Should GnosisDAO allow to use GNO locked in balancer pools for voting in snapshot proposals?

Currently, a big amount of GNO is used for yield farming on https://balancer.finance/, which is the biggest yield farming opportunity utilizing GNO today. GNO locked up in Balancer cannot be used for voting on snapshot proposals. This creates a tradeoff for GNO holders: You can earn yields OR you can vote.

As snapshot is a balancer spinoff and BAL tokens are used in balancer pools as well, snapshot implemented a solution to allow voting with BAL tokens locked in pools. After consulting with the snapshot team it was offered to make this option available for GNO as well. If this proposal is implemented there won’t be any trade-off anymore and participation in snapshot polls could be increased. There should be no downside to this proposal.

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Straight forward yes! I can also not see any downsides.

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Let’s do that, this will be useful

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Yes from me on this also

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I agree that even the quorum of 75K GNO Yes votes which represents 5% of the circulating supply is difficult to reach.

Currently we have 183K GNO deposited on Balancer pools. The owners of these GNO are active DEFI-protocol users and long-term investors who could provide additional support for the DAO proposals.

I strongly support this proposal.

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For me the question that pops up in my mind with the proposals around LP tokens (e.g. also GIP-7: Should GnosisDAO pay additional GNO rewards for GNO<>ETH LP on Sushiswap?) is if we want to motivate GNO holders to put their tokens into liquidity pools and potentially even specific ones?

While this proposal to be able to use your locked GNO seems less to motivate holders to put tokens into a liquidity pool, it is obviously favors balancer. Do we want to add more pools in the future?

Now that Gnosis has an ENS space (gnosis.eth) on Snapshot, it is fairly easy to add strategies to the Snapshot UI directly in the settings page.
Here is a list of all strategies that are currently available: https://snapshot.page/#/strategies

I would propose to not only add Balancer LPs but also Sushiwap (especially in light of GIP-7 ) and Uniswap.

Note, that there is currently a limit of 4 strategies 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.

I would therefore propose that we focus on the pools where we have most liquidity - and add / remove pools in the future based on where we see liquidity move (this would require a new vote then).

Current approximate GNO pool liquidity size:

I am suggesting to vote on the following:

  • Add the following Strategies to Gnosis Snapshot to enable LP token voting: Balancer, Sushiswap, Uniswap
  • Make no change
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For me the purpose of this particular proposal by Stefan is rather to not penalize GNO LPs for providing liquidity to GNO. GNO holders should not have to chose between providing liquidity and participating in governance. Therefore I think we should enable LP voting simply based on pool size for the moment, ie the top 3-4 AMMs in terms of GNO liquidity.

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I like this proposal and would be in favor of moving it to voting Phase-II.

I believe it is common to assume that most token holders like doing something with their tokens apart from holding them (i.e. providing liquidity, lending them, etc).

We should not force GNO token holders have to sacrifice governance over LPing or viceversa.

I think it is more valuable for the ecosystem to have tokens “working” rather than just idle. Thus, I think we should move fast to enable LPs of the most popular AMMs on Ethereum (which are Uniswap, Sushiswap, and Balancer) to vote on the GnosisDAO with GNO<>ETH LP tokens.

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We already have 2 strategies in the current gnosis space (gno balance and delegated gno balance), so we should decide on 2

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Could you outline more why you thing it is more valuable for the Gnosis ecosystem to have the governance token “working” rather than beeing idle?

But why should they not have to choose? Just because the major stake holders have a lot of tokens in balancer and other LP (which is kind of a valid reason). Or is there a more fundamental reason (related to Rafas “working” token statement)

Edit:
My question is geared towards what behaviour do we (as in the DAO) want to promote. I would take your point as “We loose voting power of important stakeholders, because they have their funds in LPs”, but another point could be “As you do not hold full control of your voting power you should not be allowed to use it”. This obviously depends on what kind of behaviour the DAO wants to have.

While I personally don’t have a super strong opinion, I prefer the standpoint: Governance tokens (what GNO is for me right now, as it has no other usage) should not be used to farm (or at least it should not be promoted/ supported by the Gnosis DAO).

By working I mean tokens not being exclusively held in a wallet, but rather LP’ing, being lent out, etc.

I think it is good to give users multiple things to do with their tokens apart from their core functionalities (governance being the case in Gnosis).

You can find this throughout the space, tokens receiving yields in multiple platforms that also work as governance tokens (BAL, SNX, AVVE, etc).

The main reason GNO LPT should have a vote is that they are taking a risk to improve the fundamentals of the token.
Liquidity providers are usually long term holders because LP require a long period of time to overcome impermanent loss and make a profit.

LPs effectively buy GNO when the price falls absorbing part of the downside.
LPs sell GNO when the price rises therefore facilitating its distribution.

If we forced them to remove liquidity to vote, GNO would be very iliquid, making it impossible for new investors to buy or for current investors to sell without a huge amount of slippage. A temporal iliquid period would also promote speculative attacks as a very low amount traded would have a big impact on price.
Then we have another question, why would they remove liquidity if there are no incentives to vote?.

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The tokens mentioned are tokens of yield baring platforms itself so it would be weird if they disallow it. But therefore I would not use them as reference for the Gnosis DAO.

Thank you for the detailed answer and this totally makes sense for me :slight_smile:

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Hmm, in my view GnosisDAO is shooting in its on foot if its not adding LP token voting, I will explain in more detail below.

I would argue that the major stakeholders have enough GNO to both engage in yield farming and to participate in Gnosis DAO governance and still have a major weight in the vote.
Enabling LP token voting will give “smaller fish” more equal opportunities.

Another, even more relevant point for me is centering around the fact that we want to grow the community of GNO holders. Volume, yield farming opportunities, but mainly availability of GNO is increasing the attention of the community towards Gnosis as a project and providing new parties the opportunity to join the GnosisDAO community by buying the token (without huge slippage). (More details on risks associated with LP provisioning in @claberus last post). Therefore, recently more efforts have been made to increase the availability of GNO (e.g. GNO to be added to the Sushiswap rewards program - not speaking about the pending GIP-7, but about Sushiswap’s own farming program which GNO had initially not been part of). Not enabling LP token voting might become a real problem for GnosisDAO governance in the long run and can be conflicting with its own interests: efforts to increase the availability of GNO across multiple DeFi protocols might lead to less governance participation and potentially proposals failing if the required threshold for a vote to pass is not reached.

Could you explain in more detail what are the major arguments for this perspective?

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One is a DEX, the other is a Synthetic Asset issuance platform, and the third one is a Money Market/Lending protocol. I’d just say the last one, AAVE is a yield bearing platform necessarily.

Shouldn’t the DAOfund these pools in this case and not the holders with their voting tokens?

Regarding my comments:

Obviously putting the tokens into another contract has the risk that these contracts can be compromised in any ways. Therefore you don’t hold as much control over them (compared to when you hold them in your wallet) … But this is a very theoretical and extreme statement (that’s why I mentioned it hyperthetically)

And why I prefer that you should not use GNO for farming/ liquidity mining. Because as said for me currently it is a governance token and I don’t see why you need to make money with a governance token.

I do get @claberus point that for the token it is valuable that it is stable. But there are also others ways for that, right? E.g. linking GNO more directly to the DAO assets.

As far as I understood all of them require users to lock funds (e.g. to provider liquidity) so that other users can use these funds (e.g. by borrowing, trading against them, …) and the fees for that action are given back to the user locking their funds.

If we say that is our vision of the DAO (that users put their funds into the DAO, the DAO does something with the funds and then the excess is given to the token holder) I would agree that you can compare these to the Gnosis DAO pretty directly to the other platforms.

But right now this is not the case right?

To be fair, this goes into a different direction: What is the purpose of the DAO

I think we should keep this proposal focused on allowing users vote with LP tokens.

I might be biased by personal views, but I don’t see a scenario in which having a more liquid GNO is bad.

I think we should reward LPs by having a say in the DAO given that they take the risk of providing liquidity.

1 Like