Vote delegation is not something we should be striving for

As I said in the Why aren’t MKR Holders voting? thread, I don’t think vote delegation is a good thing and we shouldn’t be striving for it.

MKR tokens exist to govern the system as best as possible and delegating your vote doesn’t fit in that description for me. I assume everyone holds MKR to eventually make money on it, by the appreciating value the token is expected to have if the system proves to work. In that regard, delegating your vote is like saying

Here, you do the work, I’ll just be here occasionally watching the value of my holdings rise

I can understand not everyone can spend a huge amount of time on keeping up to date on everything but it should be a goal or ambition for MKR holders. This system simply can not work as intended without a diverse group of people doing their own due diligence on a frequent basis.

I really wonder what makes everyone think that people who don’t vote themselves, for whatever reason, are going to bother retracting their delegated MKR when it is being abused (before it is too late)?

The whole point of having MKR is that you can vote entirely independent from everyone else and it seems, the second people will have the chance, they will stick it together in large groups? Like I said before, delegation is centralisation in this context.

Vote delegation will come but it should not be expected to be the fix-all for a low participation rate. While the number of staked MKR in voting might rise, the actual people engaged with voting might be going down since they won’t need to be paying attention anyway.

Maybe I’m wrong but I think it’s worth thinking about.

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I agree that we should think through the incentives and find fixes wherever necessary. But overall I’m very much for investigating the idea of vote delegation, because it just doesn’t seem realistic to me to expect the majority of holders to follow governance. It does seem realistic that they would do enough work to find someone trustworthy though. I really like things around liquid democracy, maybe votes could be even delegated by vote type.

More about incentives: people who receive delegated votes will probably care about their reputation. I would expect people who receive a lot of proxy votes to have their real-world identity known, just because I don’t see a significant amount of MKR holders give their vote to someone with no disincentive to burn their investment (such as a completely random person on the internet). After all the people who delegate have something at stake, so even if they don’t have the time to vote themselves (or the belief that they would vote well) they still care a good amount who gets to proxy their vote.

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I’m a supporter of vote delegation, but I must say @kwadrax that You concerns are valid.

First, let’s think what do we want to optimize, In my opinion that’s are:

  1. Difficulty for bad actor to purposefully vote in a way to destroy MKR
  2. Level of information/knowledge that is behind each vote (kind of quality of vote)

How delegation will affect that

Ad 1)

I think it is obvious that delegation will increase number of MKR’s participating in voting. Therefore it will decrease influence of single whale which is outside delegation.

The trick is, what if delegation entity itself is corrupted? And that is valid concern!

Why It would want to be corrupted? Well it do not risk own money only delegated one.

Why It would not be corrupted? Well in order to be a delegator and gain significant power delegator needs to stand out and can not be anonymous (while whale can) that Increase public responsibility of such entity.

Ad 2)

I expect that delegation is a valid way of optimizing total time that need to be spended to make informed decision

And last but definitely not least argument.

Delegation is an volountary not mandatory system and by that it increases utility of MKR for each individual and a level of freedom he has to act.

One can disagree, but I believe that more ways for people of organizing and expressing them selves is value on it’s own.

Agree with this. Vote delegation is IMHO actually worse than not voting.

Someone mentioned that entities receiving delegated votes should only be allowed to receive up to the number of votes that the entity it self is voting with. So if an entity is voting with 100 MKR up to an additional 100 votes can be delegated to this entity. Also maybe there should be some lock up period where MKR can not be sold just after a vote. This would align incentives better and could probably allow the entity to be anonymous as well.

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I have doubts about a solution of that type for 2 reasons:

  • Presumably the point here is to force personal stake and voting power to be proportional, but MKR can always be borrowed.
  • It defeats the purpose of delegation, which is to give some agents a lot more voting power than they could get financially because they have shown themselves to be trustworthy & competent.
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True MKR could be borrowed but would a lock up period not mitigate the problems associated with that?

True. As long a we can mitigate the issue of the delegate vote receiver becoming a bad actor because they have nothing to lose themselves.

Hmm, perhaps there are two ‘options’ for aligning incentives. Anonymity with a matching MKR stake or a publicly known identity that has reputational value that would be lost by voting badly with the delegated MKR. I think there needs to be some incentive alignment though, otherwise we’ll be open to a world of hurt.

I disagree that this is the purpose to delegation. The purpose isn’t to centralise votes into specific hands (trustworthy or no), to me that’s the negative side effect of increasing the vote turnout which is the purpose of introducing delegation.

100% Agree.

Could you develop this point? My feeling is that it could be worse than not voting, but not that it definitely is. My assumption would be:

Fully Decentralized Voting > Delegated Voting > Not Voting

A lock-up period does help with this, it also helps resolve potential problems around lending/borrowing MKR. It’s something that I think we may want to implement at some point.

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I agree, both make sense! The overall goal should be (imo) to develop a strong MKR holder culture that if you’re not going to vote, research your proxy well and make sure that they have a stake, one way or another.

I spoke too fast, you’re right that it’s not the purpose of delegation – concentration itself is a negative side-effect. But I still think there is a natural specialization where some people, not interested in exposing themselves to MKR risk, would still make very good voters because of their skills.

Can I ask your opinion on liquid democracy? The general idea that you’d delegate your medicine-related vote to your doctor friend and your technology-related vote to your programmer friend (and they in turn would either vote or delegate to someone they trust more) has always appealed to me. That’s 100% where my current stance on vote delegation comes from. If the 2 are different in important ways I’m very interested!

Can you expand on this? I don’t see how it helps.

Absolutely agree, the difficulty is ensuring that incentives are aligned.Prediction markets could maybe help solve this? A delegate could bet that MKR would not be printed in the next year, this way they would be separated from direct MKR volatility, but still be on the hook for decisions leading to inflation… There are probably more insidious ways to harm the system though… Unfortunately being exposed to MKR risk is the foundation of a governance body that is directly responsible for their choices, if you allow these to be separated, it harms the system.

I am pro-liquid democracy. There are lots of sensible ideas in there. I particularly like the idea of being able to undelegate and redelegate as quickly and as easily as you want to. Everyone is unique, and will have their own priorities, these will not always match 1:1 with their delegate or representative. In most legacy representative systems there is limited scope for recalling an elected representative, in liquid democracy representatives (delegates) can be more effectively held to account or replaced.

The recognition that different people have different skillsets and levels of expertise in different areas is also very valuable.

A lock up period prevents evasion of responsibility by voters. I have no doubt that there will be circumstances where MKR Holders make a decision and then we only find out a year later that we absolutely shouldn’t have done it. This can be used to attack the system, a token holder could help to setup a situation that would lead to delayed consequences and sell before the consequences ocurr. This is also the reason that MKR Holders need to understand the whole of the system really, really well: so they can see through attempts like this.

With respect to delegation, I think the idea was that the delegates MKR (in a system where a delegate was required to have their own MKR) would be locked for a time. This would counter their oversized influence with the negative consequence of having their personal MKR ‘on the hook’ to a greater degree.

Why? That is somewhat like saying investing is good… but you shouldnt be able to hire an investment advisor.

In this case, having MKR could be a decent investment. What is wrong with delegating the voting to a known party and keeping the upside?

In an ideal world, everyone would participate and know what is going on. That said, folks get busy.

Very much agreed. I guess my expectation is that most of these problems are solved at the base level by having actual MKR holders collectively careful about who they proxy their vote to, who they lend to, etc… so any separation of concerns is originated by someone who has a stake in not giving power to a bad actor. That may be a naive take that gets thoroughly falsified in the future though!

I see, but that doesn’t help with a bad actor borrowing MKR? What I mean is that the initial concern is “bad actor gets 100 proxy votes, has no stake”. Then we say : must have 1 MKR to receive 1 additional vote power, and the owned MKR is locked. So the bad actor borrows 50 MKR & receives 50 proxy votes. Same voting power, no exposure to MKR.

Thinking more about this, the structure is the same for borrowing and delegation: with borrowing, an actor uses funds to obtain the pure “vote” part of the MKR token; with delegation they use persuasion to the same effect. We can force delegation-based attacks to use a mixed borrowing-delegation strategy, but that doesn’t seem very helpful.

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It definitely gets confusing when you add borrowing and delegation together. I was thinking about this more, and I think there are some parallels to draw with going margin long on MKR.

When you go margin long, a decrease in price eats into your deposit before the borrowed funds, this could map to voting in such a way that some of the delegate’s MKR is transferred to the delegators if the price decreases while it’s locked in the voting system. This would mean voting with delegated MKR would be a much larger risk.

If the price rises, perhaps the increase in value is split between the delegators and the delegate (In practice this looks like MKR going from delegator to delegate.)

Basically I’m imagining some weird combination of the two problems where delegators become lenders and delegates become leveraged long traders.

I need to think more about it, but I have an inkling there’s a solution in there somewhere.

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Just wanted to add a short technical perspective.

First, I think these threads are a great way to work through ideas around delegation, its benefits and it’s disadvantages. Perhaps by the end of this we can at least say, “If you’re going to delegate your vote, this delegation model is the gold standard.” To that end, keep the discussion coming.

However, to focus the discussion a little, I want to stress this fact: there is no technical way to stop vote delegation with our current system. That is, even if we are repulsed by the idea, or think it would make our ecosystem unhealthy, we cannot stop it from happening. With this condition in mind, I believe we are best to inform MKR holders that want to delegate what they should be looking for in a delegation system.

Some ideas (some solve the same problem):

  • Only allow a delegate to be in control of some multiplier of their stake. E.g. if a delegate has 10 MKR, only allow and additional 1x, 2x, or Nx stake to be delegated. This would result in total values of 10 + 10 = 20, 10 + 20 = 30, or 10 + 10*x respectively.
  • Lock the delegate’s stake up for some timeframe to ensure their MKR is accountable to the results of their vote.
  • Allow a delegating user to withdraw their delegation at any time.
  • Burn or slash the delegate’s MKR if they verifiably vote against a known model.

If you reply to this list with ideas, I will try to keep it up-to-date. We may want to spin a thread off to discuss the merits of each option at some point.

My current interest in this is centered around the idea of risk teams (or funds) insofar as we may decide to delegate our MKR with a risk team based on their models, voting record, and results. I was particularly captivated by the idea of using a PID controller to drill down on the peg, and I would love to delegate some of my MKR to a PID controller that successfully accomplished this goal.

I share the centralization of power concerns that some of you have expressed in the same way that I am concerned about the effect of gravity on me when I fall: both are of concern, but are immutable laws of the system we’re operating within. To this end, let’s focus on best practices for such a delegate system and hope that MKR holders will not delegate unless such a system possesses those ideal properties. If we find a good mix of healthy properties for delegation we may be able to make using a system with more relaxed constraints as appalling as sending one’s credit card over HTTP or logging into a remote system with telnet.

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Are you aware of any MKR delegation contracts already deployed to mainnet?

I have no idea how high on the priority list vote delegation is. But this makes me think that it should probably be pretty high in priority to get a proper vote delegation contract deployed before someone deploys a shitty one and people start using it.

Should there really not be some ERC20 governance vote delegation standard? That the “w3c” of Ethereum created? Assuming this doesn’t exist :slight_smile:

I don’t think I understand this bullet. What would qualify as a known model?

My Solidity/smart contract development skills are so rusty that they are very close to non existing :slight_smile: so please bare with me. But would it not be possible to only allow delegated votes from a specific vote delegation contract/address? Or would that require that we don’t use an ERC20 token to vote but instead maybe create a ticketing system similar to Decred’s where you receive a (non ERC20) vote token/ticket when you lock/stake your governance token? Or why is it that MakerDAO cannot prevent vote delegation is probably what I am trying to ask?

MakerDAO need to allow smart contracts to vote for example for purpose of multisign wallets to vote and at that point there is nothing you can do to prevent votes delegation.

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@LongForWisdom
Why vote delegation is worse than not voting?
Because it promotes lazyness.
And worse - once somebody gets their hands on MKR votes that do not belong to them the whole idea of 1 MKR = 1 vote starts to deteriorate.

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Ok - there is most likely nothing we can do to stop vote delegation. That being said I just feel there is something that does not feel right with this. We are not in an ideal world - we are in a situation where just a fraction of MKR is being used for voting.