Might suggest that the stFLX voting power gets slashed at a certain level of staking % of overall FLX. If 80% of FLX is staked and there is an event, then I could see the stkFLX interests deviating as they are first in line for the hair cut.
This seems optimal to me. Leaning towards 2x or higher. The justification for the boost (in excess of the amount of FLX+ETH) is to compensate her for the volatility risk and opportunity cost she is taking on by staking her LP tokens with a 21-day unlock. Historically, FLX has been crazy volatile relative to ETH.
Musa brought up in Discord that 50/50 V2 LP is preferable to 80/20 balancer because it gives more cushion in the case of a bad debt scenario. I agree it’s definitely preferable to include 50/50 v2. I have no strong feelings about regular FLX or 80/20 as well.
I brought this up on discord but will copy it here for posterity: I think there’s probably a governance attack possible here if multiple gov tokens are being used, which allows an attacker to manipulate the voting weight of the tokens relative to each other:
I think an attacker can buy up a ton of FLX in the LP pool, initiate the vote, then dump the FLX in the same block (or they could do the opposite and borrow FLX from euler.finance). Obviously this would come up in an audit but probably better to be proactive about designing the system to avoid it.
Take with a grain of salt because things may have changed but I was told there would be multi-block MEV once Ethereum transitions to staking so just snapshotting 1 block before wouldn’t be sufficient.
I concur that it should be based off of total LP value, not just FLX, and that there should be an ~2x multiplier. I wouldn’t go higher than 2x though while also using total LP value, because it feels like that abstracts too far from the underlying FLX.
We need a couple of polls to get a general idea of the governance process. The first one is about the governance weight that stFLX should have compared to vanilla FLX. The poll will run for about a week (6th of May at 12pm UTC).
- stFLX has a 2.5x governance multiplier
- stFLX has a 2x governance multiplier
- stFLX has a 1.5x governance multiplier
- Other (comment with your preference)
0 voters
Voted for 2.5x.
I think 2x is pretty good but I figured my 2.5x vote would cancel out a 1.5x vote (which would be the incorrect thing to vote for).
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I voted 2x, but I guess I need clarification. Is it 2x the number of flx in steFLX? Or the number of pool tokens, or the value? I think if I follow the thread the idea is to have an 80/20 balancer pool. So having a 2x multiplier would make Stake governance worth more per FLX than SteakFLX. So I still have the concern that in a zone of insolvency that this might lead to some weird conflict if FLX and SteakFLX interests diverge. Am I being Kassandra?
2x is just representative of the added risk stkFLXers assume, in addition to an added incentive for people to protect the protocol. At the core though, I think it’s really about increasing the representation of the most involved users; assuming being that those who stake have more skin in the game and are more active.
Totally not being Kassandra here. (Well she was right. . .but still) This is a valid concern people have been discussing.
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Voted “other”, with my intent being 1:1. No extra voting power.
The stFLX holders get rewarded with fees and rewards to offset IL and security.
Extra governance power for stFLX is an unnecessary addon that also diminishes the value of solo flx holding.
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Yeah I agree. It was an issue I noticed when Maker got their titty in a wringer. Once they had to do “mint” of additional tokens and take their lumps the MKR holders whined and cried and try to change the deal. So, I don’t know what process in the ungovernance that steakFLX can take to side step the slashing, but it is worth considering that it could be a problem if a lender of first loss situation arises.
Taking a middle position between 2x and 1:1 and going with 1.5x, to Tirion’s point, the scales should tilt a little more towards holding spot FLX for governance, as not everyone is willing to protect the protocol at expense to IL (I am led to believe that most people in DeFi are financially driven). This also gives spot FLX a little bit more utility. As @Tirion mentioned, stFLX are already getting FLX reward distribution, which I think is already a strong enough incentive to protect the protocol and rewards towards the Uni v2 pool can always be increased down the road to maintain strong demand for protecting the protocol.
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Other: stFLX as the only governance token in the 80/20 pool
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I posted a lot of my thoughts in the discord, but basically I feel that there is a lot of reasons why people who are very optimistic about the protocol may not want to stake in the FLX/ETH pool at 50/50. Many people holding FLX are long term aligned with the protocol and should have just as much say. If we went with Ameen’s idea of using an 80/20 balancer pool, then I think even someone who believed long term in the project would have little reason not to stake.
Therefore with current design I think FLX/ETH stakers should only get 1.5x. If the stkFLX was through an 80/20 balancer pool, then yes I think it would make more sense to boost further or to just not let passive holders vote.
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Based on the thread above, voted for 2x. anything below that seems unfair…
Tally, the dashboard used pretty much by everyone leveraging Compound Governor, came back and said they cannot support two different tokens.
Unless they change their minds, I propose the DAO starts only with one token, we leave the implementation for 2 tokens on Github and later on the community can upgrade to two tokens.
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I thought more about the attack you mentioned over the last days and it is indeed an issue, especially in Compoung Governor where quorum is immutable (so that a governance attack can’t set it to a tiny value).
Someone can indeed buy & LP gov tokens (similar to what happened to RAI when it launched) and build up a sizeable position they can use to vote. This can’t be done as easily with vanilla FLX because, especially once ungovernance hits, there are strict rules on how the protocol mints new tokens.
I also thought more about Compound Governor and I don’t like that they use a fixed amount of votes as the quorum instead of using a percentage of the total token supply. This is especially bad when you use LP tokens to vote but it’s also an issue with FLX because Governor may have to swap to a new implementation with a new immutable quorum if the protocol mints large amounts of FLX.
EDIT: layer the gov boost for LP on top of the attack you mentioned and it’s even easier to gov attack the DAO.
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