Introducing Treasury Delegate Loans

[TheeWeb3Patriot]

The Sons of Gavin Treasury Loan Request

1,000,000 Dot

Introduction:

Hello DotSama community members,

I’m Fetty.Dot, also known as “TheeWeb3Patriot.” For those who may not know me, I’m a strong advocate of Web3 Gavinism. I envision a future where the Internet of Blockchains is fully realized, especially within the Polkadot community. As we approach the 8th month of OpenGov, we’ve identified flaws within the voting system.

Problem:

A major issue is the lack of voter participation, leading to an imbalance of power among whale accounts. This has stirred controversy in Polkadot. Until late November, a single whale could determine the outcome of most marketing proposals. New whales have emerged for nays (Shadows), but they don’t vote on every proposal, and they limit their voting to 3x conviction. Another increase in conviction from aye whales and they will drive the outcome once again.

Solution:

I propose the introduction of OpenGov delegate loans. The process involves a treasury proposal for voting (1,000,000 Dot). If it passes, the funds will go to a hardware wallet account, staked and used for OpenGov voting. The loan duration is 7 months, with voting for 6 months due to the unbond process. After 7 months, the funds will return to the treasury.

The voting delegate, “The Sons of Gavin,” allows each aye vote to join the delegation. Each member gets 1 vote per Referendum, with outcomes determined by majority rule. Voting starts at 5x conviction, gradually decreasing with the loan return. This coalition can form a voting block of around 5 to 3 million votes. We can act as a swing vote delegate in close votes, like Referendum 401. The Sons of Gavin will vote on all referendums members wish to vote on, and additional delegations are welcome.

A private telegram will be established for all members to communicate and interact. However, proof of association with the account that voted aye is required, possibly by sending and receiving a Dot. The Sons of Gavin declaration will also be establish that identifies the coalition core principles.

Staking:

Since the loan will be staked, it will produce rewards. The plan is to allocate 50% of the rewards to the treasury as interest and the remaining 50% to voters for the referendum based on this proposal. All voters, aye and nay, will receive 50% of the staking rewards for the 6-month stake (since it takes 28 days to unbond). Rewards will be evenly distributed at the end of each month. This provides a small income for the treasury and rewards participation in the referendum. Accounts that vote must have on-chain identity (costing a 20.20 Dot deposit) or a strong voting history to prevent spam accounts.

The validators that The Sons of Gavin will nominate are:

• CP287-CLOUDWALK
• SAXEMBERG
• AMFORC/1
• PURESTAKE/01
• POLKADOT.PRO – REALGAR

Conclusion:

In embracing this radical proposal, I acknowledge its inherent risks. However, it is precisely this audacity that might propel us toward a more inclusive and balanced future for our DotSama community.

By establishing The Sons of Gavin Treasury Loan, we aim to address not only the current issues of voter participation and whale dominance but also to fundamentally reshape the dynamics of governance within OpenGov. This proposal calls for a collective effort, an alliance of like-minded individuals committed to the vision of Web3 Gavinism.

Your feedback on this idea is invaluable. I’m eager to hear your thoughts, suggestions, and concerns. Together, we can refine and strengthen this proposal before taking it to a vote. The Sons of Gavin represent not just a voting coalition but a symbol of unity and purpose within our community.

I invite you to join the conversation, share your insights, and let us collectively decide the future we envision for Polkadot and Web3. This journey may be unconventional, but it is within these uncharted territories that we often discover new opportunities and lasting solutions.

Thank you for your consideration and engagement in shaping the destiny of our DotSama community!

[jeeper]

This looks like a really interesting idea, could work with some modifications. But I doubt that ‘whales’ will like this idea of giving power to the ‘people’ .

A couple points:

• Please find a better name for the project

• Not sure about the “hardware wallet” part. What you ask is 6-7 million dollars. I wouldnt even trust myself with that amount of loan on a single wallet - should be carefully thought and definetly use a multisig that is preferably distributed among known and ‘trusted’ actors within the ecosystem.

• It will also require an automation system similar to the Kus or Chaos DAO delegates use.

[TheeWeb3Patriot]

Hi Jeepers, Thanks for the feedback. Right before submission I mentioned the idea of a multisig to Coinsider aka Kevin.

The message reads " I’m not ready to take it to vote I want to hear feedback first.
Best course of action for storing funds
Rather that be a single person in custody (in which me storing via ledger or a multisig of people in the coalition (in which multisig should be set up with ledgers or at least majority) 5/8" - Web3Patriot

The only reason I suggested ledger is because I was the sole author of this proposal and currently have no allies for a multisig. In the event that I gather support I will definitely go with multisig. The only reason I would want to use a ledger is because I have a set of keys memorized. I trust my memory and my character. However, because of possibility of death a multisig via ledgers will be best. Unless I can somehow have a Will in which the keys can go to Parity or Gavin Wood himself.

[tugytur]

First and foremost, despite the lack of voter participation (which is not unique to Polkadot governance), we think that the outcomes of OpenGov voting have been decent - so it is not clear that there are fundamental flaws that need to be addressed immediatedly and through such measures.

Some more detailed feedback:

• Staking treasury funds: We’ve said this in the past, but in general, we think that staking treasury funds is a bad idea – fundamentally, because staked treasury funds are never at risk of getting slashed (the treasury is the recipient of slashes), and economically, because it is no different than simply redirecting more of the supply inflation to the treasury. We always prefer to use treasury funds directly for better transparency and accountability.
• 50% of staking rewards equally distributed to voters on the referendum with weak sybil protection is not a good idea. 1M DOT * 18% rewards * 0.5 years * 50% = 45’000 DOT → This is highly profitable to sybil, even with the 20.2 DOT on-chain ID deposit (gets refunded upon clearing the ID). In addition, sybilling gets you more votes for swing voting with the 1M DOT.
• As jeeper already pointed out, funds should at least be in a multi-sig, or better even through a trustless solution.; and the voting process should be automated

We appreciate the effort and enthusiasm, but don’t think this is a suitable or sustainable solution to the perceived issue.

[TheeWeb3Patriot]

Quick correction its *0.6 years * 50% since loan is for 7 months and 6 month voting/staking. between the 6 month and 7 month is the unbonding period.

Wouldn’t Sybil be greatly mitigated if the requirements for joining the coalition and receiving the rewards are a strong voting history and onchain identity as stated in the write up? Also account association has to be established by a send and receive from my account to the account you voted with on whatever ref this will be set on.

For example, a strong voting history of multiple refs between refs 80-304.
Or a strong voting history on the prominent refs that passed. It wouldn’t be like someone that just started voting could join the coalition because of risk of spam.

As for the treasury being staked there is really no risk since funds go back to the treasury and if a slash happens funds go to the treasury and once the loan is finished funds go to the treasury.

[xlc]

This is a bad proposal for many reasons.

1. Treasury does not need income from staking rewards. It is just silly and I hope I don’t need to explain it.
2. If you want the treasury to support a particular set of validators, just say so and make it in such way that’s not biased. We also already have other program for this.
3. If you want some funding to do something, just make a proposal directly.
4. Why should treasury give anyone extra voting power? Are you better than other people? That’s simply unfair.

My suggestion: keep things simple and make sure everything is as unbiased as possible.

[TheeWeb3Patriot]

1. “Treasury does not need income from staking rewards. It is just silly and I hope I don’t need to explain it”

Well of course the treasury doesn’t need the income… the proposal will be designed as a loan… a loan should be paid back with interest. If 1 million $Dot is given it makes sense to have it staked.

2. “If you want the treasury to support a particular set of validators, just say so and make it in such way that’s not biased. We also already have other program for this.”

The validators are open to change if the coalition wishes. These set of validators was picked because they are active voters, have high self-bond, good era points, onchain identity, twitter accounts for communication to nominators etc. Other validators can be viewed if they reach these criteria.

3. If you want some funding to do something, just make a proposal directly.

Well, that’s the purpose of this write up… I’m getting feedback to take this to vote.

4. Why should treasury give anyone extra voting power? Are you better than other people? That’s simply unfair.

The treasury isn’t giving anyone anything…OpenGov is! The treasury isn’t giving me extra voting power! OpenGov is giving the coalition a delegate loan. Even the Romans requested treasury loans from its senate and representatives to establish coalitions. Although OpenGov is more like an Athenian democracy with citizens being dot holders its not something unthought off.

[TheeWeb3Patriot]

Some additional comments via X and Telegram:

“Hey , It’s definitely an interesting idea especially the need to vote on the proposal to join the group. l maybe add a non refundable fee to make the participants have skin in the game I would also suggest making the staking rewards into lottery that grants you more ticket based your activity I think it would make the average user more engaged plus the free marketing when user wins blank amount of dot just for voting. Finally I would burn the treasury amount completely first for the free advertisement that might come from the burn and second I think it could help getting some whale to join on to the idea overall I like the idea of giving smaller participants a greater voice in opengov” - Swen The Builder

"That may be an interesting idea, depending on how you onboard members.
Also, validators choice is not trivial: guys like me will ask why I’m not nominated…
I’d suggest to create a community around it and start discussions:

• some will try to game the system: who’s allowed to vote
• how to select multisig participants
• validators to select
• for rewards, I’d suggest not to distribute but to hold them as a path to autonomous voting of this community. This avoids risks of gaming" - bLd v7.59

“I don’t see the issue with such a proposal, besides someone being a bad agent within the group voting against the best wishes because a whale paid them in secret form the outside
this is turning into legit USA congress lol” - Yoel Silver

“Wow! Our team has been discussing this idea for four weeks, but we haven’t brought it up for discussion yet. We know about the example; our friends from Optimism showed us this proposal. It will be interesting to see how this goes. Much respect.” -Nik Nova

“I love that idea
simple majority rules
we would be more equipped to fight Giotto with that
watch him NAY that to oblivion though” - Coinsider

[Pheeb]

Polkadot already has a reputation system called delegation. Dot holders can and do already delegate to individuals, and/or groups, based on their reputation. Reputation takes a lot of time and effort to build and maintain btw. This is what you should do if you and your friends want more voting power. Form a DAO, build a reputation, and solicit delegations. Delegations are the way we will gauge your groups reputation with token holders. Good luck/

[mister_cole]

@Pheeb

Polkadot already has a reputation system called delegation.

This is my view as well. I’m also opposed to staking Treasury funds, since they are not at risk of being slashed (since Treasury is the recipient of the slashes), and find the rewards distribution too vulnerable to Sybil.

[TheeWeb3Patriot]

I personally don’t even want any more voting power. In this coalition I actually won’t have a vote unless it is a tie. For example, if 300 members are eligible to join the coalition and they join … but there is a tie in the 1-person popular vote 150-150 then I will be tie breaker. However, if there is 299 members that join there is no need for a tie breaker unless a member is absent shifting votes back to an even number. In that scenario if there is a tie I will have a vote.

Also, since I am not eligible for a vote unless in the event of a tie that also means I am not eligible for any of the staking reward distribution since I won’t be voting on my own Referendum.

I appreciate your feedback, but I think OpenGov Delegate loans can be a good concept that helps the true Web3 vision of Gavin. I will continue to pursue this concept and plan on taking it to vote.

[TheeWeb3Patriot]

I personally am not concerned about a sybil because of the requirements to join the coalition and receive the staking rewards. If you read my write up, I say they have to have a strong voting history.

In the Polkassemby write up I will explain in further detail. However, that means that accounts will have to be long term voters but there is a cap. For example, if an account voted between ref 45-213 they will have a high eligibility to join the coalition. If they voted nay/aye between ref 45-213 they would receive staking rewards if they don’t have associated accounts voting on the same Ref that this proposal will be based on. On Chain Identity is also emphasized.

I think these three steps greatly reduces the possibility of Sybil.
Onchain Identity
Strong Voting History
Tracking of account association

This is all available on blockchain tools like Subscan.

The cap will most likely be set at Ref 304.

I also don’t think that it matters if the funds from the treasury is used for staking. Slashing barley happen anyways, and the funds are a “loan” there shouldn’t be a risk with a treasury loan. Either way the funds are returned to the source. With interest since 50% of the stake rewards also goes back to the treasury.

[Goku]

Good idea but what with ppl, who staked his dot on acala and have ldot or tdot?

[cp287]

I am the owner of validator node CP287-CLOUDWALK.

I would like to make it clear that I first heard about this proposal here on the forum (which I consider completely normal) and have no direct connection to it other than the fact that the proposers chose my validator as worthy of a nomination. Thank you for trusting our validator.

[TheeWeb3Patriot]

I know…I follow you on twitter. Great validator, this proposal has no connection with any validator. All of my proposals are written by me. Your validator was selected based off of a strict criterion I have in selecting nominations.

[SAXEMBERG]

We have been against the use of loans for treasury proposals mainly due to the risk of catastrophic loss of funds. This was already discussed by us during the TeddyDAO previous discussion (during the actual proposal they went for the direct funding model which presents a lower risk profile than a large loan.) as well as the Composible loan which due to the issue of centralized key management and the non-returning nature of the funds, it was heavily opposed by us.

However, we believe that loans still have a niche under the OpenGov model as can be seen by the highly successful loans requested by Bifrost. So if we guide ourselves by this model, we can deduce three different non-negotiable requirements for such loans.

1. Returnable. All loans requested by the treasury should be returned. They must have a clear return date as well as a clearly defined process to make the funds return to the treasury given a certain amount of time.

2 Yield. All loans requested to OpenGov should provide returns to the treasury. Just like DeFi provides interest to the users due to the inherent risk that code presents, OpenGov loans should provide a return that goes directly back into the treasury due to the risk of loss that these funds have during the loan period, just like Bifrost has proven possible.

3. Progressive funding. Large funds intended for loans should not be asked from the treasury right off the bat. It is preferable to start small and keep growing from there with each iteration of loans. (After a loan has been returned for instance). So instead of going for millions of DOT during the first proposal, it should begin small so that all governance participants, interested parties and observers can be sure that this is a safe mechanism and the parties administering the funds are doing a good job. Moreover, it gives the possibility for other parties to add funds to these loans (though right now the yield will be lower than the native staking return but it will be higher than 0% for treasury funds), thus creating an “OpenGov interest yielding product for the treasury” of sorts and keep evolving with other possible interest yielding products in the future.

DISCLAIMER: We have been selected as one of the potential validators of this proposal and like others have expressed before, we have nothing to do with the creation of this proposal. But we see this a potential model for a paralel W3F Decentralized Voices program which in our opinion can be of great help for more voices to keep growing outside the the Decentralized Voices program now and in the future.

[thewhiterabbitM]

Hello everyone! Nice proposal, looking forward to the progress!