Why aren't MKR Holders voting?

As the redditors among you may have seen. I posted a reddit thread last week titled: MakerDAO: Looking for Governance

The aim was to increase voter engagement and bring more MKR holders to this forum ahead of the ratification votes on the Foundation’s proposals. While there was some moderate success to that aim (hello and welcome to those that started posting here in response to that thread!) there were also many useful responses detailing why people are not participating in voting.


It seems that most of these reasons can fall into three categories:

Procedural: Lack of understanding around the voting process, or a failure to know when votes are taking place.

Practical: Too much understanding of the realities of voting with a small amount of MKR.

Emotional: Doesn’t feel good about voting or doesn’t feel ‘prepared’ enough to vote.


Procedural Reasons:

#2. Moving the discussions to the forums killed participation. - True for a few people, but in general participation in reddit governance was already waning before the move to the forum.

#3. UI around polls needs to be improved.

#6. Governance discussion and information is scattered between three forums and a blog.

#5. There is no good introduction on how to vote / MKR Holders don’t know how to vote - *A series of video tutorials that explain the voting process in more detail about help mitigate this. Also the voter on-boarding guide.

#7. The voting contract bug caused users to realize the risk they were taking by voting.

#13. Majority may not know voting is even happening.

#15. No simple and safe user interface to use to vote.

#18. Institutional Investors don’t currently have custodial solutions for voting. - Not sure we can do anything about this one, are Coinbase are working on this stuff?


Practical Reasons

#1. Voting is not worth the cost in time - We need to minimise the informational cost in some way. Governance Twitter account, Governance and Risk Meeting edits, Better ‘Governance at a Glance’ thread?

#10. There is no incentive to voting - Need to be careful about directly rewarding voters as it doesn’t incentivize informed voting. Tabling for now as any changes here are complex and require engineering work on the system.

#11. The average speculator doesn’t care about MKR governance. - This might be a matter of the system just not pulling in enough in fees yet. Once there is 1 Billion Dai in circulation, we might see investors become governors.

#16. Opportunity Cost is too high. - At least some MKR holders have MKR locked in uniswap instead of voting, can we reward voting in some way? If MKR is locked to vote, can it be used to earn interest?

#17. Non-voting MKR holders feel that voting MKR holders are doing a good job.

#19. Voting is not worth the tx costs - Tx costs for voting are actually very small, even still, there may be some solution here with Gas Station Network


Emotional Reasons

#4. Whales outweigh most other voters, making voting feel like a waste of gas. - This has been discussed, but there is probably no good solution here.

#8. Waning excitement with the timeline of MCD. - Definitely a contributing factor, launch of MCD will hopefully draw a number of these people back.

#9. Lack of transparency leading to MKR sell-off among previously interested parties.

#12. Purple pill affair caused interested voters to sell their MKR or cease participating.

#14. Voting twice a week is overkill and leads to voter apathy. - Reduce the frequency of voting. Once (sometimes twice) a week is a high demand on peoples time and attention. In the future, look into automation. Reducing granularity could help here, but this has it’s own trade-offs.


Common Themes

  1. Cost of voting is too high. There is a combination of informational, opportunity and gas costs that make voting undesirable.
  2. Lack of transparency in the past has hurt participation.
  3. Delegation was brought up multiple times, generally positively. Some users said that they would be willing to delegate, but not to vote themselves.
  4. Rewarding Voting was also brought up a couple of times, the implication being, more users would vote if voting was directly rewarded.

At some point I’ll do a proper write up of what I perceive to be the issues with the voting system, but for the time being we are stuck with it, so it might be worthwhile to think about how we can counter some of these cited reasons. As a brief look, some of them are more valid than others, some are flat out wrong and some we can do nothing about.

If we can get a discussion going, I can summarise people’s thoughts on these reasons and add them to the list in-line. There are 17 I managed to pick out, between us, we ought to be able to cover all of them and in some cases, figure out a response.

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There is no mention of institutional ownership. Presumably they are not voting. Are there any additional reasons, like:

  • custodians don’t offer this service at the moment
  • holding is strictly as an investment (vs governance token)
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Not that are highlighted in this reddit thread, but I imagine institutions don’t necessarily have social media people responding to reddit threads.

All of this is anecdotal, so if you can link to an instance of an institutional investor (or someone claiming to be so) saying that they need a good custodian, or that they are not interested in voting and only looking for a passive investment, I’ll add those reasons to the list.

Edit: #11 covers speculators not caring about active governance, this could include institutional investors?

Yes, I am merely speculating. Maybe Foundation could provide some information. It’s hard to imagine they did not discuss voting before selling.

Yes.

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As others have pointed out, this is not a great idea. We don’t want to encourage people to vote randomly just to accrue some reward.

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I recognise this, but I think we can find solutions that avoid this downside. For the time being though, lets focus on the easy wins we can make here, and not on problems that require smart contract changes.

I’ll edit the OP to include your comments, though.

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I don’t see this as a problem. Whales have the most to lose by bad governance decisions.

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I think it’s a problem in that it disincentivizes smaller holders from voting and I think that indirectly that makes it a problem for the system as a whole. As you say though, there are incentives for whales to vote well.

I’m not sure this is a problem we can fix or address though.

Why specifically? Do you anticipate that what’s good for large holders is bad for small holders? It seems to me that the only way that could happen is if there was an attack on the MakerDAO. But whether small holders vote or not could not stop such an attack anyway. We’d need to coordinate off-chain to mitigate such an attack.

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Because less MKR voting total means a weaker system. ~1000 Holders at ~10MKR each add up to a significant fraction, but if none of them vote because they don’t feel their vote is worth anything then we lose 1000 people and 10,000 MKR from each vote.

There is also the argument that the more individual people that are looking and thinking about each vote the better. 1000 people with 10 MKR are better than 1 person with 10000 MKR.

This is obviously bad in an attack scenario, but even on a weekly basis, the more voting MKR we have the better.

Looking and thinking can be independent of voting. I am absolutely in favor of broadening the number of participants looking and thinking about the Maker system. I think these are separate concerns. Voting should not be confused with looking and thinking.

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Is it possible in the future to allow for message signing that the foundation “records” instead of on-chain voting? food for thought…

On the first point of cost do you have any ideas that would either

  1. Lower the information barrier.
  2. Increase the desirability of the information.

Talking to MKR holders I have hear a similar problem, a solution that many have brought up is this idea of “MKR at a glance” or something like that. The one place that you can get up to speed in a few minutes.

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I’m full of ideas (but none that are costless).

Having a place where MKR holders can get access to high quality and succinct information is desireable. I attempted to do that with governance at a glance, but it just seems to get bigger and bigger each time I come back to it. Maybe I’ll revamp the format a little and organise it better so that there is a three point summary of what’s gone on in the past week and then go into more detail below.

I’d suggest reorganising how the governance and risk meetings are uploaded to youtube. Currently they are uploaded as one long video, it might be easier to consume in a shorter format. Either:

  • One long video, and a 5min highlight edit (but who makes this?)
  • Split the video into sections.

That’s more work for @rich.brown though.

Getting a governance twitter account up and running could be a good way of prompting engagement and spreading information about votes and such. I think @kwadrax was looking into this?

I haven’t voted before because I am not a whale, also I think it is not the best practice to be required to vote once or twice weekly.

The solution for this problem is to decrease the required frequency of voting. (for example by adding automation to the process of changing the SF, so the votes will only required when we want to change the algo).

by the way sometimes low voting means that most holders are kind of OK with the process.

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I have just a handful of Maker. I haven’t voted yet, although I plan to do so in the future. I’d really love the option of proxying my vote to a group with a similar outlook. For example, suppose there was one group that was willing to tolerate some deviation from the peg in order to maximize total collateral locked, and another group that was focused on very aggressively trying to maintain the peg. It would be very cool to be able to delegate my Maker voting power to one or the other.

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Ya, agreed.

I think it is worth thinking analogously about this. What communities, brands (!?), media outlets do this well?

For example a16z 16 minutes … https://a16z.com/tag/16-minutes/

Agree with you that whales deserve more influence. However, this is definitely a contributor to voter apathy. The typical response we get is that “if everyone voted, the whales wouldn’t have undue influence.” It’s sort of a circular issue.

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As a minor MKR holder who currently do not vote and voted in a past I can say what my reasoning for not voting is.

  1. I generally agree with decision current governance is making
  2. I do not have enaught time to analize situation to the extent when I will be able to confidently say that my vote is not just a random noise

I was voting when DAI was far out of a peg and back then I was spending like 3-4 hours weekly (watching governance all reading MakerDAO threads etc. ) to have even moderately informed opinion and that is quite an expense i must say. It is hard for me to believe that anybody having less than let say 100 MKR could rationally justify sutch time expense at current situation.

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Thanks for sharing your thoughts Adam, I’ll add ‘Agree with current decisionmaking’ to the list of reasons, as I don’t think that’s covered.

I agree 3-4 hours is way too much to expect from smaller holders. If I can ask, what would you consider to be the minimum level of ‘informed’ you would need to be to be comfortable voting? If we had summary videos/threads etc, would you be more willing to vote off of say 1 hour spent reading/watching a summary of the week’s activities?

Thanks for helping us with the peg back then. :slight_smile:

If there is anyone else in Adam’s situation (voted previously but not currently), I think we’d all love to hear from you. No judgement, we need to understand the problems as well as possible to make the right fixes.