Participation in Maker governance

Maker governance participation has been somewhat lower than hoped for. Several community members have suggested proposals for incentiviezing MKR holders, but the below analysis suggests that non-participation in the MKR voting process is multifaceted and schemes based on direct or indirect crypto incentievization is unlikely to yield the hoped for results.

Cognitive overhead
Participation makes no sense unless the MKR holder understands what Maker is trying to accomplish. The cost of reading up on Maker is easily a week or two of sunk cost, measured in time. Needless to say not everyone can put in these kinds of hours for something that may or may not be of value further down the road. Ask yourself this - when did you last have a spare week or two at your disposal? Few people have the time for this, making cognitive overhead an important factor determining if holders will vote or not.

Skin in the game
Does the token owner have a sufficient share of MKR as compared to total holdings for participation to make sense?

Following Maker takes at least four hours per week if we count the governance meeting, the community meeting, chats, blogs and some time to think. If we assume that a full time crypto investor works 40 hours per week, so unless MKR makes up at least 10% of the holder’s total crypto, there is simply not enough hours to go around. And that is provided you work crypto full time, for crypto enthusiasts with a non-crypto day job MKR would have to make up an even higher portion of total holdings for participation to make sense.

For a whale or an investment bank owning scores of different tokens following all tokens closely is next to impossible.

Better off shitposting
Does the token owner have a sufficient share of MKR as compared to total MKR for participation to make sense?

If a crypto enthusiast only owns a small amount of MKR, but wants to wield influence, at some point opinionating on discussion platforms will be more efficient means of influencing outcomes compared to voting.
Assuming the MKR holder actually thinks he or she adds value, and assuming 10% annual growth of MKR value is the goal , we arrive at the following formula:

number of MKR * MKR price * shitposters_assumed_vital_input = hours per year spent shitposting * hourly salary at McDonalds

Solving the above equation, we arrive at a critical figure of 7.6MKR. Any lower than that and voting is logically replaced by social media activity. About 1600 MKR holders have accounts with balances in excess of 7.6MKR, with 14400 accounts being under the threshold. Again assuming roughly five accounts for each holder there are 2880 MKR holders that might as well shitpost instead of vote. The rationality of this is however entirely dependent on the internal belief that the influencer actually adds value through this activity. The actual volume of shitposting is, with some exceptions, actually rather low so it is assumed the vast majority of MKR holders are knowledgeable about their own limitations.

As a sidenote, as the value of MKR increases, the formula predicts that shitposting on social and later mainstream media will only increase as a way of exercising influence compared to participation in Maker governance.

Selfconfidence
Unless the MKR holder feels sufficiently confident that his or her involvement will add value to Maker, participation makes no sense. The holder did have confidence to get both into crypto and subsequently into MKR, but lost courage before deciding to participate in actual voting.

Other issues
Are there other issues irrespective of holdings preventing users from voting. Issues identified so far are lack of privacy, fear of discovery by tax authorities, fear of losing MKR through the voting contracts and fear of smart contracts in general (cryptophobia).

Language is likely also a factor. Maker as an organisation speaks English. Many people speak enough English to understand the basics, but not enough for following the talks or for governance participation to feel right.

Who is actually voting
Looking at the figures displayed on the Maker Governance Portal indicates that the bulk of proposals passes with about 50 votes. This represents about 10% of active MKR holders and about 0.3% of all accounts.

Conclusions
Based on the above any designer of voting incentives would be encouraged to think about what group of non-voting MKR holders they are trying to get to vote. Any design encouraging MKR holders that are also highly active social media users will likely just distribute MKR to holders in the ‘Shitposter’ category.

Education on the other hand should take into account the significant time it takes to get holders up to speed on the fundamentals of Maker. As there already are slide decks available and multiple Youtube clips on the basics of the system, new ideas will likely be needed.

Education, possibly combined with system streamlining, could also convince MKR holders that presently are somewhat overwhelmed by the pletora of choices and processes. The knowledge that only a small minority of voters are using their vote could also act as an incentive - at the moment each MKR used for voting is actually leveraged 330x!

System streamlining, or system simplification, could possibly also convince more token holders that they actually are valuable voices in the community.

Last but not least, dapp development and code reviews will alleviate some of the privacy concerns and possibly irrational fear of losing MKR through participation in the voting process.

All in all it will likely be a long and drawn out process to increase MKR holder governance participation.

8 Likes

Hi @Planet_X,

Don’t think we should change the word shitposting for something else.

I have hard time reading this. Just an opinion like that :beginner:

Hi.

Thank you for bringing up this subject. I really think it is crucial to MakerDAO that governance participation increases. And I believe an additional financial incentive is need before more of the right people can justify spending their time on MakerDAO governance.

I agree. I think your “better of shitposting” threshold of 7.6MKR might be way too low judging from my own experience :slight_smile: however it could also be valuable to be able to incentivise people without MKR. Which might be a good argument for the use of a reputation system. Also after reading a bit about MolochDAO, Aragon, Colony and others it seems like a combination of a reputation system and lock up periods might be a way forward.

Another issue imo is MKR price volatility. Hodling a volatile asset as MKR might be too painful for some people which might cause one to sell when the price is trending down and hence lose their incentive (at least for a period) to participate in governance. I don’t know if it is possible to create a mechanism that smooths price swings in either direction. But it seems like a less volatile MKR price would also be beneficial to governance participation.

Anyways would be cool to see the Ethereum foundation or Maker Foundation to fund someone to solve this problem for good. Seems like it would be beneficial to all DAO projects.

2 Likes

Hey

I’m just trying to figure out Maker.

I’ve vaguely followed it for a while, but now I want to actively participate with the (teensy) amount of Maker that I have from my “playmoney” for exploring shiny new things in crypto… I guess I’ve become more motivated to get more involved in this after the meltdown at bZx and a post on the reddit forum highlighting the risk of a governance takeover. The cognitive overhead and the self-confidence are my barriers to active participation

I get what maker is trying to do, and I have some understanding of the mechanism, but I’m not entirely sure I get it and what levers do what things, and there is a limit to how much time I can reasonably spend - a clear guide to this would be useful.

Also can find my way through the practical stuff…the wallet linking etc, what I am struggling with is the justification and arguments for and against each of the votes. is there a place I should go for this?

2 Likes

Hey @slowchimera, welcome to the forum!

Super happy that you’ve found your way to us, we are always excited to get more people actively voting. You mentioned two barriers o your active participation. I’ll address both of these, and hopefully help you figure out how to overcome these.

First, you mentioned cognitive overhead. This is a very real issue and to be frank, I’m not sure we have a neat tidy answer to this. The fact is that it does take some level of attention and overhead in order to be an informed voter.

For keeping up to date, I’d recommend keeping track of either Governance at a Glance, or Maker Holders Dai-gest.

In terms of what levers do what, I’m not sure if we have an explicit guide to this, I may work on writing something like this in the future. As you said, it would be useful for onboarding.

For justifications for and against certain votes, the best place to look is under the Signaling tag. If you want to filter to what is being discussed right now, you can look under the Active Signal tag. It’s worth mentioning that changing the Stability Fee and DSR Spread do not usually trigger a lot of discussion (unless something ‘strange’ happens) at this point, we have been updating these levers weekly for several months, so I don’t think we feel the need to discuss on a weekly basis.

To your second point regarding self-confidence, I had this same problem initially (and still do, to some extent). The best answer I can suggest for this is to just start participating (super helpful I know). Everyone will be thrilled to have a new voice as part of the discussion, no one is going to call you out as an idiot because you have limited experience. I wrote a post semi-related to this: Ask Forgiveness not Permission: Five Tenets for a Productive DAO. Realistically MakerDAO will live or die based on the number of people we can attract to the governance layer. I am (and we all should be) extremely interested in on-boarding people. If you ever want to DM me and discuss any issues you are having on the official chat (or this forum) please feel free.