GIP-8: Enable LP token voting on Snapshot

Should LP token voting strategies be added to Snapshot?

  • Add one LP token voting strategy
  • Add two LP token voting strategies
  • Add no LP token voting strategy

0 voters

Which LP token voting strategy should be added to Snapshot?

  • Balancer
  • Uniswap
  • SushiSwap

0 voters

GIP: 8
title: Enable LP token voting on Snapshot 
author: Anna George
status: Draft
type: Meta
created: 2021-03-10

This is a continuation of the original post by @StefanGeorge, moving it to phase 2 as the proposal was well perceived in the Forum discussion and the technical requirements for implementation have been set up in the meantime.

Tl;dr:

Currently, the GnosisDAO Snapshot setup does not allow for LP token voting. This forces GNO token holders to decide between liquidity provisioning and governance participation.

This proposal suggests adding a LP token voting strategy to the Gnosis Snapshot space. Please vote on a) whether you want one / two / no strategy to be added to Snapshot, and b) which strategy/ies you would like to have added.

The Proposal:

GNO locked up in liquidity pools can currently not be used for voting on Gnosis Snapshot proposals. This creates a tradeoff for GNO token holders: they can either earn yields OR participate in governance decisions. This is concerning for two reasons:

  1. Liquidity providers – usually long term holders – are taking a risk to ensure the token remains liquid on the market, enabling new community members to join by buying GNO without large slippage. They are providing a service that helps the GNO community and should not be punished with having no voting rights.
  2. As briefly touched upon above, it’s in the GnosisDAO’s interest to have large liquidity of GNO. Striving for increased liquidity whilst not allowing for LP token voting poses a conflict of interest:
    The more capital is “locked up” in liquidity pools without voting being enabled, the less likely it is that GnosisDAO votes will meet the required threshold for proposals to pass.

At present, a large amount of GNO is already used for liquidity provisioning, demonstrating the relevance of this proposal:

While the Snapshot team developed strategies that enable LP token voting for all major AMMs, the UI limits the amount of strategies that can be deployed to four. As the Gnosis Space already has two strategies enabled (‘GNO balance’ and ‘Delegated GNO balance’), only up to two LP token voting strategies could be added at this point. There are some arguments in favour of only adding one new strategy for the time being in order to keep at least one strategy open for future use cases.

The full list of potential LP token voting strategies that are currently relevant to GNO & enabled by Snapshot is added as answer options in the poll above. Please decide on which - if any - strategy you would like to see enabled in the Gnosis Snapshot space. To review the discussion that has evolved since December please check the original post here.

3 Likes

Thanks for setting this up. I think at some point, all LPs should be able to vote.

LPs already take the risk of IL and inventory risk by providing liquidity. In general, liquidity is always a positive thing for tokens, given that it makes them more accesible to new adopters, determines price more efficiently, and reduces volatility related to low liquidity. I think LPs do enough already for the both GNO token and the GnosisDAO and should be offered a voice in the decision making process.

1 Like

Fully agree, unfortunately Snapshot currently only allows for 4 strategies but hopefully that will change in the future.

1 Like

Is this a technical restriction or is there another reason for this? Do you know by any chance?

The limit of 4 strategies is set by the Snapshot UI. The reason being that the results are computed on the users’ browsers - having too many strategies would take too long for results to resolve because it requires sending more requests.

1 Like

I can’t seem to have the permissions to vote.
What shall I do?

The poll only allows users with trust level 1 or higher to participate in voting.
Trust levels are set by Discourse, here’s an article on the topic.
You can fairly easily move up to trust level 1 by:

  • Entering at least 5 topics
  • Reading at least 30 posts
  • Spend a total of 10 minutes reading posts

Ideally I would like to keep several options open when moving this proposal to Snapshot, as the vote here only received 19 participants so far and the result of a token-weighted voting could be different to this forum vote.
The options I ideally would like to include:

  • Make no change
  • Add Balancer and Uniswap LP Voting Strategies
  • Add Balancer and Sushiswap LP Voting Strategies
  • Add Balancer LP Voting Strategy

However, I am concerned that giving too many answer options will cause the vote to fail as the threshold won’t be reached. (The threshold is 4% of total GNO circulating supply voted on the WINNING result).
Hence, my suggestion is to only vote on two options:

  • Make no change
  • Add Balancer and Uniswap LP Voting Strategies

Any thoughts on this?

I might be wrong, but my impression is that a single custom strategy can be developed to aggregate voting power from multiple sources, e.g. by querying multiple subgraphs. The concern of having to wait for all requests to complete is still valid, though proper use of await should help with that.

This should be possible, but it would require that someone develops this strategy. The mentioned options would reuse existing strategies. But maybe this option should be added to the voting :thinking:

I would only add strategies to the voting that exist already / we know they will be developed in the very near future. I reached out to the Snapshot team to get their opinion on this / find out if they have it on their roadmap.

@gnostik thanks for bringing this up!

perfect I’ll do that thanks!

1 Like

@gnostik @Richard I briefly spoke to Fabien from snapshot and relayed your idea to him but they don’t have it on their roadmap for now. If we wanted to move ahead with that we would need a GnosisDAO vote to fund the development of this feature and set up a bounty.
I would recommend for now to vote on implementing one/two already existing strategies and actually see how much they are being used. Then we can pick up the discussion when we see LP token voting is highly being leveraged. Anyways, there are currently only 3 protocols for which GNO LP token voting would be relevant, two of them we can already accommodate.

1 Like

why i can not vote? confused me

@Creampp - probably same reason as above:

Before this goes live in Phase 3, I wanted to share this voting power contract that Banteg from Yearn put together.
Essentially, it creates a getter function that returns a “voting power” number, your governance token balance across a variety of pools.
This way, we could track more than two additional pools without overloading the Snapshot UI.

I think it’s worth exploring a version of this as an option before proceeding to phase 3.

3 Likes

I think it’s best to allow as much GNO as possible to vote, so using the contract would be better than restricting to 2 strategies.

1 Like

Yes, 100%, this would be the best solution in my view. The only open question is about resource allocation to implement it. Will touch base on this with some devs this week. If it’s feasible, then we can simply have a vote on “Let’s implement the voting power contract to enable LP token voting” “make no change”.

1 Like