I’m two roles: 1) AAVE User 2) AAVE Holder
I don’t like this system for either of my two roles, that I participate in.
As an AAVE holder, I hope to accumulate value from the protocol revenues, this doesn’t help me do that, it simply re-directs the value (and always has some percentage of corruption in doing so) to whatever protocol politicians decide.
As a user, I have to pay attention to weekly incentive changes to see if I can get more incentives somewhere. I don’t want to do this.
We’re taking protocol treasury assets and revenue (taxes collected from participating users) and re-allocating them (taxes re-distributed by protocol politicians).
Overall, I’m losing here both as an AAVE user and holder I feel. My user time is being wasted without adding value and my stkAAVE holder (EV) on assets collected has gone down to incentivize: in theory, we’re talking about the tax incentives part that incentivizes things that should benefit the protocol, but the more political delegates are disconnected and in the minority compared to the users, the more grift you will get due to a dis-alignment of interests.
In the current DeFi paradigm, very few people participate in governance and so giving such power to protocol politicians is just going to end in a lot of corruption, because they constitute like 1% of the user-base compared to non-voters and this creates a dis-alignment of interests. It’s exactly the same as you’re seeing right now in real-world politics.
I would trust these systems more where governance has an extremely high participation rate of like 30-60% of users and they’re well informed and capable of making good decisions. That’s simply not the current case in DeFi protocols.
So in conclusion, I don’t like it in either variant: neither as a long-time Aave user nor a long-time stkAAVE holder.
And I think it’s easy to think this is a good idea without realizing the long-term implications.
It’s a re-distribution mechanism that places power into a small amount of hands that wastes time for a lot of people and doesn’t add any fundamental non-zero sum value to the mechanics of the protocol.
Could this enhance the protocol? In theory? Yes. It’s a co-ordination mechanism. In practice? I think it’s far from the parameters that would help the protocol once you account for the added complexity, time overhead for everyone involved, and losses to corruption.
And it’s like the tax system, once you get in to using one…it grows more complex (costing everyone more time)… and it’s very hard to get out.