Feedback request on proposed Q4 2022 governance measures

Governance
102

I wholeheartedly disagree regarding Measure #1 counter-proposal. The biggest problem that is holding back Algorand DeFi ecosystem growth is liquidity growth. Liquidity is currently too low to support DeFi growth - period.

We have awesome DeFi platforms, and there is a solid pipeline of projects building and preparing to launch. What they lack is liquidity. Liquidity is the lifeblood of DeFi. First and foremost, we must incentivize and attract liquidity providers to supply the liquidity to bring those DeFi protocols to life. Without liquidity, DeFi is dead. Liquidity growth (TVL growth) raises attention and attracts users. Users generate revenue for DeFi projects and liquidity providers. Revenue growth attracts more investors, projects, and liquidity providers … which then attracts more users … and so on and so forth.

We need to prime the pump much more to grow the liquidity. Liquidity is required to bring DeFi to life. I can think of no better analogy than saying “liquidity is the lifeblood of DeFi”. I would get rid of vanilla Governance rewards and allocate 100% of Governance rewards to DeFi. We need to concentrate all our resources and do everything in our power to grow liquidity to bring Algorand DeFi to life and grow.

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103

Re: Oysterpack:

Injecting a ton of liquidity instantly doesn’t bring new users immediately though…all it does it add more liquidity and stabilize markets on Algorand. It doesn’t mean instant user growth and transactions growth which generates more revenue though. There’s a bit of chicken and the egg going on here when the real problem is the number of users that we have. We need more people using algorand…that solves almost every problem there is. It brings the token price up, it brings liquidity up, it brings transactions up, it helps influence builders to come here, it does a lot. Realistically everything in the entire ecosystem boils down to two things. Users, and use cases. We need more use cases and users, that’s really all there is to it. TVL will increase naturally and healthily from that. That’s why we need more grants for new projects to build here.

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104

You need liquidity for the DeFi platforms to be usable. You can build a thousand DeFi projects, but they are unusable without sufficient liquidity. It’s like trying to sell cars with no oil and gas. Without oil and gas, the cars will sit, rust, and rot - worthless and useless. Automobile demand would plummet without an abundant oil and gas supply. The auto industry would die. There’s no point building more cars when there is no oil and gas. Cheap and abundant oil and gas are required for the auto industry and the entire economy to grow, flourish, and expand. (By the way, I could have used electric vehicles in the example. Regardless, you need cheap and abundant energy for the industry to exist).

I repeat, the biggest problem that is holding back Algorand Defi ecosystem growth is liquidity growth. The plan is simple. Algorand DeFi needs liquidity. Liquidity providers have little incentive to provide liquidity in Algorand because the volume and user base is not there, i.e., revenue is too low. Users have no incentive to use Algorand DeFi because the protocols have insufficient liquidity. This is the real chicken and egg problem. The solution is simple. Incentivize liquidity providers to grow liquidity. Liquidity growth makes the Algorand DeFi usable, which brings in users. Users generate the volume and revenue for liquidity providers and the DeFi protocols. Profitability attracts capital investment to build and provide more liquidity … which brings in more users, volume, revenue … etc, etc, etc

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105

You’re not wrong about liquidity being useful and important…but if the magic tooth fairy showed up and dropped $1b in liquidity to support pools on all of our DeFi platforms, users aren’t going to magically show up and start using it. If you get more users instead, they will bring with them their small market liquidity, and then big players with deep pockets will want to provide liquidity to support it because they can generate income from it.

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106

The transparency demonstrated by the Foundation is much appreciated. As Staci’s post mentions, I believe in order for a system like this to work, it requires open communication between the Foundation and the people. I’d like to start by saying thank you for maintaining that as a priority.

Going beyond that, I’ll share a few thoughts for what it’s worth.

I partially agree with a sentiment mentioned in another comment: these votes feel slightly pointless. It’s almost like, choosing between a red apple, or a green one. However, I do believe these concepts are important and should be addressed.

I’ll start with measure one. In my personal opinion, both of these elements are of importance. As far as I know, pushing governance promotes the grander vision, and pushes us towards being more like a true democracy as we gain more participants. DeFi is more important in terms of price stability and maintaining the financial foundation of the network. I think both of these elements deserve to be supported, and with the uncertainty in the current markets, it may not be a bad idea to offer more support on the financial side during these times.

For measure two, I admittedly need to educate myself on xGovs. But I believe community grants to support projects on the network, is not only a good idea, but a necessary step. I personally believe a network is only as good as the projects that are built on it. It’s like when a tree falls in a forest, and nobody is around to hear it. I feel we need to attract more mainstream users, and the way to do that is to keep building different types of projects that expand across industries.

Finally, for measure 3, it seems like it may be an unpopular opinion but I agree with the vision of supporting NFT creators. There may be other ways of supporting creators as others have mentioned. But I do believe that supporting the NFT community can attract more creators, which may in turn attract new buyers. NFTs seem to be a good entry point for many.

Lastly, some additional thoughts. I love the Algorand network, but I feel it is lacking proper marketing and exposure (Although this could be a good thing in a sense, in the wake of FTX situation). For example, whenever I see blockchains being discussed, Algorand is nearly never mentioned. Whether it be Youtube videos, watching the news about the markets, or conversing with other people in the crypto space. Algorand is generally unknown. I feel that some focus should be directed more towards exposure and marketing the network in the future. I will conclude by admitting that I am not sure if that is the ultimate goal of the Foundation, but I believe attracting more users will only strengthen the network as a whole. Edit: I just checked and Algo isn’t even supported in Brave wallet. Another element to attracting more users, would be to improve blockchain compatibility and make Algo more accessible to the general public.

If you made it this far, thanks for reading. I am proud to be a part of this community, looking forward to the developments made in the future.

4 Likes
107

As @cswenor wrote, The whales continue to sell their yield weekly while us retail users are left holding the bag.

I think that is the main point.

Algorand may be a great invention technically, but it seems to be the playgground of early adopters, friends and family, whales etc. And the Foundation’s transparency reports doesn’t help here at all.

Governance is “pseudo-governance”, without real choices, and slow turnaround times. Technical progress is slow compared to promises. The blockchain is under-utilised. There is no technical roadmap published (yet).

Crypto is a risky investment, and Algorand is not that much different. That’s why I couldn’t and wouldn’t recommend Algorand to the small investors i.e. ordinary people at all. But it is a tragedy, isn’t it? They could supply the TVL, the liquidity, the whatever…

3 Likes
108

Measure 1 - Allocating 90MM Algo to governance rewards for the next two Governance Periods.

I would place a third option for NO governance rewards. I don’t think governance rewards have had the intended impact, what we have seen is an ecosystem that encourages holding and locking over interacting with it. If we want to create value and a long-term economic virtuous cycle, which I think is what we all want, we can’t have this system. Most aren’t encouraged to interact with the system, and instead what you have is EITHER interaction through “liquid governance” systems that you then double dip on due to an unintended “meta” from governance all-together (case and point look at the most popular DeFi protocols, and they all tend to revolve around some leveraged governance play, or encourage this under the banner of “liquid governance” oftentimes having a net-negative impact). The sad reality is that the current state of our DeFi is rather stagnant, we haven’t been able to attract users, or inspire builders to build novel protocols. Most of what we have built so far revolves around leveraging governance rewards, encouraging passive “income” through token emission, or is just sheer speculation. If we want to create actual value, we need to move away from this model into one that encourages constant activity. This is probably the best outcome for both the network and its users (on-chain activity and tx should, in the long-run fuel token demand and network fees which leads to overall network revenue increasing and thus can create a profitable network in the future once full distribution is achieve).If we follow through with just “oh we’re supporting DeFi by dedicating 60MM to it” we are just going to see more products that leverage their governance position to get more of that 60MM, we won’t see any real innovation.

Measure 2 - Allocating Algo for Community Grants via community proposals and xGov process

I am bitter-sweet about this proposal, mainly because we STILL don’t know how the xGov system will look like, so starting off the bat by giving them some responsibility to a body which we’ve not even defined is already a massive red flag for me. I don’t know what the eligibility, conditions and responsibilities of an xGov are, I have a vague idea, but I still haven’t found a concise description an explanation of the program, that could be my fault, but having it already on a governance proposal before it is even rolled out seems to me a bit unnerving.
Second, the amount given is (with all due respect) a bit on the small size. With a 600k maximum budget, assuming that one of the deliverables will be an audit, because this chain is extremely risk-averse, then the reality is that most of these teams will not find this an attractive enough proposal to build anything. It is going to be hard to attract anything of interest with this amount at stake, I hope I’m proven wrong, but from what I’ve seen either given through the now defunct grant program or heard from the new investment program it seems to me like this figure is a bit far from what was dedicated to fund those programs.

Measure 3 - Allocating Algos to direct purchase NFTs from Algorand’s creator community

I don’t think this is the right way to do it. The Foundation direct purchasing NFTs seems to me as a poor way to support the NFT community. From my understanding, must NFTs, specially PFP collections tend to have the community built around it be part of the USP each project has. Having the foundation invest and take a slot in one of those does diminish that. Not to mention that supporting through a single purchase is not likely to help the actual DAO/project AS much. I do agree that we need to support NFTs, I do agree that it’s a place where the foundation has been lacking, specially when compared to the support they’ve given to other parts of the ecosystem, but I don’t agree that straight up market buying is the right proposal.

If you’re open for suggestions I would help the different creators, either directly through a development grant for NFTs specifically, supporting the marketplaces and/or development the NFT community asks for. Sit down with the top 10 NFT projects, and ask them: what do you want and how can we make your projects succeed? I can guarantee you that most of them won’t say “by buying one of our NFTs”

5 Likes
109

The foundation needs to leave out what options they support. it’s as if they are trying to slyly sway votes to go with what they favor. I feel Algorand isn’t completely ready to hand over voting proposals to the community yet, that is why they keep coming up with the proposals.
They probably feel like if governance is in complete control of the community, it may undermine with what they have planned for Algorand. (Which is understandable.)
For example, Silvio is against incentivizing node runners, but if the community had complete control of governance (with no interference from the foundation) more than likely they would have to implement rewarding node runners, because if they didn’t, then everyone would think governance is a joke and could possibly lose investors.

The foundation should take some pointers from Algofi’s governance; the people have a say in the proposals.

I like Algorand, and even some of the options in this quarter, but realistically, the foundation needs to hand over governance to the community. Algorand hasn’t been perfect with its strategy towards developing adoption, so why not have some faith in the community and let us come up with some of the proposals. I think the foundation underestimates the intelligence of the community.

The Algorand community seems like one of the most sophisticated groups in all of crypto.
So, Algo foundation, hop in the passenger seat (sometime), you got a responsible group of designated drivers. haha

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110

Since when? Not saying NFTs don’t have a bright future, but Algorand is “the blockchain for FutureFi” and was created largely with the vision to democratize finance. I don’t know how you arrived at this conclusion.

There are many great uses for NFTs and we should pursue them all. But it’s DeFi that is actually solving dire problems and alleviating suffering. For example HesabPay is helping to free people from financial slavery AS WE SPEAK. Our DEXs are making remote peer-to-peer finance available to people like you and me for the first time in history.

DeFi is the heart of the Algorand ecosystem as far as I’m concerned. And NFTs are great too.

P.S. - You’re doing great things for us with Reach. Thank you!

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111

There’s nothing sly about it. When the initial governance system was proposed, they stated specifically that there would be an option to vote with the Foundation. They never actually implemented that, opting instead to simply state their position on the measure.

I love to know what the Foundation are thinking about these things, and I do take it into account as I’m voting. Because I have an opinion, but I also value the opinion of others who are educated and engaged.

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112

I don’t think he meant NFTs are more important, I mean Chris did indeed create his own DEX haha, he just means that NFTs are what keeps the Algorand community interacting together through Twitter and discord…which is true!

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113

i guess you make a good point.

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114

How about the community starts an xGOV working group, hold a weekly meeting (weekly townhall) and provide a cohesive set of proposals / feedback to the foundation. I believe online / face 2 face meetings and forums will helps us flesh out better proposal and engage the community more. Not sure if this is something that already exists…

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115

I wanted to clear some things up … When I first read this, I interpreted legacy governance system as meaning the entire governance system. On the AlgoFam Twitter space, @cswenor clarified that legacy was referring to the Governance vanilla rewards, i.e., not the Governance DeFi rewards. I totally agree that Governance vanilla rewards should be totally eliminated.

I want to reiterate that I strongly support boosting Governance DeFi rewards. Governance DeFi incentives have worked extremely well in growing liquidity, even in the worst of bear markets. I don’t want to debate the TVL metric, but the fact is that TVL is a key metric that carries a lot of weight. The bottom line is that Algorand DeFi ecosystem growth depends on liquidity growth to support transaction volume growth and user growth.

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116

I’ve enjoyed the proposals up to now. I hate this one. Like REALLY hate it, because it reads like the Algorand Foundation came up with 3 things they want to do, then proposed Options A and B that both would accomplish what they want to do.

If you want to set aside ‘X’ ALGO to buy NFTs, it’s really a sham vote like something Putin would setup to have Option A be “Set aside X - deltaX to buy NFTs” or Option B be “Set aside X + deltaX to buy NFTs”.

That’s not how it should work. Option A is to set aside X, Option B is keep the status quo, OR if there has been debate in the community about setting aside X for a Creator Fund To buy NFTs and some other camp that has been arguing the X would better be used in a different manner, pit those very different options against one another for what the X ALGO will be used for.

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117

This was my instant reaction and I’m a but surprised more people didn’t have this reaction. Suppose I want to allocate 90K ALGO to buy NFT art. I just make Option A allocate 80k and Option B allocate 100K, and I get what I want and the voters have no say. That is exactly how this entire proposal reads.

Doesn’t Algorand have a “Red Team” that reviews drafts before publishing here? I would imagine someone on an internal team would have had such criticism and it would have been addressed prior to being pre-published here, but maybe this is a 1 or 2 person part-time job at AF writing these things??

2 Likes
118

Yeah, the more I have thought about it, the worse it became, not only as a general way of doing votes, but also the issue 3 seems kinda fishy.

If I wanted to launder some money, I would go the same road.

Just create some NFT and buy from yourself, or the people, you want to bribe, classic in art already and now the foundation wants a way, to easily be able to do it.

I know, I know - this is just my skeptical brain, but honestly, if you they truly just want to help the little guy and buy some NFTs from small artist (what I’m even not so much against (well I see some merits to it)), they should at least address the money laundering problem by explaining, how there will be checks and balances and so on. But no - not at all.

Honestly, after this current voting system, I’m considering not DCAing anymore into Algorand, this is just a to big of a red flag for me. Well - at least, I will stop it for now and see, what will happen from it.

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119

In a general sense, I think the overall options are leading - as in, there isn’t a “do nothing” option; instead, it’s leading to something that the foundation wants, just at different scales. I think the voting options or measures should always have a ‘do nothing or deny’ choice.

Option #3, supporting the NFT creators. I don’t see why it has to be an allocated amount from the foundation. Instead, if you like the art and the utility, purchasing the NFT as an individual (not the foundation) would help just the same. Tweeting or sharing what you like or enjoy about a specific NFT can help ‘support’ the creators as well.

I think option #3 has to be carefully considered.
What has been deemed a good NFT vs not?
What parameters is the foundation considering when concluding yes, this NFT deserves support?
Would the foundation disclose what NFT projects it supports and why?

You see, this has the opportunity to manipulate the market - not saying it will, but the option is there.

These are just some of my initial thoughts on the governance period.

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120

The biggest issue of these proposals is that there is no option to refuse any of them. If you do not agree with the concept you are only left with two options that do not allow a negative vote.

This is just stacking the deck.

Reform Governance!!!

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121

Introduction
Analyzing the Algorand community
Many people are showing the .algo mark, but
There were few factors affected by influencers
On Twitter, there was only price talk and unnecessary talk like “we are the best”.
If you’re truly community-building, we need a few people to keep community
(People who are not working for Algorand or who are not Foundation people)
Appropriate rewards must be given to induce this.
The way I think is similar to the direction of securing Defi liquidity with compensation obtained through participation in existing governance.
It is to give appropriate compensation to those who build communities through compensation.
Existing ambassador systems are less obligatory and it is difficult to intuitively see what activities they are doing. In fact, I don’t even know who they are.

Main subject
It uses the same method of applying for voting rights by applying according to the current governance period, and delegates your voting rights to each representative.

  1. Representative
    Anyone can become a representative and form a delegation, and they form their own proxy voting group.
    The formed proxy voting is entrusted with the Algo voting rights of delegators and fulfills the voting role.
    1-1) There is a minimum delegation $Algo limit to get rewards (prevents multi-cherrypickers)
    1-2) There is a maximum delegation $Algo limit that can be rewarded (adjusted via saturation)
    1-3) If you fulfill the role of representative, you can receive part of the reward through commission.
    (Representative role and promotion of community formation)
    1-3) The decentralization of voting rights can be promoted through parameter adjustment.
    (Adjust the maximum and minimum delegated Algo quantity through parameter adjustment)
    1-4) Fees can be changed, and malicious attacks can be prevented by depositing representative collateral
    (Adjustable from 0 to 100%, fees and collateral of the delegation transparently disclosed on the blockchain)

  2. Delegator
    2-1) Delegate your right to vote to the delegation so that you can cast your vote instead
    2-2) Possible to vote for opinions different from those of the delegation delegated by himself (re-vote system under the delegate himself)
    2-3) Can be delegated to the desired delegation
    2-4) If the fee is too much, you can run your own delegation or conduct your own governance vote and use the existing system.

This method was conceived from the community method built through the free competition system through Cardano’s SPO (Stake Pool Operator) community.

In the case of Algorand, the PPOS method is used, but since rewards are not currently given and rewards are distributed through governance, a free competition system is established through voting rights to compete (good faith) among representatives and promote a sustainable growth system for the Algorand community. is to create

Content-Based Bibliography
https://docs.cardano.org/learn/pledging-rewards
https://docs.cardano.org/learn/stake-pools

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