Improving governance participation rate at MakerDAO

I think one aspect that reduces MKR usage is to vote you can’t recognize your purchasing power through debt. This means voting is committing to idle unproductive value.

DeFi is a highly composable, highly productive environment. I would have my MKR staked in governance if I could utilize debt against it.

I understand the reasoning against self dealing debt. Perhaps one way to do this would be to gate the usage of debt vs MKR with a special vault. The 50x GUNI USDC DAI vault is quite nice. Perhaps can draw debt vs MKR that can only enter a special version of that vault. This would limit the risk that is taken with the debt, better promote product, and allow an avenue for yield generation opportunity if desired.

More interesting would be to add different stable options to allow MKR holders to inflate DAI liquidity vs various stables to profit off their vote locked MKR while servicing the bridge between various products and DAI beyond USDC.

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Hey, @BlockEnthusiast! Thanks for dropping by.
We have some people designing and improving on the Sagittarius Engine. Feel free to give feedback on that thread so that your ideas can be incorporated as well.

Have a nice one.

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Here’s the model:

Feel free to fork it an make it better (or help with my (really bad) assumptions).
Cost of Subsidy (Votes)

attn:
@GovAlpha-Core-Unit
@Protocol-Engineering
@collateral-core-unit
@data-insights-cu

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It seems to me a staggering amount to spend on gas costs for voting. Is there really no other safe, but cheaper technical solution (sidechains maybe?) to voting? Is there some technical barrier or other problem?

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Thanks for sharing! Paging @rune whose mind is (presumably) crunching MKR tokenomics right now—your ideas might be inspirational.

Thanks for the work there @juan, and I hope to see someone/some team take this on. DUX core unit would be happy to assist with the technicalities!

Absolutely agreed @purrfection, but why not both? :slightly_smiling_face: Experimenting with new infrastructure should happen but will take time. In the meantime MakerDAO does require active governance, and the gas rebate program would help for the time being.

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Hi! Let me come back with a better solution but in the meantime I pulled this from Etherscan, it should give you a good overview:

Amount of wallets with equal or higher amount of MKR
image

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On mainnet, our votes are booked at the cost of overbidding orders from crypto speculators, whales and millionaires. We don’t want to buy anything, we just want to vote. Is this really necessary?

Thanks @0xdeniz for creating this thread and giving rise to the discussion. It’s great to see the @dux-core-unit go beyond the (excellent) technical and product development work by facilitating this.

I want to echo the slightly contrarian sentiment @iammeeoh is voicing here:

Voter participation is not a goal in itself. In my opinion, the goals are (1) to have good decision making, (2) a resilient governance system that is hard to corrupt, and (3) security against governance attacks.

It is not difficult to come up with examples where high voter participation is actually a bad thing. In many cases this is a variation on the “army of idiots voting on complex expert matters” scenario.

Now, I still think that voter participation is important and I fully support the suggestions that have been made in the opening post. I’m especially excited to experiment more and explore new governance mechanics, to try and recover voting power from yield farming pools, and see progress on governance on L2.

My point is that there are two other questions that need to be asked first:

  • Why does voter participation matter?
  • When does it matter?

I wish I had good answers to these questions, but I find them incredibly complex. What is maybe easier to spot, are the problems that may arise due to low voter participation.

But what we will likely find is that these problems are more specific than just general “voter participation.” For example:

Low voter participation leads to unhappy MKR holders because they’re detached from the project, not aligned with the thinking in the governance community. This can lead to bad decision making, chaos (e.g. due to dumping and unproductive, uninformed protest voting further down the line.)

But really the issue here is transparency, expectation setting and seeking support for governance policies.

Which leads to another insight: voting is not the only form of voter participation. Keeping up-to-date with developments is a form of voter participation. Being a MakerDAO evangelist: “why I am an MKR holder,” is a form of voter participation. Etc.

Another one: Low voter participation is a bad thing because it exposes MakerDAO to governance attacks.

Once again, this does not mean that every small MKR holder needs to vote on every issue (the narrow sense of voter participation), but it may mean that we want to encourage small MKR holders to take a little time to delegate to someone they trust to do the right thing for MakerDAO and review that decision from time to time. This is a different form of participation.

Would an election cycle with lots of promotion and activation efforts be beneficial to draw more MKR to good delegates? Picking your delegate of choice is voter participation.

So, in a nutshell: let’s consider why, when, and how voter participation matters to get some deeper insights that lead to the ultimate goal: better decision making in a resilient DAO.

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Many related comments, but this one comes closest.

SES has been discussing a governance party model for a while that is pretty close to the current delegate system where the delegates
(1) form expert teams to evaluate different MIP aspects (legal, technical, financial, etc.),
(2) express their vision for the protocol and define the high-level objectives that need to be achieved for this and
(3) steer capital allocation towards the projects / CUs that move us closer to these objectives.

I like @ElProgreso’s idea of starting out with consulting DAO members for the required expertise while specialized teams are not a reality yet. And I like the idea of pooling resources.

While our delegates are doing an excellent job today and offer a great deal of transparency and insight in the decisions they’re making and why, I think there’s checks and balances missing:

  1. Delegates are not really required to be transparent; today this is an expectation but MKR holders may stop caring. I think @LongForWisdom and others who proposed the delegate framework did a good job creating at least a strong expectation while keeping the system open.

  2. The main reason seems that delegates today are intuitively seen as immediately representing MKR holders, but this is an incorrect simplification. They really are our protocol’s politicians with all the related challenges… how should our politicians be kept in check? What if a delegate promises one thing and uses their votes for another? Will MKR holders notice and hold them accountable?

  3. Should there be a separation of powers? Can delegates make the laws and enforce them? Once again our goal is good decision making. Conflicts of interest have not been solved in any real way.

  4. Do we need a constitution that cannot be changed by delegates but needs direct MKR holders’ support? The difficult question about how delegates should be compensated is just one example of a conflicted decision that may need to be off-limits for delegates to vote on.

All in all I think delegation opened the door to a lot of potential governance improvements. We just need to make sure that we do our homework and ensure the right checks and balances and safety mechanisms do indeed exist.

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I came across this write-up by one of Fei Protocol’s founders and I thought it provided another interesting perspective on the topic of this thread. I gotta say I admire what’s happening over at Fei ever since they botched their launch.

Some outtakes below:

"Token Governance is onerous. It often is subject to voter apathy as underinformed token holders are encouraged to participate in frequent, complex proposals. There is also a free-rider problem where holders can speculate on project outcomes without being engaged in governance at all."
[…]
“In a perfect world, every proposal that makes it to Token Governance has high engagement because it is that important to stakeholders. In other words, low engagement is a sign of excessive use of Token Governance.”

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First of all, congratulations on your initiative. This discussion is very interesting and necessary!

It could be interesting to investigate if this system effectively gets token holders to participate. It seems to emulate a traditional model of delegative democracy, with balanced powers, but which requires an absolute majority of token holders, as the executive branch, for some specific types of voting, right? So it would be interesting to see how it works in practice.

The first question that arises for me is, in that case, wouldn’t it be even more complex to get everyone to vote?

I add something that I found recently that I think might be interesting to add to the discussion.

Easy Track introduces the new type of votings called ‘motions’. With motions, governance token holders don’t need to vote ‘pro’ and only vote ‘against’ if they disagree with the proposals. Motion is considered to have passed if the objection threshold has not been reached within the preset timeframe.

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Here is a summary of the gas spent on voting and polling from a few months ago. At that point the total spend to date was around 13 ETH.

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Good to see you here, thanks for chiming in :hugs:

Yeah the concept of ‘motions’ as a governance primitive is an interesting first step of implementing optimistic governance—I’d personally consider Lido’s implementation as a proof-of-concept and I’m curious to see how it will serve them.

I don’t think the absolute majority rule is 100% necessary when implementing a multi-layered governance system—the DAO would be free to design such parameters/thresholds in any way it sees fit.

The reason I linked that essay is because I believe the notion of multi-layered governance could be regarded as another potential solution to our problem of low governance participation, as it seeks to only bring important and/or controversial proposals up to a token vote. Other proposals (eg. budget approvals, system parameter changes) could be governed through other systems, such as optimistic governance (ie. vote-to-block/halt instead of vote-to-approve) or automated range polling (eg. the primitives that @colby presented through his research).

I’m really happy with the engagement in this thread so far. We started by pointing out some points of friction that might have lead to voter apathy, and now the discussion is shifting towards the viability of using token voting for every single decision that needs to be made—the post I linked yesterday providing an interesting counter-argument.

@TheExistence Would it perhaps make sense to do some sentiment polling on the topic of multi-layered governance (including optimistic governance)? I also believe it would be relevant to the ongoing discussion of the collateral onboarding process and the viability of greenlight polls. On the last G&R call @monkey.irish brought up a good point on actor mandate that is needed to “do the work”.

Multi-layered governance is a huge change, so there would need to be a lot of community buy-in to tell us it’s worth prioritizing that.
I would recommend you to start a new thread to begin the discussion and see if you have enough consensus to then propose sentiment polling.
If you want to get the direct sentiment, you can even include an informal poll here to gather opinions.

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Good points for discussion with the community! We plan to explore the options with @0xdeniz and DUX as to how L2 solutions could work (as well as things like Snapshot on Mainnet) for improving Governance participation and lowering the friction to vote.

There was a cool presentation about how Starknet can offer the security/transparency of L1 onchain voting with L2 costs as well, so might tag in the @starknet-core-unit team here and see if they have thoughts about how we could scale up to these types of offerings.

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I think this aspect has received little attention in this discussion and I’d like to offer some thoughts.

The opportunity cost that comes from locking your MKR in governance can be quite significant and increases the more MKR you hold. At a certain point gas costs becomes trivial but for a larger MKR holder the opportunity cost becomes dominant. What is especially negative about that fact is that larger MKR holders have an easier time making a meaningful impact through votes.

The most immediate solution to me would be to allow for MKR to be accepted as collateral. I know there are risk objections to such a move, but as long as MKR is accepted as collateral elsewhere (example AAVE) I don’t see MakerDAO allowing this increasing the overall risk for the token. We merely drive tokens to other platforms.

To draw a parallel to stocks. A stock essentially gives you two things. A right to a proportional part of the profit, and a right to proportional influence governance. MKR gives the two same benefits. Most stocks gives both these rights but a few are split between A and B stocks where (for practical purposes) A stocks have both rights and B stocks only have the rights to profits. What we see in the market is that the voting rights are generally assigned a low value. It is therefore a reasonable assumption that voting rights matter less to the general MKR holder as well.

The difference is that with a stock you are free to use that as a collateral and still retain all your voting rights. I think going in this direction could be a viable short term improvement for the incentives to participate in MakerDAO governance.

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Sounds like you’re describing the Bucket within the Sagittarius Engine – wen launch? :wink:

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Would love to see us use Snapshot on Mainnet for the short-term. Looking at other DAOs who use it - their voter participation is significantly higher and also includes a lot of small token holders. These are DAOs that have far lower forum participation than MakerDAO too. I suspect we’d see a massive increase in vote participation as well as higher engagement of MKR holders.

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Teaser: We (DUX Core Unit, working on the Governance Portal) have included scalability as one of this quarter’s priorities and we’re actively researching gasless voting mechanism, including Snapshot. :crystal_ball::sparkles:

We plan on reaching out to GovAlpha soon to discuss applicability and scope out some kind of pilot.

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That’s a good question!

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