GIP-3: Should GnosisDAO lower the quorum threshold for required YES GNO?

GIP-3: Should GnosisDAO lower the quorum threshold for required YES GNO?

  • Lower threshold to 4% of circulating GNO supply
  • Lower threshold to 5% of circulating GNO supply
  • Lower threshold to 50k GNO
  • Lower threshold to 75k GNO
  • Make no changes

0 voters

GIP: 3
title: Should GnosisDAO lower the quorum threshold for required YES GNO?
author:  @StefanGeorge
status: Passed
type: Meta
created: 2020-12-08

Simple Summary

Lower the quorum threshold for required YES GNO to increase the chance of acceptance of proposals.

Motivation

The first GIP was not accepted as the required 10% of YES GNO was not reached (https://snapshot.page/#/gnosis/proposal/QmdjWuBnBnPUafW9jBNNsJJvaeQAVExGcFZ7zB38VtNuu4). Even if all GNO used for voting would have voted for YES, the required quorum would not have been reached. To make the acceptance of proposals more likely and to increase the speed of operations of the DAO a lower quorum threshold is needed.

Rationale

Currently, the following has to be reached in phase 3 for a proposal to be accepted:

For proposals to be accepted in this final phase, there must be one outcome with a relative majority of GNO used for signaling on the GnosisDAO Snapshot poll accompanied by a quorum of a minimum of 10% of the circulating supply of GNO. If the relative majority of GNO used in signaling on the Snapshot poll indicates the result Make no changes, the proposal will not be accepted and considered closed.

As Martin mentioned in this post (README: GnosisDAO Governance Process ) there are different ways to interpret this:

a) at least 10% of GNO is needed to vote and within those, there needs to be more yes than no votes.
b) the yes votes need to reach this quorum AND more yes than no votes.

From the text both interpretations are possible. b) is the better option because otherwise, a no vote could result in the decision being made. Imagine that yes is leading but overall the quorum has not been reached. Now - if you favor “no” it might be the better option to not vote at all.

The issue with b) is that the required quorum of 10% only counted in YES votes (ca. 150k GNO) is very high and difficult to reach. The first snapshot proposal had about 100k GNO used for voting in total.

Instead of the current 10%, the threshold could be lowered to 4% or 5%, as 4% is used in Compound and Uniswap’s governance models.

Using a percentage of circulating GNO to define the quorum has another issue:
As soon as we have more GNO in circulation, which is the goal, the quorum as a % of circulating supply based on our definition might be even harder to reach. GNO might be used in many ways, which would make it part of circulating supply but not eligible for voting (provided in liquidity pools etc.). This is why this proposal also includes two options to set a fixed amount of GNO to be required, which would possibly make it less likely to change this parameter again soon.

Implementation

Update the official proposal guidelines.

2 Likes

I think the circulating supply is 1.5 Million GNO.

This number is calculated by removing DAO vested GNO and vested GNO for Gnosis LTD.

Take 10 Mill GNO created.
Minus the GNO vested to the DAO - 8 Million.
Minus the GNO vested to Gnosis LTD - 495 410 GNO
= 1.504 590

At current circulating supply 50K GNO is 3.32%
At current circulating supply 70K GNO is 4.65%

Is this correct?

2 Likes

Yes, this is correct!

1 Like

From my view option A is correct sentence. In long run 4% is max 400000 GNO for quorum. It is sounds ok to me. If GNO LPs will can vote, this quorum dont sounds very scary in near future as well.

1 Like

I am not sure I understand why

"As soon as we have more GNO in circulation, which is the goal, the quorum as a % of circulating supply based on our definition might be even harder to reach. "

Does having more GNO in circulation means that there is less proportion of GNO eligible to vote? If not I’d say that a % makes more sense. A fixed value means that when GNO supply is increased a smaller fraction of it is required to vote, which is odd to me.

No, it just means that there is more in circulation so the relative amount of GNO required to reach quorum is higher.

1 Like

What do you mean by relative amount? Do you mean a fraction (proportion, percentage)?

Say we needed quorum of 10% of the circulating amount and that only 20% of the circulating amount is available for voting (if I understand correctly the point is that the remaining 80% might be locked or being used or in some way not available for voting). From the text I understand that having more amount circulating would decrease those 20% that are available for voting, making it more difficult to get a quorum. Why would that be?

What do you mean when you say “locked”?

I mean that if there are 10M GNO created and currently there are currently 1.5M GNO in circulation (as described above), then a 5% quorum requires 75k GNO to vote “yes”.
If an additional 500k GNO are released into circulation, then a 5% quorum requires 100k GNO to vote “yes”.

I would read it as: Right now, people that own GNO are relatively strongly connected to Gnosis and committed to its vision, and thus quite likely to actively contribute/vote. With more GNO in circulation, the average likelihood of participating might decrease, so a relative quorum becomes more difficult to reach.

1 Like

@auryn_macmillan By locked (sorry for the wrong choice of words :slight_smile: I was refering to this:

" GNO might be used in many ways, which would make it part of circulating supply but not eligible for voting (provided in liquidity pools etc.)."

If the % of total circulating GNO that is “not eligible for voting” changes when we “print more GNO”, then I can see the point of having an min absolute value for quorum. But I was just curious why would that be the case (@tom gives a possible justification above).

@tom I guess a counter argument is that we should want to distribute our GNO to people that are interested in the company, otherwise it becomes less like a “share” and more like a currency. Printing GNO shouldn’t make it easier to achieve quorum, which would happen with an absolute min value.

But I got my doubts cleared up, thank you both!

2 Likes

My concern is that futarchy does not actually work if you have a quorum requirement in place.

The Prediction market will not reflect the true consensus of the crowd, and therefore the impact on the price of GNO, because the prediction market odds will always take into account the chance of reaching quorum.

Doesn’t this distort the information that we are trying to seek out?

1 Like

I’m not sure that the quorum requirement is the root issue. As I mentioned in this post, the pricing on the current markets is distorted because the futarchy outcome is non-binding.

1 Like

Ah, thanks for sharing. Seems both may be issues.

1 Like

I’m supportive of this proposal since with the current quorum it seems like any proposal would have a hard time reaching it.

Adding some data here in order to understand the current supply distribution better: https://explore.duneanalytics.com/queries/15052#30130
(Current GNO holder distribution without the 2 vesting contracts mentioned above. Holders with <1k GNO are combined into “others”)

4 Likes

The snapshot vote is on!

2 Likes

We can make the threshold also variable to the extent of importance of the proposal.