On April 26th, B.Protocol users will vote on a new governance and jar distribution model. Given the clear signal from the community, with 99% of the users wishing to base the governance on a transferable token, it is the time to discuss how a single DAO would control two different integrations, namely the Maker and the Compound integration.
The current governance consists of two DAOs, one is controlled by mScore (Maker) and one by cScore (Compound). In a tokenized unified governance, the DAO role is three-fold:
- Select the backstop members (liquidators).
- Decide on the proceed sharing scheme between users and backstop (jar distribution).
- Making the governance more decentralized, by further distributing governance power to users (a.k.a liquidity mining).
Building the unified governance will require to decide how much power each mScore and cScore holder will get in the new unified DAO. Or in other words, the initial token distribution between Maker and Compound users.
And how the future score will be distributed between Maker and Compound users.
At the time of writing, the amount of Compound deposits (in B.Protocol) exceeds those of Maker by over 40%, and we are witnessing a bigger growth there. However, Maker users were the first to join B.Protocol, and had a major role in creating the initial traction around it.
In the absence of a mathematical formula to weigh such different considerations, we hope the community could form a consensus around splitting the initial power equally, namely 50% to Maker’s users, and 50% to Compound’s.
Moving forward, in a unified governance, a liquidity mining program will have to be able to weigh operations across different tokens (e.g., WBTC, ETH, DAI) and different platforms (Maker and Compound).
Members of the community (e.g., @Commiekiller) already proposed a scheme in which everything will be normalized to a USD value. We believe that this is an elegant way to balance operation in different tokens.
In order to balance between Maker and Compound platforms, we need to take into consideration that normal Compound users sometimes only deposit their funds, and do not borrow, while a normal Maker user does not. While our backstop doesn’t generate added value for a user that only deposits funds, at these early stages it would make sense to aim for all Compound users, with the hope that once they are using B.Protocol interface, they will continue using it also when they wish to borrow.
To mitigate these differences, new Score and governance rights will be distributed according to the USD value, where the ratio between Score allocated to collateral and debt will be 1:2.5. Meaning a debt will get x2.5 over deposits. For fairness reasons, we suggest that the same scheme will be applied also for Maker, even though deposits serve a different purpose there.
Finally, because of different user profiles, some protocols will have more liquidations than the others. As the community already suggested to distribute the Jar according to a non transferable score (and thus, decouple it from the voting rights), it would be appropriate to maintain different jars for each protocol, also in the future, and distribute each Jar according to the Score that was accumulated for that Jar by the users of that platform.
To put in simple words, the separation to mScore and cScore will remain, and the mJar (respectively, cJar) will be distributed according to the mScore (cScore), while the governance power will be unified for both integrations.
- Post Genesis vote, 50% of governance will go to Maker users, and 50% to Compound users, and one DAO will be formed.
- Future allocation will be according to a normalized USD value.
- Deposits, both in Maker and Compound, will be rewarded, according to 1:2.5 ratio compared to debt .
We invite the community’s feedback on this scheme in the coming days, before the on-chain vote will begin.