Should Compound Retroactively Airdrop Tokens to Early Users?

Ideas
45

I’m a new member here and just signed up because of this proposal. I have been a long time Compound user and Ethereum enthusiast and stand to benefit from this airdrop.

I like this idea because free money. But what’s more, I have never been interested in COMP governance because of my thoughts on the initial distribution and liquidity mining.

By giving me a real stake in Compound governance through this airdrop, it will automatically compel me to be more interested and help the protocol grow wherever I can. Especially if there is vesting whereby the future value of my ‘free money’ can be influenced through my support of Compound. Giving away stake in protocols like this is overwhelmingly net positive for the protocol, as the value from passionate early adopters exceeds the cost of diluting the COMP supply.

In regards to @arr00’s comments about the amount of distribution. 20 COMP tokens would be nice, but it wouldn’t really move the needle for me personally. 100 COMP tokens on the other hand would make me a lot more interested in governance and grab my attention.

This is just one person’s opinion on the air drop but needless to say I support it and think it’s a good idea that will benefit Compound in the long run.

5 Likes
46

The Compound protocol does not owe anyone anything

I/Grapefruit Trading was a relatively large user Compound V1 and continues to be a large user in V2. We use the protocol because it benefits us. Although it was fun to be apart of something new I don’t feel as though the protocol/team owes anything to us for being an adopter.

Any proposal should be purely about further development and adoption imo.

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47

It’s interesting to read these comments. It seems there are two sides: one is totally for this airdrop and think they are early users or early developers intergrating Compound so they deserve it and the other thinks users also benefit from Compound when they use it so Compound doesn’t own them anything. Both sides are right but in different views. In my opinion arguing this is meaningless and lose the initial purpose for this post.

  1. I recomand using rewards for early users instead of the word ‘airdrop’. Airdrop gives people a view of this is getting totally for free but actually there are only a few early users. Without those early users Compound is nothing. Of course they use Compound for different purposes but the truth is it’s hard to recognise the motivations for using Compound. Saying this I just want to express that if we make a more detailed plan to distinguish early users(such as who is true long-term supporters, who contributes nothing etc) it will only result more debates and much time and energy. We should make things easy and quickly deploy so that after this rewards we hope some of them can make more contributions and keep supporting the community.

  2. As for how much COMP should be allocated we can propose a vote. Give 5 options such as 20,40,60,80,100 and see which gets the most support.

  3. This early users reward has more meaning to the Ethereum community than the Compound community. It shows that exploring new innovate application may get an incentiv although it is never guranteed by anyone. This will indeed encourage users experience new products. Since I am a big fan of Ethereum of course I support this reward.

  4. I suggest treating this proposal with a common attitude. I will continue to encourage innovations and explore interesting dapps without this reward. Money is important, so as the interests.

10 Likes
48

I made an account to comment on this idea. I am one of the early users that would benefit from that proposal.

Many (Some?) of the early users are idealists that are intrigued by the possibilites of Defi and Compound. I feel if there would be an “airdrop” on those 5000 over the next 4 years. It would be probably the best possible group to give away tokens to.

Having to claim the coins every year, would also prevent from sending to inactive wallets. And a time limit would prevent people from claiming it that forgot about compound.

Also the point is that the people participate. I am not sure how the details could work but what if the people that send the Tokens away i.e balance dips under 25 in the first year under 50 in the second year and so on wont get to claim them in the 2nd/3rd/4th year. So that only people that hold for 4 years will get the full amount and the right to make proposals.

This also would help with people dumping. Everyone that sells straight away wont get to sell more than 25. And someone who is holding for 4 years and claims yearly will likely be more involved.

I dont feel like Compound owes anything to the early users but I think this might be a net benefit for the protocol when all is said and done and it would definetly make some waves in the crypto community and increase the interest overall.

5 Likes
49

I think this makes a lot of sense and especially given how well it worked with Uniswap. This will not only drive a large amount of interest to the Compound protocol through media saying “free tokens”, but it would also decentralize compound governance by distributing COMP tokens over more holders, and incentivizing them to participate in governance. I really don’t see a reason not to do this to be honest.

8 Likes
50

I like this idea. Heres my take on it.

I have been using comp ever since it came out. Knowing it was risky I still wanted to be apart of it. I would see this as a “thank you for trying comp knowing you could’ve lost everything” reward.

I agree with the main post about taking 100 comp and splitting between 4 years. I recently got into coding and the 4 year wait would give me enough time to get my skills up and be ready to make proposals when the time comes.

Users should get a chance to make improvements to the protocol they love. Even if a lot of proposals were made its not like they instantly get approved and added to code. They will still need to meet the 100k vote minimum right? If the community supports it they will back it and if not someone can propose something better. Plus if too many proposals became a problem what’s wrong with just adding a delay to prevent that.

I disagree with any token locking if people sell early. let’s say someone took some of the first 25 comp they received to pay for some bills while they were developing. should they be penalized for that? emergencies can happen. Aren’t we all in this space because we don’t want people telling us what we can and can’t do with our money? That would be like getting my bank account shut down because they didn’t like my purchases.

2 Likes
51

I would also very much be in favor of this. I see it has a huge net positive for all. See what happened with UNI, i think the protocol gained alot of loyal users with their drop aswell as new users with all the attention it got.

I think it will further decentralize the protocol aswell as get alot of more “loyal” users using it as their go to protocol if something like this went through. Additional it could potentially also get alot of valueable dev talent onto building with us.

2 Likes
52

This is a phenomenal idea that beneficially skews “initial” distribution in a manner that will have minimal impact on economics. However, I think beyond the minimum reward amount, it would only be fair to scale up rewards to participants who supplied/borrowed large amounts of capital- the cumulative effect of these efforts resulted in increasing larger TVL and success of the platform. These are also the participants most likely to participate in governance and not immediately liquidate rewards.

6 Likes
53

I think this is a great idea. Particularly I think some more benefits should go to early users. I joined the community to post my opinion. I am an early user of Compound Finance and I will vote on this proposal.

Several other dapp airdropped their early users for their contribution and I’ll be shocked if this proposal doesn’t pass.

8 Likes
54

I agree with blck and think people who dedicated their capital earlier should be rewarded at least as much (per % of the network), we agree that supplying 1000 usdc to compound at the day of the launch of the v2 protocol didn’t carry the same involvement as a % of the total network, rewards, and risks than providing it in june of this year …

We shouldn’t say to early 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 must say I am totally in favor of this proposition, and actually think it is in the interest of compound itself, I already posted related to this earlier this year in the forum and will repeat some of my ideas.

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”

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 :

That involvement int he protocol should matter,

Some 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.

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. We will need later to come with fair and accurate ideas and propositions.

There could be a socialized allocation of « X comps » tokens per adress and a volume weighted allocation depending of the fees for example you genereated, or volume of deposits, time weighted with maybe linearly more importance given to older date, to take into account you represented at that time a higher % of the network, took higher risk, and your dollar gave more traction to the protocol, the way UNI rewarded its early liquidity providers.

3 Likes
55

Hi…
Just a quick post to remind you all that it would be nice to include Argent and Dharma (among others ?) users in the retrodrop proposal.

2 Likes
56

Also it would be nice if we move to an actual proposal. As compound is now in momentum to move beyond ethereum it would be a great moment to stand still with the initial founders, students, pioniers and all the early users that saw compound as a game to try out and test out the protocol.

12 Likes
57

I am totally agree with the idea that the early users shall be airdropped. the reasons are as below:

  1. the early users of Conpound are real fans of comp with loyalty and idealism . They used the protocal mostly because Comp is cool, which is extemely reflect the core value of DEFI. So they should be encouraged and be awarded.
  2. if the proposed taken successfully. it will be helpful to the goverment on Compound----- some powers(comp) would be given to the loyal users who align with comp’s long term grow.
7 Likes
58

We should now go one step further and come with actual calculations and proposals, so would be nice if people shared their ideas on the actual proposal

My thought would be to make a vote

-should there be an allocation of COMP for early users of the compound protocol(v1/v2) during the years pre-COMP distribution ?

If yes : to which extend should we decide it and split between the two type of distributions ?

-Socialized distribution : X comp allocation per eth adress being an early user of the compound protocol (pre comp distribution), and make a vote for 20/40/60/80…etc

-capital weighted distribution : proportional to the interest fees received/paid by the adress(similar to current comp distribution)

An idea for this second type of allocation is that we might want to linearly weight higher, the older the fees were incured, to take into account the protocol TVL is for example in january 2019 19 million, and is 100 millions in june 2020 pre-COMP period.

Could maybe decide of a “boost” to earliest fees incured, 1.5x/2x/3x ?, linearly decreasing toward 1x at the end of the period taken, this type of setting would by the way recall the UNI distribution did to the early liquidity providers.

Finally we must decide if the other app which interacted with compound should also be a part of this reward, it seems that the capital weighted distribution should be naturally included, however for the socialized, it has to be decided.

4 Likes
59

I agree. My thoughts would be

  • As a base reward early users (100 comp for proposal minimum)

  • “Boost” for earlier fees (3x decreasing to 1x as you get closer to the end of the period taken as you mentioned)

  • Socialized + capital distribution for direct compound users and capital weighted distribution for apps that interacted with the protocol

6 Likes
60

I agree on this. Need to move forward with a vote. New topic? Anyways, need to decide the questions. My suggestions:

Should early users be awarded an airdrop?

  • Yes
  • No

If yes, should this include users by proxy, e.g. Dharma, Argent…?

  • Yes
  • No
  • As a separate proposal

If yes, how much should be allocated per address?

  • 20 COMP
  • 100 COMP
  • Proportional to the interest fees received/paid
  • proportional to the interest fees received/paid, with 2x boost

These are of course just suggestions. For the second one I think a separate proposal for proxy might avoid any trouble passing an initial proposal, but might make it unlikely that proxy users will pass the second proposal.

For the last question there are just so many variations, I feel like you have to cut it down somehow. Maybe do an initial scan, and then tune afterwards? Not sure.

Edit: After posting I realize a significant shortcoming of my poll is a question that addresses the distribution schedule of the allocated COMP. Anyone got a suggestion? I’m not sure I’ve got all the options covered, but at least “1/4 yearly, for 4 years” seemed to be a suggestion.

4 Likes
61

Sounds good.

However the proportional option would again give the COMP to the people that already have the most voting power.

There needs to be a socialized component to it plus a part based on fees/interest, capped at a certain point.

There should be some sort of vesting component.

Edit: 4 years sounds like a good timeframe.

1 Like
62

Disclaimer - I stand to benefit from a distribution as I myself was an early compound adopter. I keenly remember @rleshner responding to my silly questions via email (on weekends!), back on the discord and fewer than 100 people and the protocol had 7 digits in assets (vs the 10 it does now!)

I am a distribution of a one time allocation of 100 COMP. If 100 COMP is required to submit a proposal, why not instantly and power those early adopters? This is provided of course that the protocol can “afford” this distribution (I will leave it to those that are more knowledgeable to me on this matter).

I can’t tell you the number of people I offered to gift some DAI/ETH just to try compound back in 2019. I was all but ignored despite my best effort‘s in the interactive interest rates.

If the goal of compound/DEFI to replace your digital banking and provide opportunities to the unbanked, I think this is an opportunity to go under some media attention. Not only that, it helps encourage people to take risks and invest in new protocols which is necessary for the growth of DEFI. Without the individuals who all took quite a bit of risk early on, we would not be having this discussion.

While I understand the perspective of trying to keep individuals engaged over multi year distribution (similar to CRV), I am not in favor of it. Empower, enable, and trust people to decide what to do with the distribution on their own.

Look forward to continuing this discussion and hopefully moving towards a proposal by years end!

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63

Not totally related, but just one great exchange is using retroactive reward users for using the protocol (1inch).

This is how it should be always. Rewarding those who are driven the success of a product. For those who traded there, congrats and merry Christmas. Hope we can also see this retro rewards to compound, makerdao and more of those early DeFi protocols (those protocols where launched when retroactive rewards where not broadly invented/uses yet). Hope to see the proposal soon. @arr00 @rleshner

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64

And most users are not dumping their tokens. :slight_smile:

So I think we have another good example that supporting early users is a great idea.

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