DAO v0.5 Results and Analysis

The fifth HOPR DAO experiment has reached its conclusion. After almost two weeks of amazing discussion and voting, the DAO decided to allocate $600,000 in liquidity to external management as part of a six month trial. Arrakis Finance and Gamma Strategies will each be given $300,000 in liquidity to manage.

Topic and Rationale

This time round, the topic for discussion was:

Who should be responsible for managing the HOPR DAO’s liquidity on Uniswap, and under what conditions?

The HOPR DAO is currently responsible for managing around $8m in liquidity across various pools and chains, but it isn’t allocated very efficiently. DeFi has advanced considerably in the time since the HOPR launch, and there are now many more options and services for deploying liquidity. However, many of these require active liquidity management, and although HOPR’s governance processes do a good job of encouraging participation and capturing a wide variety of voices, they aren’t particularly fast or dynamic.

This suggested that it might be wise to delegate responsibility to a third party. However, as with any decision there are risks to consider.

Recap

We ran the full three-phase DAO procedure this time, with a week-long discussion phase to produce proposals, a 24hr referendum phase to decide which proposals were worth voting on, and a 48hr vote phase to determine the final result.

As always with these experiments, we changed some things up as part of our mission to find the most effective governance procedures for the HOPR DAO.

This time, the biggest change was to gather initial proposals from external projects, rather than generate them internally. The HOPR Association started by meeting with a variety of projects offering liquidity management services, of whom two were willing and able to provide their services in the timeframes required (many more projects were interested, but were unable to support the HOPR token at this time, usually for reasons linked to oracles and price feeds).

The two projects who presented proposals were Arrakis Finance and Gamma Strategies, who both offer automated liquidity management services on Uniswap v3.

It quickly became clear that community consensus was gathering around two options: a trial for both projects and not doing anything at all. As a result, we made another change from the usual procedure and set up primary and secondary votes: the primary vote was to decide whether to act at all, while the secondary votes set the parameters of the arrangement, conditional on the primary vote passing.

This seemed to work quite well, and avoided a huge proliferation of proposals in various combinations of parameters, which would have been confusing and potential split the vote.

We also hosted an extremely productive Twitter Space, moderated by the HOPR Association, where members of the Arrakis and Gamma teams explained their services, we discussed the ins and outs of liquidity management and members of the DAO were able to ask questions. We’ll definitely host more of these in the future.

Analysis

Participation was high, with 158 active users during the two forum phases:

• 121 unique users took part in the discussion phase, while 124 unique users signed one or more proposals in the referendum phase
• 71 users took part in just one phase (37 just the discussion, 34 just the referendum), while 87 users participated in both phases

On Snapshot, there were 339 votes in our primary vote, and almost the same in the secondary votes (this slight drop-off makes sense: if you voted to do nothing, then you might not have an opinion on the secondary vote questions).

Here the participation analysis is less certain, for two reasons:

• While we see limited evidence of Sybils, there is less guarantee of participant uniqueness in phase three than the other two phases
• Not every participant in the forum phases provided a wallet address for rewards, so it’s possible some of them participated in the vote but we can’t tell

But assuming unique voters and full wallet provision, 219 people participated in just the vote, while 120 people participated in both the forum and the vote phases.

These are amazing participation results considering the current state of the market and the complexity of the topic. In fact, our fifth experiment saw higher participation across all three phases compared to the third and fourth experiments.

The vote results themselves were extremely clear, with near unanimity in three of the four votes.

Participants were allowed to split their vote option between multiple options, however few used this option in the primary vote:

Simulating the results as linear rather than quadratic produced remarkably little shift in the outcome. This suggested that there was hardly any correlation between token holdings and vote choice (i.e., whales didn’t favour one option over the other), and further analysis confirmed it:

So quadratic voting made little difference this time. In fact, the votes basically mirrored those of informal temperature check polls we ran on the forum, just like the referendum phase basically confirmed the prevailing opinion of the discussion. But that’s a feature, not a bug: sometimes there simply is consensus on an issue, but it’s still important to run the full process to give the opportunity to find disagreement which might not be immediately apparent.

Next Steps

Now that the DAO has made its decision, it’s time to set the liquidity management trials in motion. The HOPR Association is coordinating with both the Arrakis and Gamma teams to get things set up within the next few weeks.

Once the liquidity is transferred and the trial period has begun, we’ll create a Dune dashboard to monitor proceedings. To free up the team’s time, this will probably be created as part of the HOPR bounty program. You’ll be able to check in on progress at any time, and the DAO will be able to use this analysis to decide whether to extend the trials in six months.

This was the first time the DAO engaged actively with third parties, and it’s been a huge success. Thanks to everyone who participated in this exciting milestone for HOPR governance.

Rich McDowell,
HOPR DAO Master

Forum: https://forum.hoprnet.org
Website: https://www.hoprnet.org
Network: https://network.hoprnet.org
Twitter: https://twitter.com/hoprnet
Telegram: https://t.me/hoprnet
Github: https://github.com/hoprnet