Team Statement: Latest LM and CVP Token Distribution Proposals
The CVP community has been pretty active in recent weeks. In this article, we share the team’s view on the latest governance proposals.
Since the PowerPool governance system went live, the community started to get increasingly involved in decision-making of the future of PowerPool.
The most important questions were Beta/Gamma tokens, their lock-up/vesting schedule and the mainnet liquidity mining program. It is exciting to have activity from our community, which has made a lot of attempts to make PowerPool better and sustainable in the long-term.
In this article we decided to provide a comprehensive overview of the latest proposals, posted on the Power Forum, and provide our view on them. Also, we tried to cover the most important comments from the forum threads here too, as well as our ideas on how to improve them.
Note: Ideas related to the improvements of proposals from our side are the personal opinions of the team. We publish them here to indicate our position on published proposals. The decision to add these ideas or not should be made by the community and proposals authors.
Proposal 5: Do not distribute 10% of beta testers allocations on the mainnet launch
The main topic of Proposal 5 was changing the vesting schedule for the Beta and Gamma testers.
The issue that this proposal aimed to solve was simple: In the initial CVP distribution design, Beta and Gamma testers should have received 10% of their testing allocation (or 5,000 CVP each) shortly after the mainnet launch.
According to the proposal, it could end up with dumping these CVP tokens on the market, which will not be good for the project itself and community of CVP holders, especially taking into account the current bear market.
The proposal didn’t pass, but the community opinion on it was clear: 371,842 votes for “approve” and only 42,623 against it. Also, it is important to note that the proposal attracted a lot of attention at community forum and Discord.
Team Statement on Proposal 5
First of all, it is clear that this proposal didn’t pass solely for technical reasons (quorum wasn’t reached — the proposal needs 400,000 votes for being approved). However, the community has clearly expressed its position.
As the PowerPool team we agree that the CVP distribution program defined in early August needs to be upgraded. The early LPs (both Uniswap/Balancer and mainnet Power Index ones) should have more power and influence on the early stage of the project.
Besides, the CVP market needs to be protected from selling pressure from not-LPs. Even LPs will receive vested tokens for their job (as was unanimously decided by approving Pool weighted rewards and LP rewards vesting). So, it would be quite logical to approve Proposal 5 by the community.
When the proposal was rejected as a result of non-reaching quorum, we decided to give the community more time to fix CVP distribution, as this problem is a key one for PowerPool’s future.
We cannot move further with the mainnet until a legit decision will be made by the community (legit decision = proposal, which reached a minimum quorum of 400,000 CVP for one of the options).
Proposal 6: Vesting, Liquidity Mining & PowerIndex Design
Proposal 6 covers several important topics for the project at once. There are suggestions for improving CVP token distribution, including Beta/Gamma testers lock-up and vesting schedules, Liquidity Mining program for Power Index and several other important ideas. Here we decided to summarize all its key ideas.
The overview of Proposal 6
The main aim of this proposal is to re-define some aspects of CVP distribution, establish a Liquidity Mining program and implement other important features of PowerPool’s strategy for the long-term sustainable growth.
CVP token distribution changes:
- Beta (5m CVP) — 1 year lock then 12 month linear vest
- Gamma (5m CVP) — 1 year lock then 12 month linear vest
- Introduction of DAO Grants (7m CVP) — 2 year lock then 12 month linear vesting
- Allocate 3m CVP as incentive for first VoteLock voting (to define the initial Power Index composition) locked for 6 months and vest linearly over the following 6 months
- 77,639,846 CVP will remain in the community treasury for incentives
The DAO Grants CVP allocation will be used to provide CVP stake to index composition members (protocols powered by GTs). It will increase Power Index TVL and establish a social connection with the communities of these protocols (as they will be able to participate in PowerPool governance).
Thus, the full release of CVP tokens for Beta/Gamma is proposed to expand to two years, and release of DAO Grants funds will take three years. The CVP incentive for Power Index composition vote will be released within 12 months.
The future circulation of CVP was also presented in the graph:
Liquidity Mining Program:
- Set 2,000,000 CVP/month as LM rewards for supplying GT liquidity into Power Index with 1 year lock-up from the date paid
- The detailed LM program is available here
The proposal additionally highlights the idea of collecting pool fees into a governance token ‘Blackhole’ (protocol-owned treasury of GTs, which will be used as Permanent Voting Power).
The thread with this proposal contains 64 comments. The main topics of discussion were:
- Supportive comments from long-term oriented Beta/Gamma testers
- Comments with suggestions to make lock-ups/vesting not so long
- Comments regarding the reward for VoteLock incentive (3m CVP)
- Comments regarding diluting of voting power by Beta/Gamma testers (tokens are locked, but still can be used in governance)
- The ideas of multiple Power Index pools and even the “pool of pools”
- The idea that community members have to be prepared enough to vote consciously
Team statement on the Proposal 6
First of all, the Proposal 6 contains the core idea of Proposal 5 (not to distribute 10% of CVP for Beta/Gamma testers). So, our decision to postpone mainnet launch until the CVP distribution will be fixed was the right idea. The community came up a second time with an even more detailed proposal, clarifying how to deal with Beta/Gamma tokens, and the passing of Proposal 6 would mean that the idea from Proposal 5 will be de-facto implemented.
At the PowerPool team we have long-term plans with the project and want to deliver a great product for the community which will be used by a broad audience. This proposal can fix current issues in CVP distribution and offers a sustainable long-term strategy for it. Taking it into account, we as a project team support this proposal. Note, that it doesn’t mean that it will be implemented — it will be decided by the CVP community.
Beta/Gamma voting right for the Proposal 6
As this proposal affects all “game rules” of the project, our position is that Beta/Gamma testers’ voices also have to be heard if this proposal will be officially registered in the PowerPool governance system. For this purpose we developed a special voting contract, allowing them to vote without deploying a vesting contract. It is connected with the fact that if we deploy a vesting contract its parameters cannot be changed in the future (and this proposal affects exactly them).
Is it fair? We think that yes. But, with limited voting power. The current CVP supply on the market is 5,438,154 CVP, so we need to make Beta+Gamma less than that. We propose to limit overall Beta+Gamma cumulative voting power up to 5m of CVP instead of 10m (each wallet will have 25k votes instead of 50k), so current CVP holders will have the majority in this vote. The idea of limiting the voting power of Beta+Gamma up to 5m votes (in mainnet) was also proposed in Proposal 7.
Beta/Gamma voting rights during lock-up and vesting periods
We think that Beta/Gamma voting rights during lock-up and vesting period is not a less important issue than the lock-up/vesting schedule itself.
The main issue is that even if these tokens are locked, 10m CVP will have tremendous effect on PowerPool governance (Beta/Gamma testers will have a chance to make any decision regarding the protocol future without any support from LPs during the next several months). We clearly understand this issue and our opinion is that we need to include a solution for it into this proposal.
It is important to note, that this issue also was tackled in the Proposal 7: Reputation System:
- Diminish voting power of remaining vested testers, 10,000,000 CVP, to 50% to match current circulating supply — 5,000,000 CVP. This would allow for a better forum for the popular vote to potentially thrive in.
- Boost voting power of active governance members
- Boost voting based on holding period
- Deduction of voting power if tokens are transferred out
Taking into account Proposal 7 we designed our idea how to solve this issue.
We propose to apply the “vesting of voting power” to Beta/Gamma tokens. The idea is simple: the voting power of the Beta/Gamma vesting contract will be continually released block-by-block within 12 months starting from zero. It means that at the contract deployment each Beta/Gamma tester has zero voting power, but it will increase each block. If the vesting is planned for 12 months, 1/12 of each testers’ voting power will be released at the end of each month.
So, when Beta/Gamma vesting contracts will be deployed it wouldn’t dilute voting power anyway. The governance initially will be in hands of CVP holders, while Beta/Gamma will get their voting power month by month.
It is a simple solution, which also can be implemented fast and does not delay mainnet launch significantly.
The reputation system is also a great idea, but it needs to be properly defined and then properly implemented. It can take a lot of time and significantly delay the protocol launch, which can affect protocol future taking into account the very competitive Defi environment.
Instead of a reputation system, we propose another idea how to reward active CVP holders. It is a Vote Boost system (or VoteLock in other words). We have been developing this idea for a long time (check out our medium article — the “Vote Boost” source of votes was implemented into a modular PowerPool governance system weeks ago). Specification:
- Allow all CVP holders to lock their tokens in special contract
- Each day of lock-up is rewarded by boosting voting power for X% (initially defined as 1%, so if someone has 100 CVP and locked them for one day, after first 6500 Ethereum blocks he will have 101 vote instead of 100)
- Define maximum lock duration of Y days (365 initially)
- Provide an option to incentivize long lock-ups — provide an instant vote boost for all CVP holders, who locked their tokens for a certain number of days (variable: Z%). We propose to set Z as 50% initially, so if someone hold 100 CVP and locked them for 100 days, he will get additional 50 votes right after lock, and the bonus count will be activated at 51 day (at 51 day there will be 151 vote, at the 52 day 152, etc). Also, we think that there has to be an option to extend lock-up (without any additional instant bonus in voting power in this case).
- The exception for all rules mentioned above will be the first voting on Power Index composition since it is already incentified enough (3m CVP distribution).
- Define all variables mentioned above in the governance proposal and re-define them in the future if necessary
Summary of the team statement and proposals overview
We support our community in striving to improve the project by defining the proper LM program and CVP distribution as it is the only way to make PowerPool sustainable in the long-term.
After Proposal 5 attracted a lot of attention and votes of CVP holders we delayed mainnet launch until these issues will be fixed by a legitaly passed proposal. Proposals 6 and 7 (as well as all comments to them) were carefully researched and summarized by our team.
As a result, the solution for Beta/Gamma voting power release and also the Vote Boost logic were developed by our team and presented in this article. We propose the vesting of voting power and Vote Boost mechanics (details are stated above). The both ideas can be implemented fast and wouldn’t affect mainnet launch.
We advise the community to add [vesting of voting power for Beta/Gamma + Vote Boost logic] and Proposal 6 ideas into a single proposal and vote on it. Probably, it can be made by expanding Proposal 6. Also, we think that adding Beta/Gamma into this voting (with limited voting power) will be a most legit way to pass this proposal and put an end to the CVP distribution issue and LM program at once.