I am positively surprised that @Arbitrum has been starting the conversation on this topic.
I’ll post and discuss some of the points that I have been personally discussing (for months now) in the delegates chat.
Governance token and bribing markets
First, we should not ban or censor lobbify, or systems like lobbify. Crypto has been so far build on the premise of composability, and one of the perk we are seeing compared to traditional finance vehicle is that you can rent and give out your voting power in exchange for a payout. This has happened so far in convex, curve, balancer, and in general in any token-emission environment in which directing emissions is subject to a choice of the owner which can subsidize this choice and power to a third party.
What we are seeing in ARB is one of the first instances in which this is related not to emission of token, but shear governance voting power.
This small paragraph is about describing the nature of tokens having a governance power. Doesn’t matter the power they hold: emission, voting, both, or others, as long as token has a power in the ecosystem, that power will be rent to third parties that can optimize votes, create a yield for the owner etc. We should not fight the nature of crypto tokens with voting power.
Solution to improve the current situation comes down to 3 points:
- increase the ARB voting power distributed to aligned delegates, and increase in general the appeal of delegating ARB to active delegates
- specific tech changes to Lobbify
- potential changes to our Code of Conduct
Before that is worth understanding what proposals are more impacted by any bribing market for the history of arbitrum. Useless to say, offchain elections: tally votes are usually a confirmation among a certain set of candidate with a binary yes/no so the effect of 20M votes is quite lowered. At the same time, weighted elections with shutters are were lobbify can impact the most through a single choice. This is were I think we should focus our efforts right now, I don’t currently see tally proposals being in danger. Not only we have the security council, but also, if a proposal on tally would pass by measily 20M votes, means that it was a contentious one from the start and Lobbify influence is less relevant than this contentious nature.
1. ARB voting power
We all know about the issues about stagnating voting power, which doesn’t circulate and get redistributed regardless efforts of AF and others. Few solutions here, already mentioned by others:
- having ARB native staking: however is financed, anything that is non 0 will create a realistic alternative to lobbify
- having an LST for ARB staking that has more rewards but also funnels voting power into “Arbitrum aligned parties”. This was already discussed and studied at a superficial level in November, and I personally worked on the governance part alongside @jameskbh. At the time we advocated for automatic strategies to redistribute governance voting power automatically in the DAO to certain delegates. It was sad at the time that the general reception was: this is too complex, we risk breaking thing, because the current result was foreseeable
- having ARB delegated directly from treasury to certain delegates in the DAO. This would be a temporary solution, doesn’t solve lobbify being a way to generate yield through delegated ARB.
Our goal should be for lobbigy, at 20-30-40M votes, to be a not so decisive part of active voters because we increase what delegates have.
2. Specific tech changes for lobbify
As it is now, even if I was participating in the OAT election, and even if I bought the votes for myself, I could have not voted, in an equally split way, for myself plus other 2 candidates. It means i could have not used lobbify votes in a “compliant” way even if I wanted to. Working on this would allow for a better usage of the platform. And yes, I know the vote can just come from an anonymous user, but we should in the first place find a way to use it for ourself if we want to. Paging @lobbyfi on this point, and we had a private discussion on how this is non trivial on their side.
3. Potential changes to our Code of Conduct
This is potentially tricky.
For this, or any voting platform, who would be the users in case of an election that would be incentivised to buy the votes?
- people who are candidates in the election
- users who are not candidate in the election, but that want to have an higher voting power to ensure a certain outcome.
For 1., is easy: if I buy the vote for myself, i should vote it in the same way i do it with my own delegated token. I can disclose I bought it, and that I voted myself, X and Y in an equal weight manner as per CoC. To have this, we need a change in the lobbify platform as stated before
For 2., is honestly a mess. The outcome that that specific party might want could be just an opinionated one (“i like X more than Y”) or the most disruptive one (“i think X is the less capable person in the pack, so I am going to vote for X to ensure the initiative has less chances to succed”). For people who say this won’t happen, it can.
Reading in the intention of a voter is, honestly, quite complex. A different opinion can easily be seen as unaligned. It might come down to the following:
Case A: for elections of several members at once: if whoever bought votes voted in a way that is compliant to the CoC (in the OAT case, 3 members, equally or around equally distributed), all is good
Case B: for elections of several members at once: if whoever bought votes voted in a way that is compliant only for non candidate, but we can’t source who the buyer was, we might have to disqualify the user, unless he/she specify in the forum his willing to express that vote in a certain way and declares to be non affiliated to the party. This is easier said than done and might require onchain sleuthing to validate the vote
Case C: for elections of a single member: CoC states you can vote for yourself.
Summing it up, case A and C are trivial, while case B is quite complex.
Who does the onchain sleuthing?
Who validates the results from sleuthing and takes a decision?
Who ensures that the entity that declared the vote stated the truth and is not maybe affiliated to one of the candidates instead? (and it might be very well the case)
These are open questions to which I don’t have a specific answer right now.
TLDR: most of the effort should, honestly, be put into increasing voting power. We should also try to work with lobbify to find the proper solution, eventually going to a case by case scenario in certain offchain votes like complex elections such as this one to ensure that there is at least the ability to be compliant in the usage of the tool.
Banning it, I am not sure would benefit anybody, would mean really going against of the main functionalities we have seen since the DeFi inception for governance tokens.
At the same time, I share the concerns of the Foundation. In the hypothetical scenario in which we had an election with one or more parties being elected with Lobbify, with a winning margin below the total amount Lobbify has as VP, we would always have had the question “did we get the best person appointed by the DAO”. Or even, “was the result piloted by someone not aligned with our DAO”.
We definitely need an honest discussion about this, and I am glad is coming from the Foundation.
Neve a dull day in Arbitrum indeed