Governance Proposal 1: A different Perspective
Like everyone else here, I hated it. You guys can check my comment history if you like. This was the first time I actually wondered if I should cut my losses and sell all my algos (Algorand is the only L1 I am invested in). But after listening to John Clarke's (founder of AlgoFi) thoughts on it yesterday during the algofam, I kind of changed my mind on this and now think it's not so bad after all. 1. Incentivizing ecosystem growth is absolutely necessary and the most important thing to the chain. If there's no one using/developing on the chain, it will die, and all of our investments will go to 0. The small APY from governance won't even matter. On the other hand, if there's lots of activity, price will go 10x, and losing a bit of APY won't matter either. 2. However, directly cutting governance rewards is extremely unpopular amongst many members of the community, and especially many influential large holders of algos who want their risk-free returns. It's very hard to push politically. This is why the foundation ended up with this kind of "half-assed" complicated system; they needed a way to reward the ecosystem without directly cutting governance. 3. Total TVL in DeFi right now is about 300M Algos. Currently, ther eare 3.6B Algos in governance. Which means even with "double vote", there would be an additional 600M algos' worth, which is 1/6, or 16.67% of the current amount. Which means your governance APY will hardly be affected very much. 4. However, it is very beneficial for the ecosystem, especially as a lot of bridges are coming online; Warmhole, the London Bridge, Glitter Finance, and AlgoMint is developing more bridges as well, just to name a few. There was also that bridge to BTC whos name I forgot. Flair network? Anyway, lots of bridges, but why would anyone come over to Algorand right now? We need to entice them with incentives so that they are incentivized to at least learn more about Algorand to decide whether to bridge over, and during that process, hopefully convert to algo fam. 5. According to various speakers in the algo fam chat whom are all very technical and smart and connected members of the community, on-chain data shows that the vast majority of DeFi users are small players. Large whales tend to prefer safety; after all, smart contract risk on algorand is still relatively high because it hasn't been as tested as EVM chains. So this proposal would benefit little people more than big corporations. 6. In particular, we can reduce the power that centralized exchanges like Binance, Coinbase etc have over our ecosystem right now, both in terms of voting power but also in terms of freeloading free algos to dump on us. 7. If the DeFi TVL goes way up in the future to billions, the voting power of DeFi participants can always be lowered when that happens.
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