Some thoughts of mine on the topic.
The discussion seems to be started from 2 premises:
- Participation on voting can improve.
- Voting power is unbalanced between largest and smallest delegates.
I will leave for a moment aside the proposal and focus on why I think the previous happens and how (if) to solve it.
Participation on voting can improve
True, almost everything can improve, but let’s look more in detail.
- Voting supply. Following the graph of voting power presented, the average voting participation is in the order of ~600k per proposal. This seems pretty low if we compare with the 16m AAVE total supply, but AAVE total supply != AAVE effective supply.
Even if changed since then, as presented HERE back in the days, there is a pretty meaningful amount of AAVE which in practise can’t participate in governance. This is the case of exchanges (both centralized and decentralized), non-Ethereum networks, and at the moment, still stkABPT.
On decentralised locations (e.g. abpt, other networks), the plan is to enable them as voting asset in the short/medium term (for example, we are preparing on BGD a proposal for an extra voting asset at the moment). But at the moment, close to 1m AAVE is on stkABPT, ~250k AAVE is on Polygon, 17k in Avalanche, 10k in Optimism, etc.
On centralised exchanges, just looking superficially, in the order of 2.5m AAVE are there. In this case, having them involved in voting (directly or ideally allowing their users to do it) involves way more effort, and most probably is not possible to get a meaningful supply voting (if any).
Finally, the Aave Ecosystem Reserve holds more than 900k AAVE tokens, which also are not participating in voting.
So we can say that just on a first look, in the order of ~5m tokens are practically not able to participate in governance. That means 11m AAVE are a realistic current effective supply. - % of participation over effective supply. With the 2 previous numbers at hand (~600k average participation and 11m effective supply), that gives a 5.4% average participation, which seems pretty low. However, this number should not be taken out of context.
Aave can be described as a decentralised software-based community, and close to 100% of its governance proposals are about that, software. Additionally, economic aspects are voted, but pretty frequently quite specific to Aave’s software.
Now, even if not having rigorous data, the profile of holders of Aave can be assumed to be (in a pretty meaningful percentage) composed by entities which have trust on the system, but not completely understand it, simply because like any software, and specially in blockchain, it is complex.
At the moment there is a rhythm of more 3 governance proposals per week, so expecting a meaningful percentage of holders to participate is not realistic, even if they can. And so the initial concept of delegates. - Participation spikes. The Aave governance internally has 2 types of proposals: Level 1 has a YES required threshold of 320k, and Level 2 has a threshold of 1’040’000 YES.
If we look historically, the spikes in participation are quite frequently aligned with the creation of Level 2 proposals, and even more, threshold almost always gets crossed.
This is extremely important because the conclusion is very clear: when participation is really required, is not only that holders of Aave who rarely vote delegate, they vote directly even!
Now, why is that? Maybe they get better visibility? Maybe they feel the vote counts? Maybe the scarcity of these Level 2 proposals have an influence on their participation (meaning if there will be more, they will stop)? Probably a combination of all of them, but a pretty important one to study, I have no answers.
Mind that I didn’t talk on purpose about delegation dynamics and obstacles on it, but that is to highlight on why actually “voting participation can improve” maybe has totally different causes that delegation could not solve.
Voting power is unbalanced between delegates
Keeping it simple: some delegate platforms have a lot of voting power, others don’t.
There is also a lot to comment on this, but to keep it simple:
- Ways of having governance power. Personally, I think voting power should be in mainly 2 entities: 1) whoever has made explicitly they want it by holding AAVE or its flavours, and 2) whoever has shown they deserve it, but for whatever reason not able to acquire AAVE. To simplify, first category is AAVE/stkAAVE/aAAVE holders, while the second is delegates.
Now, not being able to acquire AAVE but seeking for having governance power should have a price, and that is in my opinion work. You show involvement with the community → you should probably get an explicit voice in the shape of voting delegation or directly power.
However, this should also take into account that, unless the proof of participation is very very strict, it should not break the interests of direct AAVE holders: the skin in the game is way bigger by being a holder, so the “price” to get delegation with work or any other dynamic, should be high enough. - Maybe there is a reason for big delegates having power? It is pretty clear that current big delegates in the community like @EzR3aL or @ACI have shown for a quite long time their involvement in the ecosystem, with deep participation on governance discussions, or voting. Additionally, I’m aware they made important delegation campaigns; we could even say that in some cases they set certain standards on how they should be done in a system like Aave, like in the case of ACI.
So, do they deserve big power? Probably “deserving” is not applicable here, but well, the work is there to see.
Detail: this post has been here for some days, and precisely the biggest delegates are sparking the discussion. - Asymmetric delegation campaigns. The advantage of decentralised voting power systems is that “elections” happen continuously: you don’t go to the ballots on a random Sunday once every 4 years, you take your wallet and delegate by doing an Ethereum transaction from your computer.
However, this also has a different implication. Whoever is able to run a better “continuous” delegation campaign has an edge on getting more delegation, at least initially.
I’m not confident that this should change, but definitely I think there can be experiments on improving them, most probably of social nature. - Delegation is expensive. More on the technical side, delegate tokens is still pretty expensive, compared with voting which is at the moment free, compensated by the DAO in batch.
It is possible this creates some barrier for delegation on smaller holders, even if the objective for those is to be able to participate directly by voting for free. - Granular delegation (sub-delegation). Currently if you hold AAVE in an address, you can only delegate to another address. This is a technical blockchain limitation, but potentially could cause big AAVE holders to be forced to or 1) split their holdings between multiple accounts 2) simply delegate everything to 1 single participant, for “lazyness”.
This is actually pretty solvable, even if it requires some setup, so another route to explore.
So, what do I think about the proposal?
After the previous rant, my conclusions about the proposal:
- It tries to solve a “problem” which is actually not so big problem at the moment, if we compare with other so-called DAOs. However, Aave standards should be the highest, so makes a lot of sense to continuously look for better mechanisms to improve participation.
- Governance power is asymmetric in nature and so it should be. Personally, I think 1-party-1-vote systems only work at large and very open scale like countries, due to their heterogeneous nature.
- Probably other mechanisms should be explored or first, or in parallel: granularity of delegations, free delegations, contact with centralised entities (e.g. exchanges) to unlock participation for their users, etc.
- The amounts proposed are pretty much out of hand; nobody should get ~50k AAVE just because of some non-strict framework qualified them as “official”, that is just a tool of corruption and/or a circus.
If having a proper framework for it, starting with relatively small amounts like 1k AAVE and build organically from there could be a consideration, but the rules of it should be carefully crafted, not only “the current average is X, let’s just give up to X”.