I totally agree with you. Just pointing out a blatantly false claim.
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Update re: todayâs dev call. I summarized our progress and solicited input from the dev community. Itâs 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 â which are inclusive but not necessarily representative of the developer community as a whole â 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 â which is probably at this point the most distributed, in terms of community participation and development, in Compoundâs history â differently from initiatives coming from Compound Labs, its backers, and a small handful of all-star devs in our ranks (no shade intended, yâall 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 âyesâ vote carries greater yet harder-to-measure uncertainty/risk than a ânoâ 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?
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The discussion did not get that quantitative, so I donât 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 wouldnât 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 youâd be creating is a possible divide between users going forward.
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@getty @arr00 @allthecolors @CryptoCraig
Maintaining comp distribution to the existing small group of comp holders creates financial and regulatory risk outlined in the SECâs token safe harbor proposal.
If we donât 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.
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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, iâd suggest something like 10, because at the core it isnât 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.
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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 Iâm mistaken, Compound didnât 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 thatâs not to say they havenât benefited from being an early user. Being able to shape the protocol and community, knowing about Compound before many newcomers (Iâm 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 doesnât matter how you and all users (early or not) together combined will vote. What do you think itâs 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 arenât users.
Everybody is welcomed to tell their opinion and advocate for it as much as they want, but when it comes to decision making, thatâs irrelevant. There is just not enough voting weight for it to matter.
But donât 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. 
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I think I understand where youâre coming from @oniru, but I also think your argument would actually land more squarely against uses like the grants program than against a retroactive distribution. There is no question in my mind that the grants program uses âthe perceived value of COMP to fund activitiesâ other than âusing it to actually govern the protocolâ. Yet:
- The grants programâs launch included funding for legal counsel to review regulatory questions associated with the program, and since it has moved forward, presumably no fatal issues were identified
- there seems to be broad agreement in the discussion on the future of COMP distribution that the grants program is a good use of funds.
An early user distribution would, by definition, empower early users with a stake in governance corresponding to their early-user time and capital, so unless Iâm missing something, I donât think this is a convincing argument against a retroactive distribution.
@TylerEtherâs case is understandable to me and one I think we can agree to disagree on. I agree fully that early users are not owed anything from the protocol. At the same time, I think that COMPâs distribution model to date has nearly guaranteed that ordinary users will never have a meaningful say in Compound governance, and to me itâs a bit surprising how unconcerned most folks seem to be about this (I can hear @Sirokko making fun of my naivety here 
). So @oniru 's concerns resonate with me, albeit with us arriving at different conclusions.
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I dont understand this protocol sometimes. last time i checked comp was a governance token. The best way to decentralize the governance is getting it more into the hands of the people. Which group of people would be best receive it? The early users who helped shape the protocol.
If the whales are gonna just call all the shots why even launch a token. why even try to be decentralized. Should just go back to the team managing this whole thing then.
Of course comp didnt promise any awards. But when you talk about you want more community engagement theres no better way to do it other than giving your day 1 supporters a voice. even if its a small voice at least its there. Wasnât that the whole point of the token?
Compound (COMP) is an ERC-20 asset that empowers community governance of the Compound protocol; COMP token-holders and their delegates debate, propose, and vote on all changes to the protocol.
By placing COMP directly into the hands of users and applications, an increasingly large ecosystem will be able to upgrade the protocol, and will be incentivized to collectively steward the protocol into the future with good governance.
Every other protocol doesnât have a problem recognizing the community. Go look at dydx new token for example. direct quote from the blog
The success of the dYdX Layer 2 protocol is the result of thousands of community members who have been trading on the dYdX Layer 2 protocol and its predecessors over the past three years.
Uniswap
Uniswap owes its success to the thousands of community members that have joined its journey over the past two years. These early community members will naturally serve as responsible stewards of Uniswap.
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Comp grants were not available in the early days but those that are getting them now are benefiting greatly as is the protocol. Yet limited to those with code development skills.Those that wrote the initial code got paid in comp.
Decentralized governance is required in order to keep this protocol alive otherwise the SEC will come knocking soon. Creating further comp centralization protocols and making decentralized governance proposals harder to submit will not help.
Bottom line you donât want or currently need to truly decentralized governance, as you would not benefit from a decentralized governance.
Treasury is the driver here. Big business taking over the defi sector. Sad day
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Comp going down the path of DINO (decentralized in name only).
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I agree with everyone that more COMP should be distributed to users, but I donât think an airdrop is the best way of going about it.
Is an airdrop an effective way of promoting governance through the users? How do we know users still have the private keys of those addresses? What about the contract addresses? What about contracts that would be unable to use airdropped tokens? How do we know recipients will actively participate in governance? How do we know recipients wonât just sell the COMP as soon as they get it? What about the recipients who donât have the time, energy, or money to pay for gas to be [educated] voters or to delegate their votes to delegates they support? Do recipients even want the responsibility of governing?
We need to know the answers to those questions (or at least a reasonable estimate) if we want to be effective at further decentralizing the protocol and give more power to users. If ineffective, the result will be that Compound will have less COMP to distribute to users and to grow the protocol and everything stays approximately the same as if no airdrop were performed.
Iâm very skeptical that an airdrop will accomplish what everyone is seeking here. I really donât want to see this drag out for who knows how long to end up not being effective at accomplishing the goal of further decentralizing the protocol. Hence why I support building for our future rather than focusing on our past.
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