That’s interestin discussion overall, as indeed COMP distributions have a lot of things to improve. I see kind of a lot of focus on rewarding voters, that in some way mentioned both in 1 and 5 ideas, so i want to start with that.
Let’s say it straight: amount of voters is really massively irrelevant. It really doesn’t matter if people vote or not and especially very small, “dust amount” holders. They have absolutely zero impact on outcome, and in general, holders of single-digit comp should rather be delegating than voting themselves. Voting power is what matters, not amount of voters. Voting power is concentrated in very few accounts. How and if they vote DO matter, remaining 10-20% (that isn’t exact number) of voting power spreaded across hundreds of adresses does not. That’s the facts. Participation doesn’t really matter and that goes directly from distribution of voting power and thus anything spend on incentivising useless action is wasted money. Who we going to fool here with massive participation when every single decision can be made regardless of participation of masses.
However, i fully support everybody who want to execute their voting power. Either by directly casting a vote, or by delegating their voting power to their representative. That’s their right.
But i’m really curious: Does nobody really thought why participation isn’t that massive? Aside of people just thinking that their vote matters not?
The problem here isn’t because people are so ignorant. It’s just COMP token design itself is so bad and outdated. It kind of based on assumption that COMP token is valueless governance token, which primarily would be held in wallet. And that kind of
assumption never worked from the very beginning. As soon as it hit AMM and become paired to assets which have value, it gained value as well, regardless of initial vision.
So right now COMP is financial asset, which do have a value which also “kind of” could be used in governance.
The problem here is that there are 2 basic real life usecases for that type of financial assets:
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It can be used as collateral
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It can be used for LP at AMM DEXes like usiswap, sushiswap, etc.
And interesting enough if you try to use it in any of this ways, you are instantly unable to participate in governance by design. Because in both cases you can’t keep token in wallet. And thus it instantly looses it’s utility in governance.
Fortunately Compound is Lending platform by itself, so Collateral usecase is relatively easy to solve with already pretty much existing code. And here we come to COMP staking. What is COMP staking? Well, in our case, it’s basically just a Compound
market with only Supply side present. But it wouldn’t earn any interest, you’ll tell me. Yea, and it’s not supposed to. But it will earn COMP distribution. And it will give that distribution for those who hold COMP. And that is, a way to
improve COMP distribution. AND because same address hold the same amount of cCOMP, it’s theoretically possible for COMP staker to participate in governance still.
And of course, we should never forget that existing COMP market is a SHAME and DISGRACE of all DeFi. Example of market manipulation via artifitially setting CAP and rewarding select portion of users for months, at the expense of everybody else.
Every single person holding more than 65k COMP should feel personally responsible in that mismanagement. Because they actually are, by being aware, having power to create a proposal to fix that and yet taking no action. And if regulation eventually comes to crypto, that would be example of inability of DAO to properly self-regulate. Because, they would say look, they created special privileged group of users, who are earning extra rewards. And that isn’t a market condition, it’s a manipulation.
It’s worth reminding that the problem is still there: COMP market, as it is now is NOT fine.
But let’s go back on topic of improving COMP distribution. It could be somewhat fixed for users who LP COMP in v2 type of AMM. It’s a bit more complicated because of oracle for LP tokens, but it can be done in same way as COMP staking, as a one-
sided Compound market for LP tokens. Voting portion is more complicated as amount of COMP in LP varies, maybe somebody could find technical solution for that. But so far aside of Snapshoting i don’t see anybody made a way to give LP voting power.
Creating such tools not only improve distribution itself: Part of COMP distribution could be diverted to COMP staking and to LP staking. But that also will improve liquidity. Users, who provide liquidity for COMP tokens in various DEXes, are in some
way doing more for protocol, then users just supplying or borrowing funds to Compound.
And actually big portion of users will be able to actually execute voting powers which they DO already have, but actually unable to use, because it have financial costs to actually pull their tokens either from collateral, or from LP to wallet to participate.
Not like i’m strongly against rewarding voters, even though i believe it’s useless spending of COMP. But unless things mentioned above are solved, yeah, i might pull 1 COMP or whatever minimum needed to get distribution and do signing. But i’d
surely not going to pull all tokens from where it makes financial reason for me to keep to just cast a vote, which wouldn’t change anything. (Yeah, as a very long time user, i do hold some very minor voting power, and yes, i pretty much never participate for the reasons i outlined. I’m aware of proposals and could be voting still, if technical options would exist even without any specific rewards for doing so)
I want to shortly mention airdrop. It’s not really that much bad idea. And it doesn’t need to be 200m airdrop. It’s just dragged for so very long time while it should be closed long ago. There is nothing really to discuss, basically only founders and early investors have the voting power to pass it or not. They should just voted on that long ago instead of collecting opinions from those whose opinion doesn’t matter in decision making. Idea itself isn’t that bad, yes. It indeed somewhat improve distribution, because right now COMP isn’t really going to users pretty much at all. It goes to big capital in vast
majority, not to the broad community: small users are diluted by massive capital.
As for expanding grants and separating supply and borrow markets for rewards being able to be fine tuned, it’s both great ideas, enough was said on those and i very much agree with support of that, voiced by others.