[GOVERNANCE] Make voting great again

Hello guys,

The founding team and I have been brainstorming a lot of possible ways to solve one of the main pain points of every DAO out there, with no difference for metaCOLLECTIVE, which is active engagement and voting.

We believe that voting is the highest expression of active participation, which is at the base of being part of a DAO, and we believe that this is now the first and most important issue to solve and open up the DAO community.

We are proposing a randomised fractional NFT incentive system to reward active participants and voters of proposals. In our view, this can be the flying wheel to boost other areas like the visibility and brand, new users adoption, more token liquidity (due to new people entering the DAO), more demand on vMETA token, as well as serving as a foundational mechanism to drive other possible reward systems.

The system would work in the following fashion.

The DAO purchases an NFT from a well know project, let’s say a SMB for let’s say 250 Solana (a the time of writing $32k). We fractionalise it into 5000 pieces of NFT via Bridgesplit. Every time a voting on a proposal is completed, we randomly select 20 out of every 100 voting addresses (20%) using a vote-power adjusted probability and we give to them a fraction of this NFT. In this case, 1 fraction = 1/5000 of an SMB.

The main benefits we envision are:

  1. People will get instantly rewarded with a valuable piece of an NFT collection which has some market value

  2. We attract visibility from the ecosystem / other NFT projects with a new and innovative approach. Word of mouth is very strong and can lead to a great influx of people to learn more about the DAO.

  3. The randomised part of the process prevents from people just performing a vote-to-earn strategy, or just buying 1$ of cMETA and having the same likelihood of winning of those with $100.

  4. People gets a reward (NFT piece) of something that can exponentially grow in value (and people loves NFT)

  5. With more voting, we can later build a better governance system to reward and incentive good proposals properly and fairly

  6. The dilution of cMETA holders is minimal and can be compensated by higher vMETA demand as well as better liquidity / hype around the project

As everything in life, there are possible drawbacks as well, reason for which we are proposing to take this as a testing opportunity that with a very open minded approach we can carry on or discontinue after some iterations if not successful.

From a tech point of view, we are thinking the best solution possible to provide and open and transparent mechanism to reveal the winners.

2 Likes

Indeed, great idea. How would the vote power adjustment work?
IMO we shall prevent the “just buying 1$ of cMETA and having the same likelihood of winning of those with $100”, but also ensure fair distribution not only based on 1to1 voting power to avoid disengagement of smaller investment and losing the wisdom of the crowd pricniple behind our DAO

1 Like

I say this is an interesting proposal, however assuming we fractionalize the NFT into 5000 pieces and that we have 100 votes per year we get around 50 fractions of NFT per vote. As of today we don’t have 50 single unique votes in most votes as we are still a small community.

I think it is better to think in relative terms and randomly pick a certain % out all the voting addresses.

The voting lottery using a fractionalized SMB (worth 25k) can be considered the equivalent of circa 50bps “inflation rate” transferred from cMETA (as the NFT is purchased by the DAO) to vMETA (as they participate in the voting process).

I’ve had some fun to think how we could calculate the effective inflation rate post-distribution

image

Q and P above are the quantity of fractions at their market price at the time of the airdrop, and below we have the average mark to market value of the Treasury calculated at the time of the airdrop. With this approach the cMETA would suffer of a decay worth “i” at the end of the year.

On the other hand one can argue that the moment we purchase an NFT to distribute it as a reward the “inflation rate” is already locked-in and should not be reflected in the Treasury anymore. This would require the creation of a separate wallet to hold the NFT fractions. This methodology is such that the inflation rate is known in advance and the Treasury value is “depreciated” at inception by transferring out the NFT fractions.

I agree with the idea of incentivizing participation via NFT rewards. As with other projects, projects bootstrap via different mechanisms, such as native token inflation. By converting the rewards to an external token/reward, we reduce the need to increase token supply in the market.

If this were to pass, I’m expecting a flywheel where this activity would boost visibility and brand > attract new users > increase user adoption > improve token liquidity > add demand for vMeta token. When such incentives dry out or prove to be ineffective, we would have the ability to modify or stop the program when we don’t meet the expected results or criteria.

We should experiment with different incentive mechanisms to incentivize participation and double down on ones proven to be the most effective.

Challenges/questions

  1. When do we stop incentivizing?
  2. Where do we get the funds to incentivize? Should there be a positive expected return if it comes from our treasury?
  3. How do we select which NFTs to give out? Should it come from partnerships with new NFT projects or buy existing blue-chip NFTs?
  1. Forever if you want it to become part of the identity
  2. If partnerships can keep the price down a % of cMETA can be diverted here during the next investment round
  3. Partnerships would be good if they are good projects.

While this mechanism will be at a cost to existing investors, I think its a solid option.
How are we planning to get the word out about this? The only way this might work is if we can get some hype around the project. Will the NFT be sold once all pieces are distributed? How does this work?

Sorry for the late reply, yes so the point is correct that it would be something that transfers value from cMETA holders to vMETA holders, so even if for sure it would not be a significant amount of the total AUM, it would have to go through a constitutional proposal (50% of the total votes are need, which is not impossible to reach but for sure it would be challenging give the current rates of voting).

on how to promote it, it think the best way to go would be to do it organically within the community and our twitter followers → ideally the goal would be to have current cMETA holders to vote more than simply just having a lot of people just buying little amount of vMETA and try out to “win the lottery” by voting every proposal just to hope for the NFT piece.

For the NFT fractionalisation part, technically you “break” the NFT into smaller pieces therefore the pieces are the NFT itself. The pieces can then be traded for $. If you want to come back to the original NFT, there are some ways to buyout the whole amount of tokens. Adding here an explanation of it: Fractional NFTs Explained — Benefits and Risks