@hinchy , @AndrewB , @rake , @Dan and @OG69380 and I have been drafting a proposal to weight votes cast by locked phonon. The purpose of this discourse post is to solicit feedback before crafting and promoting a full fledged proposal.
We will keep this discourse post open for discussion for two weeks until 6/7/22. Pending feedback, we will proceed by completing the proposal with all relevant implementation and logistics details, and put it up for a vote.
Should we weight votes cast by DAO members whose Phonon tokens are locked in a vault (for years+) more than votes cast by DAO members whose Phonon is unlocked and could be sold to market at a moments notice?
DAO members who lock tokens away for months or years, are committed to the long-term success of the protocol. The longer someone locks their Phonon away, the more likely they are to vote in favor of proposals that benefit Phonon long-term.
We expect the hypothesis to be true - and believe locked phonon should be counted more than unlocked phonon. For this reason, we are crafting a proposal for Phonon to adopt a vote-escrow (ve) model.
The vote-escrow model, popularized by Curve Finance, has been and continues to be adapted by many successful defi protocols. To participate in governance, the model requires users to lock their protocol governance tokens for a period of time. A detailed explanation with examples can be found in the Curve Finance documentation.
To reduce smart contract risk, and minimize development and auditing costs, we believe forking and tweaking either the Curve Finance or Frax Finance would serve us best. Both have been in production for over a year, have been well tested and audited and are currently securing billions of dollars of value each. Here are the options, with their differences listed:
Option A: Curve Finance
- Person locks CRV for 0-4 years and is granted veCRV for voting
- You CANNOT vote unless your curve (veCRV) is locked and has a remaining lock duration > 0.
- The longer you lock the more power your vote (see figure below)
Option B: Frax Finance
- Person locks FRX for 0-4 years and is granted veFRX for voting
- Unlike veCRV, when your lock duration expires (i.e. = 0) your unlocked veFRX still counts as 1 vote.
- veFXS has an admin controlled emergency unlock functionality that, when trigged, allows users to withdraw FXS before unlock
- Like CRV, the longer you lock, the more power your vote, except the weights are skewed right compared to CRV model since it gives unlocked FRX a vote (see figure below)
Questions and Requests for Feedback
- How do we want to weight vePhonon?
- We should copy the veCRV model.
- We should copy the veFRX model.
- We SHOULD NOT let unlocked phonon vote.
- We SHOULD let unlocked phonon vote.
- We should customize our own weights
- Do we want the admin controlled emergency unlock mechanism to allows users to withdraw their vePhonon? If we use the veCRV model we can copy this functionality over from veFRX.
- Would you prefer to discuss this over a voice discord call?
- Do you have any other feedback, concerns or questions? Please comment below.
EDITS: Replaced bullets with multiple polls