Concerns about Custodial Asset Management and Proxy Voting

Ideas
21

I think there is a major difference between a petting service and the Vault where petting is part of their service. I will picture this from my personal situation but I think this applies to 90% using a petting service.

  • Main difference is that, even tho I use a petting service, I am still active in EVERY other part of the game/protocol. I’m not dumping my assets for a small fee, walk away and reap all benefits.

  • Quality of Life was but is imo not a valid argument anymore because instead of an alarm every 12h for petting, I now have an alarm every 6h for channeling lol. However, the QoL for channeling can be improved with the help of lending, scholars etc. so why can we not have scholars/renters pet our gotchis? (please don’t tell me this is yet the case, or I look like an idiot here, not that I care but yeah)

  • Many started using a petting service at times when there was absolutely nothing else to do in the verse, hell, most likely there wasn’t even a verse. The QoL argument was valid up until this point but I also think that since then 90% of us is using petting services so not really a small group that has an edge over the rest of us.

  • Alternatives/Competition: As easy as it is to complain about certain services and entities (not saying you are) at some stage there has to be alternatives/competition to level out the playing field. Petting services have competition as in different service providers and there will be alternatives around the corner as I know a few guilds that will integrate this service themselves, in fact there’s a few already. In general, having a monopoly on services is straight up illegal in most countries, let alone if there’s voting involved. The Vault as of now is/has a monopoly. I’m not saying they have to go straight to Jail without passing Start to collect 200$ :laughing: I’m sure down the line there will be guilds providing similar services but as of now that’s how it is.

Not shooting on anybody here, just felt the need to debunk the idea that a petting service is similar to the Vault. It is not.

2 Likes
22

I think we are getting off track a little here.

  1. The vault does not provide XP to vault Gotchis when they use their VP to vote, people are still required to vote to receive XP, they just don’t get to vote with their full VP.

  2. Auto Petting is another topic all together.

  3. The Vault is a valued asset to this community that provides the best Custodial Asset Management that deserves all the praise in the world for being able to execute the most useful asset to Gotchi owners that this ecosystem has seen.

  4. People should be aware if they are delegating their VP to the vault if we want to allow Poxy Voting, which means allowing all types of Proxy Voting systems to exist in our ecosystem into the foreseeable future, not just the Vault.

  5. If we do not want to allow Proxy Voting, then all VP should be properly allocated to asset owner’s wallets so a proper snapshot can be taken when new props come out.

I know people have a lot of bias one way or the other on the Vault, but this is not whether you like or dislike the Vault. This about fair and proper DAO Governance.

5 Likes
23

I did not intend to draw a comparison between the petting service and a vault quite clearly the vault offers petting as one of its services along with many other benefits to players who do not wish to commit time and energy to the game .
My point is that the intention of petting as I understand it is to reward player engagement .
Unlike the vault which incentives player dis engagement
I would also like to see where the stats come from that support your assertion that 90% of players use petting services .

1 Like
24

I am 100% with you on this whole topic fren, for real…
I just felt that bringing in petting in the conversation 1) makes petting look as bad as these Vault shenanigans or 2) makes the Vault shenanigans not as bad in comparison to petting.
They are separate issues, 1 worse than the other.
Ask around in your guild or even 10 random people if they use a petting service. 9/10 is definitely not out of the realm of possibilities, quiet the opposite imo… At least that is my experience.

25

What are you talking about, “Vault shenanigans”?

Criticism is healthy; hating based on a chain of assumptions is toxic. If you think the vault has done something wrong, just say what it is directly and maybe it will result in a positive change. But overly worrying about concentration of voting power (which would be withdrawn quickly upon the first hostile action by vault managers) and implying the vault is bad now because maybe it could do something bad in the future is nonsense. Every single action is on chain, so there’s no need to assume.

1 Like
26

I’m using ‘shenanigans’ as a replacement for ‘issues in any kind, shape or form’ = The reason of creating this thread.
Forgive me for not being a walking dictionary:

image

I agree that the bulk of these meanings are not applicable here, yet a few still are. I’m somebody who will always say the things in a very sharp (and sometimes a bit over the top) way with zero room for interpretation. But make no mistake about it, I prefer this every day of the week over sugercoating things and being politically correct, which is just as toxic.

I’m done with this thread now, I will catch up with the DAO meeting and listen to people who know what they talk about.

27

To follow-up on the productive discussion from this past week’s DAO meeting, here is my understanding of where we are at with regard to this topic.

The main question is: Should the DAO continue to allow proxy voting?

If the DAO is going to disallow proxy voting, how should we go about ensuring that only the true owner of assets is able to exercise the voting power allowed by those assets? @coderdan mentioned one possibility - which is to ban smart contract addresses (such as those offering custodial asset management services) from voting directly at the protocol level, and to credit the voting power for the assets in the contract to the owner directly.

In this scenario, the managers of the smart contracts that hold Aavegotchi assets would need to register their contract addresses with the DAO and ensure that the contracts adhere to a defined standard that gives the DAO transparent visibility to the true owners of the assets contained in the contract so that voting power can be attributed directly to the owners.

One concern brought up in the discussion is how this would affect Gnosis wallets and other types of smart contracts that individuals might use to hold their own assets.

Should the DAO choose this route, we should ensure that we’re not placing an undue burden on custodial solutions or individual asset holders to comply.

We would also need to consider how a change such as this would impact quorum.

If the feeling is that the benefits of having proxy voting outweight the downsides and concerns mentioned above, then the follow-up question would be: Is the current implementation of proxy voting (only by transferring ones assets to a smart contract or other wallet - with no option to opt-out) the best way to handle delegated voting in the protocol? Or is there a better way to implement proxy voting that is purposeful and where we can be sure that the intent of the asset holder was to delegate their voting power (as opposed to an intent to exchange their voting power in return for asset management services).

As a secondary housekeeping matter: @coderdan can you please confirm whether or not Vault gotchis are currently receiving XP when the vault votes? Just want to make sure we have a definitive answer on this as there was still uncertainty about this during the meeting. I see this as a secondary concern, however, and do not think we should distract ourselves with this issue as it really should be secondary to the larger question about proxy voting

PS - I have created a thread in the DAO #threads channel on Discord. Feel free to have short form discussion (constructively, please) or ask questions there.

6 Likes
28

If we don’t make quorum because the AFK people didn’t vote, that’s fine. It just means we need to try harder to pass whatever it was.

4 Likes
29

I’ve made my opinion about the vault vocal over the last few months, to the point that most recognize me as anti-whale or similar. (which isnt 100% accurate…)
I do agree that the initial premises for the vault existence were important, to have a place where investors could gather and maximize the returns of their assets without actively managing them, a way to avoid specifics countries taxes by not holding specific “value increasing” assets , etc.
I do also agree that their role is fulcral to the community, being involved in multiple areas, from Aadvisor positions, task forces, as well as legendary petting services. And that their team leverages each others strengths to deliver value to the ecosystem and their participants . Proof of that is the defi capabilities /returns they manage to siphon from QiDao rewards.
I also think that the initial premise of managing the FRENS rewards effeciently put too much pressure on the thin ticket market , enough that it was the cause of the overinflation and consecutive ‘demise’ of price… (probably not true, but nevertheless :stuck_out_tongue: )

I dont think VP per se is the problem, i think that with bigger players coming in, and providing these kind of custodial services, the quorum should be adjusted according to the average participation on the dao votes , example "last months 2 proposals got around 13M votes and reached quorum , this months quorum will be 12,5M instead of the normal 9M " .

IMO the quorum should be hard to reach (while maybe giving a % for pixelcraft to weight in if quorum isnt met by 5-10% PC decides…for example ) , to force people to get engaged and “promote the votes they want to see through to core props” , and not just a family table decision between a group of elitists … To have any entity wether pixelcraft (since they do personally own assets) , or outside to the protocol have more than 60% of quorum should not be acceptable for the DAO.

The current issue is that the vault has legitimacy to their current voting power (since they “represent the community decision, are backed by the communitys assets and have a centralizedao in place”) , and for sure will not accept any “bag hurting decision” in favour of a more decentralized dao, they worked hard to achieve this position and i see them enforcing it , as we saw with the move to try to have a participant in pixelcrafts private meetings .

4 Likes
30

Although I have mixed feelings about the gotchivault (brings alot of advantages at the cost of centralization), I don t think the actual owner of the assets should not be allowed to vote. The gotchiverse asset owner makes the decision of having the gotchies in the vault or not, so it s his conscious action to do it or not. But at the same time, the asset owner should not be treated with a special case in terms of rewards - like XP or other ‘rewards’, for simplicity.

2 Likes
31

My question would be: how do we know that the owners who use an asset management service do so primarily for the purpose of delegating their vote, or whether they see it as the undesirable (but tolerable) cost / side effect of using the service for its yield and convenience? Are we comfortable if asset owners are exchanging their voting power to get services in return?

4 Likes
32

Wow, Mikey…
You asked a question….
And what followed …
is silence. (Not even crickets dare to snicker …)
Three weeks of silence. Comfy silence.

Three weeks of silence after you posed the question:
„are we comfortable, if asset owners are exchanging their voting power to get services in return?“
So, what is it? Are we comfortable? Yet? Still?

Did you utterly and completely miss the point? Or did you hit bulls-eye?
Have you stumbled upon the most un-interesting topic ever?
Or does this silence tell us something?

Such a large animal – an elephant – smack in the middle of the room and barely someone notices…how come?
Nah, everybody knows, its an elephant dmmit – we are just too decent, to mention, that he forgot to put on his clothes…
Is he supposed to wear some?
It‘s fine. Why talk about the obvious?

Is it OK, to exchange ones vote for services?
Are you kidding? What do you think voting is for?

If I wouldn‘t get something for my vote, would it be worth anything?

Let‘s imagine the voting power of a Gotchi would go to (the DAO) of the District, the Gotchi is in at the time of the (pre-announced) Snaphsot.
[Well, that would be voting with ones feet…]

Would Districts try to entice potential voters? Would that be …immoral?

„If you are in our District during Snapshot, you get: free petting, a token, better lending-rates, a lollipop…“

What is voting anyway, if not a „quid pro quo“?
An expression of my will?

Well, to be honest, I don‘t know what I want… but maybe you want me to want something? Yes?

You do not!?
I will get my lollipop without even having to want anything? You will get that off my conscience?
Deal!

Mikey, you missed the point.
You should‘ve asked:
what are we comfortable to offer in exchange for the service of being relieved from having to command our own voting power?

Essentially only a few lines of code…

„You won‘t own anything and you will be happy.“
Don‘t remember, where I heard this sentence, but as I remember it, I don‘t feel very comfy.

3 Likes
33

BUMP

What do we do? How do we sort this? How do we make this not happen in the district DAOs? How do we keep VP in the right DD?

34

I don‘t think we are close to sorting this, at least I am not.

I do not see any other way than to experiment with a variety of governance-tools to find out a way enticing enough to safeguard – like MikeyJay put it -
„an accurate reflection of the purposeful will of the owner of the assets contained within“
Am I against delegation?
No. I remember the stress-test: I was not able to decide which street-lamp-design was the coolest.
I can imagine myself delegating this decision to my districts favourite artist.

Delegation should work seemlessly and there should be the option only to delegate the decision for a specific question/vote at hand.
Every vote should have the option „Delegate VP to (adress)“
Why shouldn‘t I be able to – revocably - delegate all of my decisions to someone, an entity, I trust?

Nonetheless I would like to see DAO participants encouraged to cast their votes directly and individually:
I envision entering the Gotchiverse with/as my representative – my Gotchi – and heading to the Districts center/laandmark.
Clicking the laandmark I will see the ongoing votes and have the ability to cast my vote(or delegate)
Ideally I would be able to leave a comment.

I could imagine „live-votes“ in the Gotchiverse:
attendance is required to cast the vote and is incentivized by an Alchemica-drop from an allocation for each district (portion going to the Gotchi-pocket, portion dropping on the map for the collection-fun)

What if someone has Laand, but not a single Gotchi?
„Observer-mode“ could encompass voting-capability.

1 Like
35

I don’t think it’s really about finding a solution right now. I think its about whether we are ok with a thirth party service growing to powerfull in terms of voting power. Its a yes or no answer and looking at the current sentiment and tensions maybe it’s time to put this up for a vote?

1 Like
36

I’d like to hear from anyone (vault manager or otherwise) why having a potential majority vote/veto power over proposals affecting the entire protocol is in any way, shape or form OK.

No one has defended the status quo - seems like a good time for a change.

The simplest idea I can think of is that customers of custodial services should have their votes passed onto the main vote without having to withdraw their assets.

I’m basically saying no to proxy votes… for now!, but custodial asset managing services should enable their internal voters’ votes to be directly forwarded to the actual snapshot proposals. Basically, they’d be required to set up as many voting wallets as there are options in each proposal and just track the internal votes and effectively forward them to the snapshot vote.

If 37% of their internal participants vote then that’s all that gets passed onto the main snapshot vote.

Like our approach with anti botting measures: Once we can ensure that no single entity or handful of individuals have veto power over protocol wide votes we can look at a solution to enable proxies again, at a later date.

3 Likes
37

If the DAO did want to do make a change here- I still feel this is the simplest and most direct approach discussed so far:

@coderdan Previously mentioned the idea that a new standard could be introduced to help solve this issue in other protocols as well… how to assign voting power to the true owner of the asset rather than the smart contract that holds the asset in trust for the owner.

The downside to this is it does place somewhat of a burden on asset custodians that operate these smart contracts to comply with the standard.

Ultimately it’s up to the DAO to decide whether such a system is for the overall benefit or detriment of the protocol. Is proxy voting a feature of our protocol, or a side effect? Speaking personally, I would be more likely to use dapps with vault-like functionality if I didn’t have to forfeit my voting power to use them.

6 Likes
38

Creating the standard for this is a serious business opportunity and strengthens the protocols standing in the WEB3 Macroenvironment.

We have Daimonds, trustless asset lending, NFTs you can stake in, The Curve… breaking new ground is what Aavegotchi does! Let keep being the leading edge and solve the two toughest issues… governance transparency and sybil attacks.

3 Likes
39

I also think this is likely the simplest way to implement. Would the Vault be able/willing to implement such a standard, if devised by the community? @Bearded @stedari @Marczeller_Aave

Probably would be as simple as one line of code, or one read function, letting external parties know that they should route voting power back to the asset owner, and exclude the Vault wallet from voting calculations.

I guess the main question is how these Vault-like parties would be identified, and what would happen if they were identified as asset custodians but refused to comply with the standard?

But I do agree that since voting is one of our core “player engagement” activities, there’s an argument to be made that voting power should stay with the owner, even if their assets are in trustless custody.

7 Likes
40

We would be willing to adopt a standard I think where depositors could opt out of having their VP managed by us, but it would have to be an opt out. A large number of users have entrusted us with their assets and voting power, and we take that seriously.