[DAO:370555d] Limit Max VP accounted in a vote from a single address

[dao]

by 0x5b5cc427c1d81db4f94de4d51d85ce122d63e244 (Fehz)

Linked Pre-Proposal

Should the DAO limit the max VP accounted in a vote from an address?

Summary

This governance proposal seeks to address the issue of whale voting and VP distribution within the DAO community.

Abstract

This governance proposal advocates for the introduction of a maximum participating VP limit from a single wallet for casted votes. This will apply to every proposal with predefined voting options (Yes/No/Abstain), mitigating the potential for undue centralization and single-handedly approvals.

Motivation

There are multiple positions in the ecosystem discussing the problems of token-weighted voting mechanisms for decentralized organizations (See Vitalik, 2021 and Chapman, 2021) but the reality is that most of the bigger DAOs out there used this approach from the early days and continue to do so. That’s partially because changing core-governance design is a haunting and risky task that demands a lot of engagement and politics between the community and major stakeholders of the project.

In Decentraland, specifically, the initial governance design of 1 token - 1 vote for our utility token (MANA) and 1 token - N votes for NFT assets made sense in the beginning. However, in the light of history, we are seeing how early decisions regarding other aspects of the protocol (such as initial LAND distribution, and the formation of Districts, among others) are negatively impacting the DAO’s ability to make decisions in a more democratic and representative way. As we recognize the challenges of modifying the fundamental token-weighted voting mechanism we would like to propose improvements to the current system to move it closer to an ideal state.

Some of the collected evidence for this proposal and the adopted approach comes from the findings and insights of the paper authored by Mitchell Goldberg and Fabian Schär "Metaverse Governance: An Empirical Analysis of Voting Within Decentralized Autonomous Organizations, 2023”.

As stated by the cited authors, there are vast differences in VP and its distribution “Some addresses control large amounts of governance tokens, others extensive LAND estates, or large collections of names. VP may also be a result of delegation by other entities. In any case, these high VP voters have a significant say in the outcome of a proposal.” (Goldberg, M. et al. p13)

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VP Distribution

Currently, there are approximately 5,000 historically active members of Decentraland DAO. However, as evident in the chart below, of the 100M total active VP, near 50% of VP is controlled by only 19 wallets.

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One of the most significant issues appears when voting outcomes suddenly flip, especially when this occurs very close to the end of the voting process. The authors gathered evidence regarding this issue and pointed out that they found “evidence for proposal outcomes that were changed close to the conclusion of the proposals voting periods. Sometimes the outcome was changed by a single ‘last minute’ voter with a very high VP”(Goldberg, M. et al. 15).

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Another major concern revolves around funds appropriation through grant proposals, particularly when high-voting power individuals are involved: “Approx. 45% of grants have effectively been approved by a single entity that may or may not be the person who proposed the grant. While lobbying and trying to extract rent through grants and tenders is a concept well-known in traditional governance systems, a pseudonymous setup could worsen this problem.” (Goldberg, M. et al. 20)

Specification

Implement a limit for the maximum VP accounted from a single address to 50% of the threshold for each proposal type:

• POI, Catalysts, Names Bans - 50% Limit
• Draft Proposals - 50% Limit
• Linked Wearables - 50% Limit
• Grants - 50% Limit
• Governance - 50 % Limit
• Hiring - 50 % Limit
• Pitch, Tender, Bid Proposals - 50% Limit

Examples:

• POI [2M VP threshold] => 1M VP Limit
• Catalysts [2M VP threshold] => 1M VP Limit
• Name Bans [4M VP threshold] => 2M VP Limit
• Draft Proposals [1M VP threshold] => 500k VP Limit.
• Linked Wearables [4M VP threshold] => 2M VP
• 20k Grant [2M VP threshold] => 1M VP Limit
• 80k Grant [4.4M VP threshold] =>2.2M VP Limit
• Governance [6M threshold] => 3M VP Limit
• Hiring [6M threshold] => 3M VP Limit
• Pitch Proposal [2M VP threshold] => 1M VP Limit
• Tender Proposal [4M VP threshold] => 2M VP

This measure aims to ensure that no individual or entity can exert disproportionate influence, preventing dominance and reinforcing the DAO’s commitment to decentralized and democratic governance, as an alternative to traditional shareholder corporations. Moreover, this limitation encourages a robust decision-making structure, valuing major stakeholders input by allowing them the freedom to exercise their voting power. Simultaneously, it mitigates the sense of undue influence, as their vote won’t unilaterally alter the outcome of a proposal due to the 50% cap, ensuring the DAO’s collective autonomy.

It is important to be noted that the proposed cap percentages on voting power (VP) from single wallets, set at 50% of the voting threshold, will remain a fixed parameter even in the event of potential adjustments to VP thresholds in the future. While the specific VP thresholds for various proposal types may evolve as the DAO’s landscape shifts, the principle of limiting individual voting power to 50% remains unwavering.

Acknowledge that the proposed VP limit scheme will not be failproof until we have a sybil attack defense mechanism, but its effectiveness is enhanced by the operational costs associated with splitting assets for MANA and LAND holders. Moreover, it remains infeasible for ESTATE and Delegated VP holders, further reducing the risk.

Conclusion

Whale voting has been a subject of ongoing discussion within the DAO community, both in private channels and public forums. This situation has made clear that there’s an expressing need to address the concerns related to the disproportionate influence of large holders that can lead to centralization and unequal decision-making power within the DAO.

The proposed approach seeks to implement changes in a manner that allows the DAO to experiment and adapt gradually, considering the importance of the VP distribution strategy as a foundational aspect of the DAO’s governance model. This approach is the first, and one of potentially multiple ways to address this specific issue with an eye towards adapting our current system without starting from the ground up.

This governance proposal not only marks an essential step towards addressing the issue of whale voting and VP distribution but it is also a strong statement from the DAO and its expectations in the long term. Setting VP limits, aims to promote a more equitable and balanced decision-making process. Additionally, the proposed rollout strategy allows the DAO to assess the impact of these limits on grant and governance proposals, learn from the results, and make informed adjustments to the limits over time.

Bibliography

Goldberg, M; Schär, F (2023): Metaverse Governance: An Empirical Analysis of Voting Within Decentralized Autonomous Organizations, 2023

Metaverse Governance: An Empirical Analysis of Voting Within Decentralized...

Buterin, V (2021): Moving beyond coin voting governance

Moving beyond coin voting governance

Transparency Dashboard: DAO Transparency Report Dashboard

Vote on this proposal on the Decentraland DAO

View this proposal on Snapshot

[Fehz]

Resubmitted the proposal after a reasonable time have passed, prompted by feedback from community members who expressed that they hadn’t been able to vote during the previous submission.

[dogman]

good prop @fehz i will be voting yes again

[Manadaiquiri]

How can we address this issue if one is to split their VP among, say, 4 wallets that they control directly?

[JasonX]

We had a recent threshold proposal passed for raising the VP per category due to larger VP participations. This proposal in a way cancels that governance proposal.

I have paid, purchased and collected every single VP point that I own and now you are telling me my accumulated VP over the years are now only worth 50% ? If anything this rule should only apply to Delegated VP’s. It’s taken me close to 5 years to own 180K VP and and already feel much less relevant compared to someone who has no skin in the game but gets given 500K delegated VP. Now you want to make my VP even less relevant.

I believe this 50% rule must be applied to Delegated VP’s Only. Otherwise I will be voting NO as a long time investor, collector & holder.

On another note, this proposal’s 1st stage pre-poll proposal had passed way before Esteban’s wave of delegated VP distribution. Although it made sense to users back than, you have to realise now that the thing are way different with Esteban’s Delegated VP’s & this must be taken into consideration. Which clearly tells me you or your team haven’t even thought about.

If it makes you guys happy, why not cancel all purchased/accumulated VP and steer the ship with Delegated VP and see how long the ship sails, before sinking into oblivion.

IMHO VP Delegation has done more damage to DAO & Decentraland than anything else combined. If you want to do something constructive Cancel ALL VP Delegations. This will solve all your problems.

[Fehz]

Hey! We did analyze several options but I personally didn’t know this one, so thanks for sharing.

Regarding the Governance system, we’ve also considered different options to test but we’re still looking towards keeping the system as it is without huge modifications in the short-term, just small tweaks/patches as this one.

With that said, I believe a system like that could be adopted in the long-term, it definitely makes a lot of sense for projects with resources allocation.

Thanks again!

[Fehz]

The only way to do that with “reasonable” costs would be to buy a ton of MANA and split it into different wallets, meaning that for flipping over a voting in a Binding Governance Proposal you should buy +3M MANA.

This is just a first approach and a first step, we’ll definitely need something to address the potential bypassing of this (e.g. sybil attack defense mechanisms).

[Fehz]

Thanks for your feedback!

We’re not proposing to limit accumulated VP from all wallets VP to 50%, we’re proposing that no wallet could surpass the 50% of the threshold of a proposal.

With 180K VP this literally won’t affect you:

• POI [2M VP threshold] => 1M VP Limit
• Catalysts [2M VP threshold] => 1M VP Limit
• Name Bans [4M VP threshold] => 2M VP Limit
• Draft Proposals [1M VP threshold] => 500k VP Limit.
• Linked Wearables [4M VP threshold] => 2M VP
• 20k Grant [2M VP threshold] => 1M VP Limit
• 80k Grant [4.4M VP threshold] =>2.2M VP Limit
• Governance [6M threshold] => 3M VP Limit
• Hiring [6M threshold] => 3M VP Limit
• Pitch Proposal [2M VP threshold] => 1M VP Limit
• Tender Proposal [4M VP threshold] => 2M VP

[JasonX]

It’s the same thing, no need to sugar coat it. Since we have already raised the bar for Proposals with the last governance proposal on all categories, I find this initiative to be irrelevant and a waste of time.

Either way that is dumb. Say I want to invest more money into DCL and purchase 4M Mana and come across to DAO to find out my 4M Mana investment only gets me 2M of voting power. This does not resonate well with investors whichever way you look at it.

With this unthoughtful proposal you are knowingly & willingly devaluing the platform token ““MANA”” Period.

Idea was to have those who’d invested in Decentraland, who believed in Decentraland make decisions, steer the ship. Help shape the future. By performing this act you are taking that away from those who invested, those who believed and were here from the beginning. It does not matter if they had Land, L1’s, Names or Mana. Problem at large are the Delegated VP’s and if you guys can’t see this you must be all blind.

Clearly someone who wants this should not be part of the team, perhaps Sandbox with their Centralised model is more suitable for this kind of ideology.

1 Mana is 1 Mana not 0.50 Mana

Why can’t you be a man and come out and say you want to block/ban certain individuals from voting in the DAO instead of punishing the whole community?

[HPrivakos]

Vegas city is split across multiple estates for example, it would cost a whole 5 usd to send one estates to another wallet.

This proposal idea is good, as long as “bad actors” don’t decide to be nefarious, because if they do there won’t be many ways to counter it.

[JasonX]

Here’s the passed Governance proposal in case the team were too busy exploring ways to limit Voting thresholds.

In a way it’s like going backwards. Who is in charge here?

“Moreover, it remains infeasible for ESTATE and Delegated VP holders, further reducing the risk”

Maybe I should cast another proposal to Decrease the current threshold by 50% which equals out this new proposal. As dumb and as stupid as it sounds, this will actually work

Increase VP Thresholds for POI, Name Ban & Catalyst Node Proposals.

[james]

I think the main benefit from this proposal is that it improves morale in the DAO because it feels like a positive step - it’s a tactical fix to a small number of DAO problems. On that basis I can support it because it is marginally better than what we have today.

However, the more fundamental problem to me seems to be trying to make sophisticated and costly decisions with a very crude model of voting that will always be prone to one form of corruption or another. And unless everyone is going to do a KYC, then there is no way to eradicate the ability for bad actors with money or technical skills to pwn the system. For example, a rival metaverse could buy a lot of MANA, completely send the DCL community into disarray, consuming DAO resources in the process, and even make a profit on the MANA - this proposal does nothing to address that underlying risk.

[Fehz]

Appreciate your feedback!

And YES, we’ll definitely need sybil attack defense mechanisms if we want this to still remain functional in the long-term besides the mere “statement”. KYC could be one option, but we should explore different ways for addressing that. And YES, I also believe we should keep exploring and adopt another system in the mid/long-term, at least for allocating resources. Although, this proposal represents a strategical starting point.

Thanks!

[JasonX]

KYC will only drive people away besides defeating the fact of being a decentralised platform.

I can’t believe the extent our team are willing to go to in order to block certain individual’s votes and trying to justify their actions as it’s a good thing for the platform.

[Existential14]

One of the other platforms I have explored has an interesting way of awarding VP to those who participate in the game and some have more VP than those who own lots of land. They have faucets that can be collected and recorded on the blockchain, in this case, ETH Classic. The fee associated with making the transaction is put back into the DAO. Doesn’t have to be a faucet necessarily, could probably come up with other actions that people could do and record onto the BC. This metaverse is also the most Decentralized one I have come across.

[Sannin]

Le RIP El DAO…………………….

[JasonX]

it was a good experiment

[LandlordDao]

Simply “no” because this goes against the principles of the contract and decentralization.

[DedHeadJ]

Hi @Fehz thank you for taking the time to submit this proposal.

@dao

Draft Proposals [1M VP threshold] => 500k VP Limit.

I have been delegated 500k VP and to date have also accumulated 3,889k VP through names, mana and some L1 wearables. I know that it is a small amount, but that VP is very important to me. With the draft proposal limits maxing out at 500k VP my own VP wouldn’t count, and I don’t want to see that happen.

In addition, I don’t believe this will actually combat the bad actors who would just split between wallets anyway.

For those reasons, I have voted No.

[Mease]

Great thought. Looks like you spent lots of time on this. I would just Xfer funds to another wallet and keep doing the same with 1 extra step. I dont think I saw anything here that solves this… potentially rendering all of it moot