We don’t need to force a lockup, rather we can incentivize one
In the wake of a revolution in governance structures, from ve to (3,3) to ve(3,3), we are introducing the next logical paradigm in decentralized governance: re.
Simple, yet elegant, re innovates where ve has failed. We believe governance power should be continuously rewarded based on involvement and stake in the protocol. ve fails at this because it requires you to continuously buy more of the governance token in order to maintain your voting power. While a necessary step in the evolution of decentralized governance, and undoubtedly a foundation for newer governance models, we believe we can enhance the ve model and expand upon it.
DAO members begin by minting a HAI DAMO Governance Pass. This pass is completely free to mint and is a dynamic, on-chain, generative ERC-721 NFT. After minting, members stake their $DAMO onto the NFT. This functions similar to a lockup, except, unlike ve, users will be able to unstake at any time. However, with re, users are heavily incentivized to maintain their stake. We achieve these incentives by reflecting voting power in the form of reDAMO and making reDAMO the source of voting power for directing protocol-earned value. The amount of reDAMO a member has will be a function of their DAMO staked and the length of time this DAMO has been staked. Members will begin accruing reDAMO immediately upon staking. Upon unstaking, all the reDAMO will be erased from the Governance Pass. This incentivizes, rather than forces, long term $DAMO lockups. The longer a $DAMO token is staked, the more it is worth to the holder as that $DAMO is now worth proportionally more than a fresh $DAMO token, therefore making it more valuable than an unstaked $DAMO. Since $DAMO can be unstaked at any time, 1 reDAMO >= 1 $DAMO.
What can I do with it?
When the core product (DIVs) launches, Governance Pass holders will be responsible for managing DIV weights and channeling real asset rewards to their desired locations. While DIVs are still at least a month away, there is one governance application that will be launching as soon as the audits are done: the emission gauge.
The Emission Gauge
In the beginning, HAI DAMO allocated an amount of tokens for burning as well as an amount of tokens for ecosystem development and community engagement. We have decided to pool these tokens together and allow Governance Pass holders to vote on how many of these get burnt or rewarded each week. In order for HAI DAMO governance to function effectively, enough capital units ($DAMO) need to be distributed to the community. This gauge provides an amicable method of distributing these capital units as efficiently as possible.
With reDAMO, members are rewarded with additional trust in the form of voting power (reDAMO) for staying in the protocol. Your voting power within the protocol increases as your reDAMO accrues. This promotes a more engaged member because as their power within the protocol increases, they are less likely to leave, which creates stickiness in having $DAMO locked up in staking. We don’t need to force a lockup, rather we can incentivize one.
The Governance Pass and Staking modules are currently in the process of being audited. We expect the audits to be completed in April 2022, at which point we will polish our UI and launch. We thoroughly believe (re)economics can offer solutions to previous governance pitfalls and we are excited to finally deploy them. Thank you all for reading and we look forward to sharing more exciting developments in the coming weeks.
reDAMO = reward engaged DAMO
Voting power = reDAMO
Governance Pass = NFT representing status within the protocol
Emissions = DAMO released
Quill Substack: 0xquill.substack.com/p/the-hai-damo-value-proposition?s=w