Proposal: Users should vest their tokens before being able to vote/sell them in the DAO. This can be achieved by implementing a lock-up period for tokens. Such a mechanism would also prevent whales from buying and selling tokens quickly to influence elections. This would ultimately benefit the DAO by promoting decentralization and encouraging meaningful participation from all members. If this is too hard, you could add an option for quick withdrawal, which imposes a penalty.
One of the biggest challenges facing DAOs is the influence of large token holders, commonly referred to as “whales,” who have the ability to dictate decision-making through their voting power. In some cases, these whales may buy up large amounts of tokens before a voting period, vote in their own interests, and then sell their tokens immediately after the voting period without incurring any penalty. This behavior can lead to the centralization of decision-making power and a lack of trust in the democratic process.
One potential scenario is that a whale with a significant amount of funds could buy into the election by purchasing a large number of tokens just before the voting period begins. They could then vote in their own interests, knowing that their voting power would likely carry the day. Once the voting period is over, the whale could then sell their tokens, potentially making a profit from their influence over the decision-making process. A tracking feature or tool could prove helpful in this case. Native tracking of tokens from DAO members wallet addresses can help easily fish out irregular token movement from wallets during voting proposal seasons.
Moving on: this behavior can lead to an unequal distribution of power within the DAO, with a small group of large token holders wielding disproportionate influence over the decision-making process. This can erode trust in the DAO and lead to a lack of participation from smaller token holders who may feel that their vote does not matter. By implementing a token vesting requirement, DAOs can help prevent this type of behavior by requiring members to hold their tokens for a minimum period before they can vote or sell. This aligns their interests with the long-term success of the DAO and reduces the potential for short-term manipulation by large token holders.
Vesting is in the best interest of all who have the true desire to do the DAO good because it would ensure members who are committed to the DAO’s long-term success. Locking up their tokens, members can demonstrate their commitment to the DAO’s objectives and promote its stability. This would also prevent the potential entry of opportunistic actors who may seek to manipulate the system for short-term personal gain.
I believe the vesting should be around 30 days, so you would have to be vesting before a proposal is made public + you cannot make it to vote. So this require a actor to be vesting before a proposal is made public.
Interesting proposal, I think I like it, the only point I’d disagree on is having a minimum vesting period to be able to vote.
Another possibility that could be integrated is how Stargate does their governance currently; you can create a lock for your tokens of up to 24 months (I think), where basically the higher time a token is locked, the more weight that token holds for voting. For example:
1000 ARB (No lock) = 100 ARB Voting Power 1000 veARB (12-month lock) = 500 ARB Voting Power 1000 veARB (24-month lock) = 1000 ARB Voting Power
(veARB amount would be different but I think one can understand the principle)
(Note to @CryptoNick: you misspelled vesting on the title)
Thanks. I thought to myself that a minimum vesting period would probably be an overreach. But I think the Stargate example seems pretty reasonable and I like it. What about unlock?
If I remember correctly (someone please correct me if I’m wrong) the tokens remain locked for the whole period and unlock at once, but the VP decreases with the time too, here’s the description from the Stargate Docs:
Time Weighted Voting
Time-weighted voting is used to provide long-term Stargate token holders greater governance weight and control of the Stargate protocol.
veSTG is the unit of Stargate governance voting power. It is received by staking locked Stargate tokens and is non-transferable. The veSTG balance decays linearly as the remaining time until the staked or locked STG unlock decreases.
We would of course need to adapt this to our needs and incentives, since Arbitrum and Stargate are completely different, but I believe it’s an idea worth exploring.
yeah the conviction voting system would help eliminate the issues with scoop up coins just for instant voting rights and dump all after the proposal which create issues with self interest rather than the real protocol engagement
Adding in a lockup of some type to participate in governance is an interesting approach for sure. If there were a vetoken or other locked token mechanism would it require an update to the governance contracts? I haven’t poked around but imagine it would have to be considered as well yes?
The stargate model on weighted / decaying voting power based on how long you lock for is also interesting. Encouraging a lockup for longer with stronger voting is a great approach. As an alternative, I’d also suggest the idea of voting power becoming greater the longer a token is locked for.
As an example, You could have a minimum lockup of 30 days to vote which becomes greater at month 6/12/24/etc that resets if tokens are unlocked. I think this approach might encourage people to hold long term even more so than a decay lock.
I agree with the proposal to implement a token vesting requirement in the DAO.
I think implementing token vesting in the DAO is a smart move. It helps prevent those sneaky whales from swooping in, voting in their favor, and then selling off their tokens right away.
By requiring a lock-up period, we can promote fairness and discourage short-term manipulation. Plus, it shows that members are committed to the DAO’s long-term goals.
Let’s keep things transparent by tracking token movements during voting periods too. With token vesting, we can level the playing field and ensure everyone’s voice counts.
By implementing token vesting and considering these measures, the DAO can ensure fairness, inclusivity, and meaningful participation from all members.
Update: I’ll be putting up a proposal as the grants framework contest ends. Likely on Monday or Tuesday of next week. Part of it will include a staking mechanism like I suggested above to have the votes count in the future.