[LRFC] Move Governance to Lyra Chain

Simple Summary

Move governance to Lyra Chain.

Abstract

We outline a proposal that will greatly improve the experience of LYRA holders. It will perform a full migration of governance to Lyra Chain.

Motivation

Recently, the economics of LYRA were upgraded to coincide with the launch of V2. That proposal aimed to enable decentralised governance of v2, promote its adoption (via incentives) and put the DAO on a path to sustainability (via fees). However, the user experience associated with Ethereum-based governance is poor. This tradeoff made sense in a world where we were pursuing deployments on multiple networks but not in the context of our singular focus on Lyra Chain.

Specification

Migration

Move governance to Lyra Chain

Agora will build the software required to migrate governance. They have previously provided services to the DAO, building the current delegation portal. The deliverables are:

  • Onchain governance framework, conceptually similar to Lyra Governance V2 with a few major exceptions:
  • All onchain processes will occur on Lyra Chain (i.e. proposing, delegating, voting).
  • All-in-one home to view both onchain proposals and offchain tempchecks with a proposal creation wizard that is both powerful and easy to use.
  • First-class support for delegates, via profiles, delegate statements, and various filters and sorts to help token holders discover new delegates.
  • Easy to use voting interface that allows vote with reason to encourage ecosystem discussions.

In addition to regular delegation, the system will support re-delegation and partial delegation. This will improve the experience for large and institutional token holders, and enable a seamless transition for delegates who are looking to transition their role or portion of their responsibilities. Costs for proposing, voting and delegating will be minimal due to the lower costs of Lyra Chain.

Configurable Parameters

N/A

Copyright

Copyright and related rights waived via CC0.

2 Likes

I overall agree with the first part (migration).
On second part (buy back) here are my comments:
I agree with buy back but disagree to incentives to go to voters.
Lyra is a Defi project, its main goal should be to a. increase trading and b. increase liquidity (related to a.), c. increase liquidity and price of gov token to be used as backstop. Anything else is a secondary to these goals.
As a result incentives should go to traders, liquidity providers and stakers above all else.
I think Lyra could actually incentivize stakers to become LPs and taders even more.
I propose to follow the model Goldfinch has in its membership program and give higher incentives to be both LP (and in this case also trader) + staker. In other words, find a healthy balance where you could be incentivised to be both token holder and trader/LP. They buy back program could help with this.
Incentivising voters instead especially at such early stage would just increase unnecessary politics and would not add anything to volume or LTV. We should first ask what is the main purpose of a defi project and start from there.

There are no LPs anymore in Lyra. Traders are rewarded with a program where 150M $LYRA will be distributed during a 2 year period.

Thanks for replying. I know that, but I wrote trader/LP. So for now this would apply only to traders.
Regarding LPs, will it always stay that way?
I think long term for Lyra chain to succeed passive LPing or at least simple strategies should become possible.

Buying back $LYRA Positives:

  • Generates price support and liquidity for LYRA
  • What kind of “fees” revenue are we looking at for LYRA?

Negatives:

  • This LYRA will be sent to the rewards pool and distributed to Active Governance Participants. To be considered an Active Governance Participant, holders must:

  • Have voted on the most recent governance proposal or

  • Have delegated their tokens to an active governance participant in the last 3 months

  • Forcing people to vote in governance to get the lyra fees makes $LYRA staking a second class citizen almost. Theres risk to doing this that alot of investors are just looking for passive yield.

Imagine forcing someone to vote at AGM’s or via a proxy otherwise they lose their dividends in the company. I think the social contract / agreement is that they earn it regardless. Maybe a better incentive is to give them some kind of extra incentives (carrot) for delegating or participating in governance than a stick. Ideas:

  • Could you put the LYRA buyback + ETH / USD fees as a combo into liquidity pools so you act as MM (Earn extra % yield)
  • Distribute the LYRA LP’s % as the reward back to stakers
  • Might be not as efficient as just pure buying LYRA for price appreciation