Proposal 3: Creating a Governance Blackhole

Disclaimer: This proposal was penned by Delphi Digital on August 29th. The original post can be found here. I am submitting this to the PowerForum on behalf on Delphi Digital for the community to discuss and possibly vote on.

The PowerPool model does have a major drawback though. Namely, if and when the liquidity for those governance tokens gets pulled, PowerPool’s influence can severely diminish, if not disappear entirely. Given how fluid we’ve seen liquidity be, as people chase the hot new yield farm each week, this is a serious concern. With this in mind, we came up with a better strategy.

Rather than paying out the interest earned from lending governance tokens, why not redirect it to a reserve owned by PowerPool, with the key stipulation that the assets are never sold. That way even if people pull their liquidity in the future, PowerPool has a way to maintain its influence in perpetuity, to some degree. 80% of the total CVP supply is set to be distributed during their liquidity mining program, which should generate more than enough yield to attract deposits even with no interest being paid out.

There are a number of benefits to this change. By never selling the governance tokens in its reserve, PowerPool has the potential to become a governance blackhole. It gives CVP holders a long-term stake in all of the major DeFi protocols across the sector. The reserve of governance tokens could generate yield for CVP holders from the potential future cashflows paid out by the protocols in its portfolio. It allows the benefits received from the liquidity mining program to be far stickier and long lasting. It turns a potentially negative activity (i.e. people borrowing governance tokens to go short) into a positive one by redirecting the interest towards a long-term holder. Even the token projects themselves might appreciate that part of their supply is being siphoned off into a contract where it won’t lead to selling pressure in the future.

After the liquidity mining period ends, and the CVP rewards go away, PowerPool can always revert back to its current design of paying out interest to attract liquidity. Perhaps that won’t be necessary, as people realize the intrinsic value that can come from amassing governance power. For some, accumulating CVP could be a strategic imperative. High profile projects themselves may even want to deposit their own tokens into PowerPool to gain influence over their competition.

This proposal would help PowerPool build a moat against other liquidity sinks like Aave to create a similar function for deposited, but unborrowed, governance tokens’ votes to be delegated. If Powerpool locks up governance tokens, in perpetuity, to hone in on voting power then it wouldn’t be dependent on temporary liquidity and unborrowed assets.


Thanks for posting the Proposal 3.
This sounds interesting but tbh, the wording is a bit not precise. We need to provide more details on how exactly it works.

“By never selling the governance tokens in its reserve, PowerPool has the potential to become a governance blackhole. It gives CVP holders a long-term stake in all of the major DeFi protocols across the sector”

I would ask for details of how exactly will this work, maybe case study or a brief example

Also, if we lock up 80% of tokens, what is the % of circ supply which will be held by apha/beta/ gammas? - I understand not less than 50% of circ supply.
This will not work

Governance tokens earned from the interest on borrowed assets would be forwarded to the reserve to be held in perpetuity.

Yeah, this is what can be easily understood from the text.
I mean, the proposal you posted is very smart
Just feels like it will literally change everything, so need to spend a bit more time thinking over.

It is mentioned in the latest team statement. Looks that they will apply this approach to the Power Index and possibly collect a lot of GTs and voting power in protocol’s treasury (depends on amount of liquidity ofc)

I am FOR this proposal
Finally had a chance to get familiar with the concept.

Should be definitely implemented either in the “old” CVP concept or in the “new” one as this step will create strategic value for CVP holders and incentivize (together with other measures) the ecosystem projects to send tokens to CVP

For this! build the moat!

Sounds like a very secure way for the team/product.
Also, it may clear out all of the defi hypers.
Is this going to be next official proposal?