I propose the following changes to quorum for governance proposals:
Upon approval of this proposal, set the quorum to 20% of the locked MNDE, rounding down;
Use a variable threshold going forward of 20% of exponential moving average of the locked MNDE for the last three months, rounding down;
Empower the Master Chefs to alter the threshold periodically without a governance proposal, likely once per quarter or when a major change in locked MNDE warrants it (like a new token exchange program), as long as they use the formula from #2 above.
What is the rationale behind the proposal?
Part of our efforts in decentralizing Marinade, we need to make sure that the proposal quorum is a reasonable one - that is, that a proposal requires enough parties getting involved for it to pass quorum.
Our on-going liquidity mining and team payouts alter the amount of MNDE available on the market. Efforts like the token exchange program can send out a large amount of locked MNDE at once, meaning it would take much fewer parties to reach a quorum.
We cannot plan for the governance threshold based purely on emissions, however. While we can project the likely circulating MNDE, Marinade’s governance depends not on total circulating MDNE but locked MNDE. The amount of locked MNDE depends entirely on the holders’ actions, so we need to alter the quorum threshold periodically based on the actual numbers.
What is the expected positive impact of this change?
Having a voting quorum that more closely relates to the a mount of locked MNDE will make it necessary to reach a meaningful amount of votes before a proposal passes.
As I mentioned above, Marinade’s own voting approach doesn’t have an exact parallel on other projects, and the potential high variability of locked MNDE further complicates things.
Given that we plan to further empower MNDE holders going forward, including moving the treasury from a multisig to governance control, it behooves us to figure out an approach that works for Marinade early on.
Empowering the Master Chefs to use the DAO-approved formula in the future enables us to adjust this value faster - otherwise a change would take at least two weeks (between proposal discussion and voting).
Any other considerations
A change in the formula would require a new governance vote.
While the Master Chefs can alter the value without a new vote as long as the formula holds, they should keep the DAO appraised of any such changes.
I am currently only basing this on locked MNDE. It is possible that in the future we may want to consider large amounts of unlocked MNDE in whale wallets (not pools), given the owner could lock it at a moment’s notice. I am not considering it at this stage to avoid overcomplicating the approach.
I don’t believe Tribeca supports that, which would mean creating a program that has authority to execute the change. Someone needs to run the server where this daemon would be. That seems to open up an attack vector that I’d rather not have to worry about right now.
It would also require us to code the rules into the program of what we consider a “relevant change” in locked MNDE, further complicating things.
It looks like leaving that in the hands of the team, which currently holds the upgrade and setting authority, helps both minimize the amount of code changes and the attack surface. Eventually this will be one of the settings that will end up under DAO voting control, which seems a better long-term solution.
I’ll ask about the technical aspects - I’m not sure how easy/computationally expensive it would be to get the locked total from a smart contract.
Off the top of my head, letting anyone crank it at one point could potentially lend itself to a scenario where the quorum gets temporarily manipulated for a lower value without us noticing, so I’m still inclined to keep a human oversight element as a safeguard. I tend to err on the side of caution, though.
The current quorum is 13.72% of the current MNDE locked;
So far we have seen between 41%-51% of voter turnout on proposals;
However, we can’t assume turnout will remain that high;
We can’t predict the amount of MNDE that is locked on NFTs yet will be unable to vote at any given moment because the holders decided to start an unlocking process (which they could do even if they don’t plan to sell, to consolidate or split into multiple NFTs);
It is also likely that as more large holders get involved, like TEP participants, one of them will be unable to participate during the time window for a proposal because they are otherwise occupied.
With these factors in mind, 20% seems like a value that would allow us to expect increased participation (if executed today, it would raise the required votes by 43%) while not adding a significant risk of proposals failing due to lack of quorum.
It is merely a starting point, though. We’ll get more participation data as people submit more proposals.
I agree to this proposal. We are too early to fixate on the number 20% but nevertheless a good starting point until we find a decent quorum needed. Today, as you said, we have around 41% participation and from the looks of the previous proposals, at least 80% or more have voted to approve the proposals. If this trend continues, I believe we can increase the number from 20 to a higher value. But this is a good starting point to figure things out
From your experience, how does other governance systems (majorly in ETH) maintain this quorum percentage?
Also, aside from this proposal, are there any mechanism to control the large bag holders colluding and over powering the system? Like the weightage increments of your vote parabolically decrease when you cross a upper limit of MNDE tokens? I think this could be a conversation for letter?
Such a tapering wouldn’t prevent collusion, though - it would only start curving the power of some NFTs after a certain amount of MNDE locked. Votes from independent wallets would still have to be considered independently, which is why I haven’t spent much time on it: it seems that if a whale wanted to still have full voting power, all they’d have to do is split it among multiple wallets.
I could see a scenario where vote impact curves down not by the wallet but by the accumulated value in the position (Yes/No/Abstain). While this could in theory help against collusion, I currently suspect it would not have had an impact on any of the proposals we’ve passed, where the voting has been mostly one-sided. It could also add some confusion, since users never know exactly how much their vote will count for, and could be demoralized by seeing an even smaller impact if they vote after a whale.
All these complications are why, when it comes to voting models, I prefer to move slowly and deliberately.
By and large, the DAOs I’ve been involved in rely on community proposals to adjust the change. It’s usually based on the amount of votes that proposals have had on average recently, combined with a projection of how many tokens are coming into the market based on the unlock schedule.
I don’t think we have enough data for the former yet, with only a handful of proposals under our belt. The latter is not something we can easily take into account, since Mariande’s governance depends on NFT-locked tokens and not on tokens at large and owners can lock/unlock them at will, changing the “valid electorate” in an unpredictable manner.
Yes, we kind of made things harder for ourselves here.
I am pro this idea. This strikes me as a way more effective way of managing the quorum based on token supply and token emissions vs. making a new proposal and on-chain vote several times year about the same thing.
I am wondering if an increase from 10% to 20% might be too steep at this stage though, as you mentioned @playerofbits, 20% today would be the average participation. Is perhaps 15% a reasonable margin?
Seeing that 20% of the current locked amount is the average turnout we have been getting gave me pause as well. However, we have been getting that turnout while having less than 41M MNDE locked, and that number has almost doubled now.
I think that instead of lowering our expectations, it is up to us to make sure that both holders at large and these newly minted whales feel that participation is valuable.
15% of the current locked amount would be 10M MNDE;
We have several wallets controlling more than 5M MNDE, so with a 10M limit, two of them could pass a proposal on their own;
A bit late to the party but I fully support this proposal.
I think allowing Marinade to modify the quorum parameter according to a set formula that we all agree on beforehand is a good way to go at it, and I think the suggested formula achieves a good balance to both protect the governance from being controlled by a small number of wallets and achieve successful governance votes at the same time.
I think this makes a lot of sense. We now have over 200 unique governoors that have voted on either a proposal or the validator gauges.
Average turnout for the first batch of governance proposals sits at 93.8 wallets, and there are now about 40 unique wallets that own a Level 5 Chef NFT (at least 250k MNDE worth of voting power).
I’m hopeful that the success of the Token Exchange Program will lead to even higher voter turnout on proposals too. With this new Lfinity proposal, it looks like we will have an opportunity to test it out soon!