Should Compound Retroactively Airdrop Tokens to Early Users?

@TradegyStruck is correct. I really appreciate @cryptobuddy_1712 's enthusiasm, but the grant expiry concern is a bit of a misunderstanding of how the grant is related to this broader initiative. The grant supported the early user interest analysis, and that work is complete; I will do my best to be responsive to any questions or concerns about it. This broader initiative continues beyond the expiration of that grant.

The only difference before v. after the grant is that until the grant is officially closed out, I won’t be weighing in on the present discussion of translating the data into a distribution. If this discussion seems to be converging on a consensus recommendation before that happens, that’s awesome; otherwise I might add my two cents to the discussion after the grant’s closed.

It looks like a pretty full agenda, but it would be great to have someone involved in this discussion briefly jump in to update the dev community about the current state of the discussion, so that it can incorporate any questions or concerns from the broader dev community. I am not sure if I will be able to make it; if I can, I’m happy to bring it up, otherwise anyone else here is welcome to do so. I’ll post a note to this effect in the forum thread for the dev call agenda.

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Oh I see. Thanks for clarification on the grant. Just wanted to make sure all great efforts are not in vain. As some one pointed out as long as the progress is made probably we are good .

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just do same amount for all eligible address, uniswap done with 400 each address, why not compound? much easy and take no more than week to completed

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That’s not how Uniswap worked. Uniswap had a capital weighting mechnasim based on amount and duration an address provided liquidity. What’s being discussed here is actually pretty similar to how the Uniswap airdrop was structured.

@samscalet @daver,
It is really besides the point of how Uniswap or any other project decided on how to do the airdrop. Those projects aren’t Compound. Those projects may or may not have had the huge difference in users, or the multitude of users who interacted in such a way to not really be users (Sybil attack/smart contracts designed to spread cTokens to make it look like there were more users/etc/etc). Over 50% or +20,000 “early users” had earned $0.00 interest.

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I totally agree with you. Just pointing out a blatantly false claim.

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Update re: today’s dev call. I summarized our progress and solicited input from the dev community. It’s important that we get this input periodically as plenty of key community members have limited bandwidth to follow this thread.

My sense is that the concerns about a distribution raised in the dev call – which are inclusive but not necessarily representative of the developer community as a whole – center on:

  • Size of the distribution, both in terms of monetary value and in terms of COMP available to the comptroller for distribution
  • Opportunity cost of distributing COMP to early users that could have been deployed for additional grants or other yet-to-be-determined incentives for driving adoption, hardening the safety and reliability of the protocol, etc.

I hope we can continue to work hard toward incorporating these concerns in this discussion. We may be tempted to defend this initiative by going on offense against constructive criticism; but my hope is that any proposal that emerges will be responsive to the various concerns raised across the full spectrum of protocol users and COMP holders.

One suggestion raised was the idea of submitting an initial on-chain proposal that simply asks governance whether there is support for pursuing some flavor of early user distribution.

I appreciate the suggestion and the accompanying good intention of avoiding unnecessary development work. I also recognize that there is an appetite in this forum for timely action toward an on-chain proposal. That said, I would advise against submitting a preliminary or temperature-check proposal through governance:

  • Every prior governance action has involved an on-chain task(s) for the protocol to execute. A proposal that just asks COMP holders whether to eventually hold a vote on this idea would deviate from that standard, treating this proposal initiative – which is probably at this point the most distributed, in terms of community participation and development, in Compound’s history – differently from initiatives coming from Compound Labs, its backers, and a small handful of all-star devs in our ranks (no shade intended, y’all are amazing!)
  • Without a specific distribution or mechanism laid out, never mind coded up, the proposal will be inherently more ambiguous than any prior governance action. Given the conservative approach governance has taken to protocol changes, the ambiguity of a temperature-check proposal makes it likely to fail irrespective of the merits or deficiencies of this initiative because a “yes” vote carries greater yet harder-to-measure uncertainty/risk than a “no” vote.

In short, I think the intent of the suggestion is in the right place, but for this idea to really get a fair shake, it should be presented to governance in a polished, well-reasoned, and executable format.

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@allthecolors @CryptoCraig was unable to attend. Was there an indication of what volume of comp would be more widely accepted by governance?

The discussion did not get that quantitative, so I don’t have a clear answer for you on that one. (@CryptoCraig was there fwiw, just a mic issue I think)

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Yeah, mic issues. Was using my mining rig, since the usual PC wouldn’t have been able to keep up with the other stuff I am working on currently.

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Will also be voting no to this proposal. Like many have mentioned, many alternative more productive ways to utilize reserve funds.

What you’d be creating is a possible divide between users going forward.

@getty @arr00 @allthecolors @CryptoCraig

Maintaining comp distribution to the existing small group of comp holders creates financial and regulatory risk outlined in the SEC’s token safe harbor proposal.

If we don’t make a real and quantitative effort to decentralize governance we pose the risk of COMP being defined as a security and the protocol could become legally susceptible to laws under the security exchange act.

Noting specific concerns to how network maturity is defined, quantitative measures and related persons.

https://www.sec.gov/news/public-statement/peirce-statement-token-safe-harbor-proposal-2.0#_ftn2

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Another day in crypto. Dydx protocol released the airdrop and I must say the model is elegant. Dydx is also from the old day, an old giant.

Than I really thinking again, why in earth is comp discussing an airdrop for almost a year. Yeah I know we lunched first the token and than do an airdrop. But I am tired to read everything. So can we conclude and move on?

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Been following the thread since a while and at this point am tired to check for an update . Hope there will be a final decision made soon to end the speculation. Just say yes or no and when if yes. Thanks for all the contributions.

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Governance in Compound is largely decentralized, hence the longer conversation. dYdX was not a DAO or foundation until just now, so the decision to airdrop required no building of community consensus. Interestingly, dYdX also chose not to recognize its earliest (V1) users at launch.

I would encourage everyone engaged in this discussion to also review the recent conversation on the future of COMP rewards and chime in about which ideas there they support, whether or not that includes an early user distribution. If you think this is a good idea, there is an opportunity right now to make your case on that thread.

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I have some more thoughts on the distribution proportions, and while i still have a very little confidence that that would pass governance at all, but if we talk about formula, that my suggestion would be something like that:

Users, who earned 0 : 0 COMP (not a user, so no distribution)

Users, who earned between 0.01$ and <1$ : COMP = MAX ( (Interest earned),0.25)

Users, who earned >=1$ : COMP = 1 + MIN ( SQRT(Interest earned), A)

Where A is up to discussion, i’d suggest something like 10, because at the core it isn’t a capital distribution, but rather a community one, and capital here is just a measure of weighting participation. That would require much less COMP to spend, give noticeble rewards for majority of early users, but nothing ridiculous.

COMP which were initially suggested for that distribution, but not needed i suggest to spread via different community initiatives.

The question on opportunity cost of distributing comp to early users vs using it for other incentives in concerning. If you are using comp as an incentive for other activities it calls into question if COMP really intended to be a governance token. It implies that you are using the perceived value of comp to fund activities rather than using it to actually govern the protocol. How would regulators would view conversations surrounding this issue if it were ever brought to court?

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Unless I’m mistaken, Compound didn’t promise any rewards for early users, so in my opinion, there should be no airdrop. Early users chose to use Compound exactly as is and for whatever reason; they found the idea intriguing, they wanted to borrow, they wanted to make money using the protocol, etc. Maybe they helped the protocol and were valuable community members, but they chose to do so without a promise of compensation.

Now, early users may not have received compensation for the early days, but that’s not to say they haven’t benefited from being an early user. Being able to shape the protocol and community, knowing about Compound before many newcomers (I’m one of them) - being able to purchase and accrue COMP at better rates, learning from the project, making friends, having a chill time, etc.

Furthermore, there are still many opportunities to earn COMP (the grants program is more than generous!) and also to buy the token before DeFi goes mainstream.

If this goes to a vote, for these reasons, I will vote no to the airdrop.

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The thing is it REALLY doesn’t matter how you and all users (early or not) together combined will vote. What do you think it’s democracy or something like that? All combined voting power distributed to users for all the time is about 1 mil COMP tokens. Founders, team and early investors control 4+ Million of COMP voting power. It can be discussed as much as everybody want, but the only people who can make decision about any sort of airdrop or distribution aren’t users.

Everybody is welcomed to tell their opinion and advocate for it as much as they want, but when it comes to decision making, that’s irrelevant. There is just not enough voting weight for it to matter.

But don’t worry, anything which is dragged and dragged over year, unlikely ever bear fruits. We will probably will see second annivesary of that topic without any result. :slight_smile:

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