This is just one of many articles Vitalik has written on the topic of collusion, but I believe he makes some really relevant points.
Particularly…
In most contexts where bribing has taken place in the blockchain space, the operators use a euphemistic new name to give the concept a friendly face: it’s not a bribe, it’s a “staking pool” that “shares dividends”. Bribes can even be obfuscated: imagine a cryptocurrency exchange that offers zero fees and spends the effort to make an abnormally good user interface, and does not even try to collect a profit; instead, it uses coins that users deposit to participate in various coin voting systems. There will also inevitably be people that see in-group collusion as just plain normal
And here is what he concluded almost 3 years ago. I believe this is the main issue we are discussing here.
there is an impossible tradeoff between either failing to incentivize legitimate public goods or over-subsidizing plutocracy .
I think we’d really need to consider amount of effort vs benefit to the DAO. I’m not convinced it would be worth the time to work this out. Especially considering the positive effects JIT (Just In Time) MEV flash loans will have on LP. While there may be still be some users who provide LP in uni v3, I suspect that number will decline as it becomes less profitable to do so. JIT flash loans will be getting more and more popular and become very effective and efficient at “sniping” large purchases, thus greatly reducing the fee returns average LP providers will earn.
My point being that we may see LP investments drop considerably between now and the time a solution was proposed and executed.
That would still leave AAVE style loans, but I’ve already mentioned how I dont think there is any benefit to attempting to give voting power out to users who are attempting to lease out that voting power.
That’s possible today, without any ability for staked tokens to vote. I don’t think allowing staked tokens to vote would make it worse.
I guess I can see the countervailing argument - that we should provide some incentive not to stake - but then staking providers could simply avail themselves of that same incentive!
Yes, that’s possible today - and I address that in my reply as well:
There’ll always be the possibility for malicious actors to offer more of an incentive than the DAO, but then that borders into the territory where they’d offer higher prices to buy the token outright also, and as a result the price of the token would increase which would increase the security of the DAO.
In my mind that was directly related, but I’m new to this DAO and I’m still wrapping my head around this space, so there might be things I’m not considering. Either way, I’ve voiced my concerns which is all I wanted to do
Providing liquidity is necessary to support the token’s value. I am in favor of finding solutions to count LP tokens where possible.
Moreover, to address broader comments about ownership and what it means to store your tokens in different smart contracts, a token is just a primitive for storing and associating value. We should encourage people to use tokens however they please and not place artificial restrictions based on perceived intent of on-chain actions. Taking on a derivative position to manage risk or extract value is a natural thing to build on top of a token standard.
There are a number of “meta-patterns” that develop around tokens. LP tokens is one such meta pattern, but there will be more patterns in the future. To support the value of ENS and the DAO, we should maximally support ENS token composability.
In summary, we should look to support this and other popular meta-patterns build on top of the composable ERC-20 token standard. Supporting ERC-20 interoperability helps the value of the token and the DAO.
