Summary
Decrease a minimal CVP balance required to create proposals from the current 10,000 CVP to 1,000 CVP level to enable up to 270 additional organic investors to create proposals.
Motivation
-
Provide access to governance activities to a larger group of organic CVP holders who put their funds at risk and cares of the future performance of Power Pool
-
Engage this larger part of the community to
a. actively participate in the decision-making process
b. hold a fair amount of CVP
Details
On Sep-10 the official communication introduced a barrier of 10,000 CVP to enable a proposal creation.
This barrier is too high and should be decreased to 1,000 CVPs now, while more sophisticated logic of what the barrier should be can be introduced in the later stages.
Why the 10,000 CVP barrier is high? Let’s see the breakdown of who can and who can not create proposals:
I. Eligible: 58 alpha/beta/gammas
– it is fair to assume that these holders on average less care about the project performance as they didn’t put their capital at risk
II. Eligible: 16 large organic investors
- most likely whales, while I believe we want not only whales to be able to create proposals
III. Not eligible: 270+ supporters with 1,000-10,000 CVP
- definitely includes a large number of alpha/beta/gamma who partially exited, but still adds the second large group of organic investors – “middle/upper-middle class”
Let’s dive deeply:
I. Small # of organic investors eligible to create proposals:
at the moment only ~16 organic investors have 10,000+ CVP on balance
Who are the current holders of 10,000+ CVP balances:
6 exchanges, 4 pools, 58 alpha/beta/gammas, only 16 ordinary investors (roughly)
-> While many of alpha/beta/gammas will definitely add a lot of value to the Project, this is definitely shouldn’t be the largest group eligible for proposal creation (see the reasoning above)
II. Just 16 organic investors are eligible, but they are most likely whales
Let’s assume that a rational investor would put a max of 10% of his portfolio into a risky project (CVP is obviously much riskier than Stablecoins, Curve pooling, ETH holding, DeFi large-caps holding)
Thus, 10,000 CVP @ $10 price its $100,000 worth of USDC
If this is 10% of the portfolio, then its total value is ~$1 mn and this is quite a conservative estimate imo.
-> No objections for having proposals from the whales from my side, but their # (16) is too small comparing to the total # of organic investors
III. ~270 addresses with significant (1,000 – 10,000) holdings of CVP are currently eliminated from proposal creation process
This 270 number includes other whales and alpha/beta/gammas, but it also includes “middle/upper-middle class”
->I believe this part of organic investors will be actively engaged in proposal creating process, which is very important at the Project’s start
Summing up:
- Decreasing the 10,000 barrier allows to spread the group of investors who can create votes
- 1,000 barrier is a very much ad-hoc approach…
- … But it allows to quickly plug in a large group of organic investors who cares of the Project future performance before the active proposal/voting period started
Further thoughts / next steps:
- On next stages we can think over a more sophisticated approach as I anticipate the questions like “why 1,000 CVP and not 5,000 or 500?” – this is a reasonable question, but lets bootstrap something more reasonable than 10,000 CVP barrier ASAP and then make the mechanism more complex
- We should definitely consider to count in staked CVPs, because the committed LP should be eligible to create proposals as they are definitely interested in future performance of Power Protocol
- Taking into account high CVP volatility, we can consider another solution – denominate the balance in USDC instead of CVP