for active participation and the more you participate, the more chance you have. Which is not the case in the current version, a shrimp has no influence in a vote and so no influence on the “value” of their MKR.

Long before anything like this is tried the following should be attempted:

  • governance automation. Take people out of the loop using code.

Not feasible in my opinion or certainly not in the next few years.

  • structural changes. Possibly there are elements that now is envisioned using voting that could be replaced with MKR staking. Collateral onboarding is one such example.
  • structural simplification. Refusing non-fungible assets as collateral (just one example) would most likely greatly reduce governance overhead.

We will still need voting on Executive Governance polls, so this seems besides the point.

So I’m going to dub this idea ‘vote-lottery’ as that seems like a vaguely appropriate label, and I think we’re going to need such labels as more idea like this get proposed and discussed.

True randomness on the blockchain is complicated, but I think it’s being worked on? I assume this will get solved by someone at some point (if it hasn’t already.)

This is cool, I like the way that it’s a constant stream of random wins.

Yep, Sybil safety is one of the biggest issues with this sort of reward mechanism. There are a couple of ‘solutions’ to the Sybil issue, but they all have pretty major tradeoffs:

  1. Reward based on the staked/voted MKR (more MKR, higher rewards). Tradeoff is that you lose the incentive for smaller voters.
  2. Ensure that the gas cost of voting exceeds the reward. Tradeoff is that in reality this in no sort of reward at all, as the voting cost is now higher than the reward.
  3. Only reward above a fixed threshold. Tradeoff is that everyone below this threshold is disenfranchised, and it still doesn’t prevent Sybil action by larger holders.

I wrote down some thoughts about the topic in general in another post: Inclusion of a DAI Stability Index, to MKR holder risk profile

I have no problem with “vote-lottery”, that’s essentially what it boils down to. The idea was also inspired by things like pooltogether and shuffle token.

I don’t think the Sybil safety will be a real issue if we have some conditions that make it not worth the trouble for large holders to even bother. What’s 1 MKR to a +1000 MKR Whale but it’s interesting for anyone with <100 MKR.

I’m sorry, but I think this is just wrong. Sybil behaviour is always an issue. Even if it’s not worth the trouble for large holders (big if), it will be worth the trouble for medium holders. If it is worth the trouble for anyone then at some point someone will develop a bot that automates the process which can then be used by large holders.

Like, it’s just axiomatically worth it. If:

Chance of winning * reward > gas cost for entry, then it is worth it to Sybil attack*.

But the reward is only a reward if the above is statement is true. It can’t be both a non-proportional reward and be Sybil safe. The fix is to make the reward proportional based on the amount of MKR you voted with, but this makes the system even more plutocratic.

* Any one time cost to setup a bot would be quickly overcome by the continuous future reward. Furthermore, you are essentially excluding any medium holder from using the Sybil mechanism based on the technical expertise to setup an automation solution (which means one would eventually be published to resolve this unfair imbalance, and then be usable by large holders too).

Ok, the Sybil safety is a fair point but:

  • Making such a system to automate +100 votes is not an easy task I would think, someone would have to put in a lot of time and effort to make this and whats the potential reward in comparison to the work? They are going to need a lot of “rewards” to break even on that work and recurring gas cost I think? (can a techy shime in and estimate how hard it would be to make something like this?)

  • Sharing that system would not be in the creators best interest

  • By the time it happens, you will have a much larger community of participating users who might still stick around and “just” stay for the potential appreciating MKR and come up with a solution to it when it happens

My conditions were just some ideas to kick-start a discussion, I’m sure people can come up with other conditions to improve on the idea.

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I don’t know about a financial incentive, but it seems to me like there should be pointers on the new Oasis platform to inform or remind users that they can vote.
Perhaps something which displays the current executive vote and voting deadline on the system info cards on the right hand of the screen, or a tile on the Oasis Borrow overview page, and a link to the governance platform would help boost engagement somewhat

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I agree with the spirit of this idea but not the implementation.

I recently laid out a framework and reasoning for incentivized voting, full post here: https://ethresear.ch/t/incentivized-voting-a-theory-on-greater-network-engagement/6457

In short these mechanisms can be evaluated using modern rational voter theory where voter utility can be expressed as:

U = qB − C + T

Where

q = the probability voter is pivotal

B = Benefits if ballot wins

C = cost of voting

T = extra benefit of voting

The reason larger voters turn out is because they have a high probability of being pivotal which outweighs the costs ( C ). This is not the case for small voters which for the same vote will have a negative expected utility. In those cases incentives can bring the utility back to positive.

The utility to the voter and the accuracy of the votes can be further enhanced by introducing voter credits, where the voter has the option to claim their fee and accumulate their votes for a future poll which has a high benefit to them allowing them to increase their probability of being pivotal in such votes and not voting merely to collect fees and distort the collective sound judgement.

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This is paying MKR holders to move the mouse and left-click. Do you have any ideas that incentivizes them to think?

You could try the same design but without the financial incentive where they still have to check in and decide if they want to defer and accumulate their votes or cast for a decision. This will make them stay active so they have a higher probability of being pivotal when there is a ballot of important consequences to them.

To stay they are just being paid to move the mouse and click is oversimplified. The cost in terms of time and money in on-chain voting is significant for small holders. From acquiring MKR, to setting up the wallet for voting and then figuring out how to vote can be a significant investment of time and then the recurring gas costs of voting is a cost that impacts small holders more than large ones. incentivization probably would not even fully compensate them where it’s profitable to just show and vote but rather help offset those costs.

At the end of the day we don’t expect our elected officials and corporate board members to do proper research and voting for free, but with on chain governance the expectation is that stakeholders show up week after week and pay for the privilege of voting?

Again, I refer to the framework of modern voter theory to explore other ways to create positive utility value for voters. This also includes reduces costs through things like offchain vote aggregation which would eliminate gas fees for voters and not clog up Ethereum with everyone voting but rather just have anyone submit a merkle root of all the aggregated signatures and grieving period for anyone to submit a fraud proof.

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Very interested in this! Thank you for sharing.

That said, I think I can see some issues. No matter how many credits you gain as a smaller holder, there is always the chance that a larger holder has stored up more of these credits than you have. Does it really increase probability of being pivotal in future votes? The assumption seems to be that smaller voters will gain credits, and that larger voters won’t? (Though I suppose it increases everyone’s chance at being pivotal in comparison to those that aren’t actively voting.)

Your notes on engagement theory are interesting, and I agree that a small voting reward would probably help with engagement, which would hopefully lead to more active and informed participation.

How exactly would you implement voting rewards in your proposed framework? Presumably in proportion to the amount of token (+voting credits?) used to vote. So in this case, a portion of stability fees divided between voters based on their stake? Have you given any thought to rewarding only voting credits, or does that nullify the incentives significantly?

The utility with voter credits should be higher for all stakeholders and part of the reason why is that different stakeholders have different preferences and knowledge and now they can incorporate intensity of preference and knowledge. A more indepth exploration is outlined here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2003531&download=yes

The same paper also introduces and attempts to provide proofs for quadratic voting, which also increases the probability of a voter being pivotal, however at this time quadratic voting is not sybil resistant without strong identity which is an unsolved problem, while voter credits are sybil resistant.

Funding a pool for each vote and allowing each voter to claim a proportional amount of the funds in the pool
Each voter would be able to receive a payout according to:

POOL_SIZE X AMOUNT_VOTED / TOTAL_AMOUNT_VOTED

I don’t have a strong opinion as to where the funds should come from (it could also come from a portion of MKR that the foundation has earmarked for network incentivization), but I think the compensation should be in MKR so the reward creates a feedback loop for participation that increases stakeholder stake in the network.

I think rewarding based on voter credits cast instead of just showing up for each poll should from a rational behavior perspective be worth a bit less because of time value of money being received at a later date. However people don’t generally discount things using a pure utility model, see prospect theory (https://en.wikipedia.org/wiki/Prospect_theory) so they may end up discounting it more severely, it also might have the perverse effect of incentivizing people to vote sooner so they finally receive some compensation for their credits.

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I keep coming back to the same question(s).

What is the actual goal? Is it measurable?

If the goal is more people - I don’t think we have an accurate means to measure ‘people’. If the goal is more MKR voting. Then I think that is measurable but I honestly am not sure this is the goal.

The real issue here is the whole 1 MKR = 1 VOTE. I liken this to 1USD =1VOTE. The only system we get out of this is whales accumulating more votes because they have the financial ability to. Trying to incentivize the people runs into the sybil or unique identity problems. I’m skeptical of credits honestly.

I think there is a real perception out here that whales basically control everything. If you were a MKR whale would you feel more or less threatened/secure if either another MKR whale showed up, or whether this was a group of people with 50K + MKR that voted in unison. Honestly if another MKR power group showed up would everyone else feel more or less satisfied with respect to governance vote participation?

Where I think the rubber hits the road here is who has sufficient votes to carry a vote (how many are required) vs. sufficient votes to potentially signal a ES. Anything below this has less power than those who have more than this.

Also I still have not seen any sort of data regarding governance votes historically so I honestly don’t have a clue what has been going on voting wise vs. what is desired.

When I was thinking about this I started looking up MKR holder distribution… I was thinking about the 100-500MKR crowd and that this group was the group to incentivize as they are large enough voting blocks to potentially make a difference in votes, and should be reasonably incentivized because they hold a fair amount of MKR etc.

Until I see some measurable historical data, and see a presentation of a measurable goal I honestly don’t see how moving forward on this is possible.

I just want to point out that in ancient Athens, those citizens accepting to go to the “Assembly” (https://en.wikipedia.org/wiki/Ecclesia_(ancient_Athens)) to vote were compensated for their effort, and would receive 1day worth of salary.

So the idea of compensating active MKR holders is potentially good, imho, and does not necessarily leads to “buying votes” or other negative things.

EDIT: quote from https://en.wikipedia.org/wiki/Athenian_democracy#Participation_and_exclusion

After the restoration of the democracy in 403 BC, pay for assembly attendance was introduced. This promoted a new enthusiasm for assembly meetings. Only the first 6,000 to arrive were admitted and paid, with the red rope now used to keep latecomers at bay.[31]