Distribution of COMP token to early users, pre-COMP distribution period

Ideas
1

Hello community !

After 20% reward were removed to liquidity providers on compound.

In an attempt to reward less farmers, and more the usage.

I would like to hear about your feedback and to implement a reward for the early users of Compound protocol, pre comp distribution.

It would reward the usage, more than the farming, and reward these who sticked to bring their funds to the new protocol which was compound since 2018 for a 1% apy often when centralized platforms were offering much higher incentive in term of supply apy, more than the farmers who would go and leave to a new place when apy decrease.

I am not necessary for “cutting” the farmers further to the previous proposal which was taken, but for redirecting the 20% that was removed to them to pre comp distribution Users for a given period which could last one year.

We should find what is technically possible to bring a reward to early users, if these 20% are not currently accessible, we might find an other way ! listening to your ideas

By looking at other most used protocols, we can see they almost all rewarded their early users pre governance token distribution with a share of these.
Uniswap : Near 150 millions of uni supply went to pre uni community users,(close to total supply at launch), in a year, september 2021, there will be around 400 millions UNI, so thats almost like whole year of Uni distribution given at launch to early users, thus I wouldn’t find disproportionned to redirect the 20% that was taken of the Lps, rewarding more the farming, to the community, pre comp, rewarding the actual “usage”, and for a given period which could equal one year.
Uni has gotten a lot of credit for retroactive token distribution, and other protocols which made the mistake not to process like it are currently starting a retroactive correction (see RARI governance token)
Crv, and many other protocols also thought about their early users when releasing their token, that’s why I think Comp is also able and should think to reward proportionally their early adopters, pre comp distribution !

For those telling me noone will wanna do the “data search work” : we could use the same process as on proposal 022 : https://twitter.com/compoundfinance/status/1305239284547346432?s=20
and call withdraw from the csai reserves for 5k worth or what is needed as a bounty for the so called “paperwork” to reward the pre comp users community. We could thus afford to obtain all the necessary data for the fair pre comp reward calculations. (Which I cannot do myself as I am not a coder, but I’m sure we can do it, as most of other protocols succeeded, uniswap even went to reward their v1 protocol users !)
We could use some datas that reward users accruing of their volume or supplying/borrowing throught the years 2018-2019-2020 pre comp distribution, possibly proportional to the interest received/paid (same system as now),an idea would also be to proceed as uniswap and to weight higher the older the liquidity providers provided its liquidity, and I am sure we can find out what is the most fair and best technical way to do it!

Retroactive incentive has been proven to be a clear path to decentralization, and I think it’s the right moment to bring a correction in the way comp launch was organised and not to forget early adopters.

In my opinion, early network participants of compound should be treated as a gem who participated in the protocol, not for the reward (comp token did not exist and noone expected an airdrop) and every network participant should be a stakeholder.

Listening to your feedback and hoping we could implement that soon if the community agrees !
Thank you for your time

7 Likes
2

It’s nice to want things for free but I believe that the COMP token should be given out to it’s user and members who vote in a way and effort that reduces centralized governance with to much power at the top. If only early users get COMP, it will likely further consolidate governance between the few.

Those who were early had the benefit of picking up COMP early and at significant cost savings. It’s one things for everyone to earn COMP equally but to only distribute to a select few would be unfair to those who have purchased COMP as significantly higher prices in order to participate in governance. Uniswap, which is referenced, gave to everyone who used or tried their platform and to all current existing LP providers. They didn’t segregate any new from old, all were treated fairly.

I personally believe it may be best to apply a dividend to voter participation, assuming that we get the cost of voting reduced. Of course, a COMP payment for voting might be seen as an offset for the voting cost.

2 Likes
3

To answer your short message :
The current structure is really rewarding the future users, given the 4 year distribution horizon, but it does tell to the old users “thanks for providing early traction, which allowed VC money and kept us building throught the crypto winter, however we won’t ditribute you any comp”

I think you did not understand the UNI tokenomics by saying “they did not segregate any new from old”, Uni actually distributed at launch almost all the tokens to early users pre-uni distribution (400 per account), but also, the early liquidity providers were rewarded proportionally to the volume they provided, and with a higher weight given to older date, this was taking into account that for a given dollar at an older date, represent a higher % of the network, higher risks (newer protocol), and higher importance in the traction given to the protocol. They are even trying to reach and reward every user that didn’t use the protocole, but used a proxy interacting with the protocol : https://gov.uniswap.org/t/application-for-retroactive-proxy-contract-airdrop-for-projects-apps/3221strong text

I dislike this word, “segregate”, however if it means taking into account we all have a different historic with the protocole, allocated to it our funds differently throught 2018 2019 2020 and that this involvement should matter, then segregating makes sense. And again, noone is asking for a boost or a bonus over future users on the liquidity they are currently providing; just a correction on past emission.

You seem to think that rewarding early users would both : be bad for comp investors, be unfair for current network participants, would prevent from applying dividends to voter participation or further development in comp distribution.

Firstly you should get that getting COMP into the hands of dedicated early users who demonstrated strong interest in the protocol itself, rather than into the hands of whale farmers who don’t care about anything but yield, is great for comp and for comp investors. And I don’t agree that “it would be unfair for the investor” : these tokens are allocated to the community already. So it’s not reducing their holdings or inflating anything away.

Secondly, early users are not necessary asking for a better treatment compared to post-comp distribution users, but at least a similar one, something fair. And I am not asking to cut your reward. Comp distribution to early users is currently 0.

Thirdly I disagree with you and think the idea you are mentionning is not incompatible at all with a reward distribution to early users of the protocol, it’s just an other proposition that can be examined and (maybe?) applied at the same time.

To come back to the technical aspects of distribution of COMP token to early users, I am thinking we could propose an approach which both benefits the users, and the capital, we could allocate a part of the reward toward the users, and a part toward the capital, the same way UNI did actually, uni was heavily weighting towards users. We will need later to come with fair and accurate ideas and propositions.

I would have hoped you would see more than “We want our free coins” in my message.
And by the way, would early network participants want their share of the pie, wouldn’t it be legitimate ?

2 Likes
4

We need to break down the reasoning behind these airdrops. From my point of view, they are:

  1. A source for increasing decentralization
  2. To help build an active community post decentralization

As much as I’d like to reward old users of Compound, I think we should focus on trying to accomplish these goals when distributing significant amounts of COMP. We as a community don’t gain from airdropping COMP to inactive users or accounts that will immediately sell.

We want to try to devise a method for distributing COMP that will stimulate the community as much as possible. Vesting the COMP, in my opinion, is a must for this.

5 Likes
5

I think you have at least one big mistake in your logic. There is indeed a benefit of airdropping to accounts who immediately sell. It’s decentralization, you give a portion of voting power directly to people who were part of what helped to make Compound what it is. It doesn’t matter really what they do with that. It’s their share, if they want to sell, it’s their choice. For every seller there’s a buyer on the other side. Or maybe you trully believe that it’s much better to give vast majority tokens to select few who own the most capital, so only they could sell (or get majority votes otherwise) as it pretty much happening now? :slight_smile:

It’s not that bad idea to retroactively drop something to old users, though how big that portion should be, is a place for discussion. And Compound is a very different system from Uniswap, Compound users are basically liqudity providers at same time. I don’t think such distribution could cover such a big amount of small users. So, while i don’t think it would be as efficient as uniswap distribution, i’m more for it, than against.

Now come to vesting idea. Vesting is good for VC and team who got big amounts of tokens “airdropped” to them. But in general, if by vesting you mean simple timelock in address i believe it’s not very good concept. It removes liquidity and chains capital, both of which aren’t really good for anything which supposed to grow and develop.

If , on the other hand, by vesting you mean locking COMP tokens inside supply pool or any other liquidity pool and rewarding users for doing so, than i fully support that idea.

But for that, we do need COMP market supported by Compound to begin with. And so far nobody with enough voting power is interested in proposing that. :slight_smile:

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