Hello fellow DAO members!
A few things first!
Why liquidity pooling is incentivized
Let’s remember why we incentivize pooling liquidity, I’m not the best person to ask this to, however, a few obvious reasons come to mind:
- Incentivizing liquidity drives liquidity to the pool
- We want to drive liquidity to the pool to create deep liquidity and allow the price to fluctuate very minimally when anyone exits or enters a staking position through the pool
- Liquidity mining programs are a great way to distribute governance tokens and it helps to engage the community, incentivize voting and active DAO participation. Sure, we know that the most active DAO participants may not coincide with the largest wallets, but it sure helps get people in when you’re giving them voting power in exchange for helping us maintain deep liquidity in the pools.
- Incentivizing the rETH2/sETH2 drives liquidity to it as well, this differentiates StakeWise in a significant way to other staking protocols, where users can’t compound their rewards, here they can!
- See the first reply by @amphoria which further highlights disadvantages to pooling which are compensated by the rewards.
Recently, a governance vote passed on the third extension of incentives for the sETH2/ETH and sETH2/rETH2 pools. This vote, as opposed to the first extension and the second extension was NOT overwhelmingly in favour to actually extend the incentives.
After some quick and dirty data analysis of the 3 extension votes, some interesting trends and figures show (I hope you like barplots, because that’s all we need):
Some good news
Consistent voters’ SWISE count is on the rise
Albeit not significantly, voters which voted in all three extensions seem to be acquiring more SWISE, my guess is that most of these increases come from the Uniswap incentives, but after close inspection, some sold, some bought, but as a whole, they’re on the rise:
Other interesting information
Extension votes 1 and 2 had a significantly lower amount of SWISE in votes
It’s not black magic, we know this last incentives extension vote was anomalous, but it helps to illustrate by how much.
Every time there’s less unique addresses
There could be many reasons for this, but my guess is that since if a voter sees that their balance doesn’t seem to make any difference to the outcome of the voting, the user is not exactly encouraged to vote.
The first two votes were much more in favour of extending than the third one (in terms of unique addresses)
There’s more addresses voting no than yes in the third vote than in the previous two. Consider this does not take into accoun the wallet’s size, so there’s wallets with lower amounts of SWISE voting no, before voting no, there’s a whole month of rewards where you can voice your opinion and say whether you agree, disagree with the program, or whether you consider the incentives must be adjusted, anything, but voice your opinion, we actively encourage it and want it.
Prior to this last voting, the ‘no’ option had basically no support at all (in terms of SWISE amount)
Before there may have been addresses which voted no, but they held virtually no SWISE.
Some things we need to ponder
The meaningful addresses that voted no
These two addresses represent about 34.4% of the SWISE used in the third extension vote, about 91% of the SWISE used to vote no was also coming from these two addresses. Quickly going on etherscan we can see that the SWISE used was acquired over 4 transactions as follows:
The plot shows a cumulative sum.
Whatever the motives are behind this decision by these two wallets to vote ‘no’, us DAO members that care want to hear your motives!
If you disagree with extending the program, make your voice be heard, come to the forum and post, post here, post anywhere, but let us know why!
PS: I promise I know how to make way prettier plots than this, but bear with me, we need practicality, not beauty.
- Why did this occur?
- If the overwhelming majority of the DAO agrees with the program and these two wallets don’t say anything, we need to make sure that we can safeguard these votes. It wouldn’t take a ton more SWISE hoarded by wallets like these to defeat an important vote that could hurt the protocol by causing liquidity to get out of the pools due to lack of incentives.
- Whether or not these two users decide to comment under this post or not, we need to remember WHY the incentives are there and WHY we push to keep it like this. If you consider the amounts need to be adjusted, say so! if you think there are issues with the incentives, say so! voice your concerns and opinions!
- If there’s anything you see wrong in this post, point it out please. If you want the files I used to produce the plots, I can also share them, just DM me on discord.