Great writeup @getty. My thoughts on each of the ideas:
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I’m not in favor of paying people to vote. In an ideal world, every tokenholder is up-to-date on protocol affairs, reads all of the proposals thoroughly, and votes according to her independent view. Unfortunately, we don’t live in that world: it takes a lot of time to get up to speed on governance, and as a practical matter, few tokenholders have the time to vote with an informed view. (I’m not the first to say this; there are always tradeoffs to various governance mechanisms). Paying people to vote may result in incentivizing the wrong behavior: we want people to get informed first and vote second. Paying people to vote for voting’s sake is unlikely to add any tangible benefit to the protocol.
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I’m very much in favor of separating supply and borrow subsidies. As a general matter, I think rewards/subsidies/liquidity mining programs should be thought of as growth programs (rather than token distribution mechanisms). As such, they should be managed scientifically. That is, if we’re designing a new rewards program, we should have a hypothesis of what will happen, run the experiment, and compare the test results against the hypothesis. We should do this thousands of times until we are able to understand how users interact with the protocol. Once we have a deep understanding, we can use the data to grow usage, reduce churn, and allow the protocol to use its COMP efficiently.
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@getty and I had a few brief conversations about how to turbocharge the Compound Grants Program. One way to do it that is by growing its budget, of course. In my mind, that’s necessary but not sufficient: having the money to fund grants is good, but what’s absolutely necessary is having a well-staffed team of full-time individuals who is able to quickly, efficiently, and dutifully provide grants. One learning we’ve had from the Compound Grants Program experiment is it’s simply not enough to have a part-time grants manager (that’s yours truly). We will share more thoughts on this topic in a separate post in the future.
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Presumably, the idea behind subsidizing fees is to grow usage of Compound (particularly with retail users). If that’s in fact the motivation behind the subsidy, then I’m very much in favor. That said, similar to my thoughts in point two, I believe the subsidy should be managed as a scientific experiment. For example, we may have a hypothesis that covering 80% of the fees will grow Compound’s user base by Y, and this user base will churn by Z% over 6 months. To test the hypothesis, we can run a test and compare it against the hypothesis. More importantly, we can run this test hundreds of times until we find the optimal subsidy percentage.
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See my thoughts on point one. We want informed voters, not profit-maximizing voters.
I’m glad we’re having this discussion. It’s an important one!