Proposal to Shorten the On-Chain Voting Period & Reduce the Minimum LUNA Voting Deposit

Governance & Proposals
1

Proposer – Terraform Labs

Disclaimer – I am employed by TFL.

Context

To initiate an on-chain governance vote on Terra, the proposing party or parties must submit a minimum deposit of 512 LUNA collateral for the 14-day voting period to go live. Should the vote subsequently pass, the 512 LUNA deposit is returned to the proposer(s). Deposits are refunded if all of the following conditions are met:

  • The minimum deposit of 512 LUNA is reached within the two-week deposit period.
  • Quorum is met – the number of total votes is greater than 40% of all staked LUNA.
  • The total number of NoWithVeto votes is less than 33.4% of the total vote.
  • A vote returns a majority of Yes or No votes.

If the vote fails to meet the above conditions, then the 512 LUNA deposit is slashed – meaning it is not returned to the initiator(s) of the proposal. The deposit is burned if one of the conditions manifests:

  • The minimum deposit of 512 LUNA is not reached within the two-week deposit period.
  • Quorum is not met – the number of total votes after the two-week voting period is less than 40% of all staked LUNA.
  • The number of NoWithVeto votes is above 33.4% of the total vote.

The 512 LUNA deposit functions as a safeguard against spamming the voting process by embedding risk into the initiation of a governance vote in the form of at-risk value (i.e., LUNA) should the vote fail. With a minimum deposit, poorly construed votes that don’t meet standards set by the community are dissuaded from being initiated, facilitating more constructive votes that have undergone rigorous discussion on Terra’s Agora Research forum, and the proposers believe have a higher chance of passing.

However, as LUNA’s price has increased significantly since the initial 512 LUNA deposit parameter was set, it has prevented more active governance participation from the community. At current prices, 512 LUNA is equivalent to roughly $23,000, precluding many users from initiating potentially net-positive, successful governance votes since the at-risk value cost if the proposal fails is simply too high. Consequently, Agora proposals that stand to benefit the Terra ecosystem and have undergone thorough community discussion tend to remain solely Agora posts of community ideation rather than actionable on-chain votes.

In the first part of this proposal, TFL proposes reducing the minimum LUNA deposit to initiate on-chain governance votes from 512 LUNA to 50 LUNA.

At a current equivalent value of $2,200, the 50 LUNA deposit will lower the barrier for many parties to submit constructive governance votes without excessive risk while still maintaining adequate safeguards against spamming the on-chain voting process. The idea is to facilitate more active governance engagement from users that would otherwise be disincentivized to submit on-chain votes with the current deposit amount.

The second part of this proposal focuses on the voting period itself, which is 14 days once the current 512 LUNA deposit is made and the voting period commences. The voting period enables sufficient time for stakeholders to consider and discuss how to cast their votes across diverse time zones and schedules.

However, multiple proposals over the past year have either met, exceeded, or failed to meet “Yes” or “No” vote quorum requirements within a much shorter period. By the time the 14-day voting period concludes, the results of many proposals have already been firmly in hand for up to a week or more. The result is a delayed initiation of the effects of governance proposals, particularly those that pass successfully and are significantly beyond the required quorum threshold. In a hyper-paced crypto ecosystem, the speed of shipping and activating community votes can often make a meaningful difference in outcomes.

Recent community discussions indicate that the 14-day voting period hinders the rapid deployment of successful governance vote actions. In particular, more prominent votes like initiating IBC and Col-5, which both passed with nearly unanimous approval and whose quorum was reached within days.

In the second part of this proposal, TFL proposes reducing the voting period from 14 days to 7 days.

The result will be a voting period that ameliorates the delay issues associated with the current 14-day period while concurrently maintaining sufficient time for stakeholders to discuss active vote proposals and cast their votes accordingly. A shorter on-chain voting period also encourages more deliberate engagement from stakeholders, since the reduced window to discuss and vote on proposals can produce more active social signaling and public discourse on the subject matter at hand without topics being buried under new developments.

Execution Plan

This proposal will be initiated as a single on-chain vote since it requires a parameter change to both aspects. The on-chain vote will include:

  1. Reducing the minimum LUNA deposit during the “Deposit” period from 512 LUNA to 50 LUNA.

  2. Shortening the on-chain “Voting” period from 14 days to 7 days.

Should the proposal pass, the new voting period and minimum deposit parameters will go into effect immediately once the voting period concludes for the above on-chain vote.

Please allow for open discussion regarding the proposal above.

An on-chain vote for the above will follow within the next 48 hours.

19 Likes
2

Great proposal especially about the shortened time to 7 days, will help keep up with the pace of innovation!

1 Like
4

Shortening from 14 to 7 days sounds good to me!

However, maybe setting the luna limit at 100 would be a good start to things? Can always adjust it down when Luna is firmly in the $XXX range.

1 Like
5

I was wondering why no one proposed this so far, I wanted to do so, but 512 LUNA was way too much for me to gamble with. Kudos to you my friend, you have a big YES vote from me!

1 Like
6

Awesome

7

I agree with lowering the voting period, 7 days feels optimal between time for analysis and waiting for execution, 14 has felt to long for a while now. But I also believe that 50 Luna may be a low threshold for new proposals, I’m concerned it may lead to abuse and with the lower voting period may lead to some proposal passing because of uninformed majority of voters.

Could we start by lowering the voting period to 7 days and making the threshold to propose half of what it is now, 256 Luna? With the compromise to keep lowering it in the upcoming months, should everything run smoothly until then.

8

@TheIntern you’re keeping busy! Well done, TFL.

I acknowledge the current limitations of a 14-day voting period. 7 days is more appropriate for a quicker vote and execution of passed proposals. This change is something we would support.

As for reducing the minimum LUNA voting period, we feel 50 is too low. Currently there are five active votes on a range of topics such as events, treasury burns, and DEX funding. While a shorter voting period would help with this, 50 LUNA will not.

I believe we may have to find a number in the middle. How does 200 LUNA sound? That number seems more appropriate. At current rates, this is just below $10,000.

Look forward to hearing your thoughts.

9

@fig Maybe 200 Luna is better for after the bull run, I believe that is why TFL chose 50 as the amount for this time period and is the right move imo.

To your point about: There are 5 active votes now:

Sure, but that’s from mainly TFL and has not been the trend the past few months. There were like only a few total for the past few months, see the images attached

Oct: 1 Vote for the whole month
Sept.: 1 Vote for the whole month

image
image1564×599 44.2 KB

image
image1541×427 24.7 KB

10

Hey, thanks for your input. Currently, 3 out of the 5 active governance votes were initiated by TFL, and most proposals over the past several months have also been initiated by TFL. Our goal is to encourage more active governance participation by community members and stakeholders, particularly those that are active on Agora discussions and produce constructive ideas but are hesitant to launch governance votes because of the current minimum deposit.

Comparing 50 to 200 LUNA, a rate around $10K will likely still preclude many people from initiating votes, as the average LUNA holdings of many LUNAtics that contribute to the community are quite small. $10K is a lot of money to many people to lose at the whims of online voting in return for taking the ambition to propose an idea to a shared community, which is something we should encourage.

For reference, we want to provide an avenue for ardent supporters of Terra that are active in other roles in the ecosystem but may not hold abundant LUNA to engage in governance in a meaningful way that breeds better decentralization over the long term – setting the foundation for a wider variety of perspectives to contribute to decisions on the network. If contributors feel rewarded by making actionable impacts in governance votes instead of purely ideating on Twitter or Agora, then we’re on the right path. Primarily, this includes deploying community pool funds that fuel ecosystem growth, which has been relatively intermittent over the past several months relative to other major DeFi protocols and DAOs despite many promising ideas floating in the community and a well-funded pool.

Regardless, the 50 LUNA will be put to a vote shortly. Should it pass, the community stakeholders can gauge its effectiveness in promoting more active governance relative to any potential downside of introducing less-viable proposals as on-chain votes (i.e., spam) and introduce changes if necessary. Should it fail, we can explore raising the minimum if the majority of dissenting votes and sentiment indicates too low of a deposit minimum. I don’t think there’s an explicitly correct number to entrench for the minimum deposit in a price-volatile asset, but we concluded that 50 LUNA is the optimal starting point to measure the effectiveness of increasing governance participation.

At the current value of $2,500, a 50 LUNA minimum still provides adequate defense against spamming since, for the majority of Terra users, the cost-risk associated with the potential slashing of the deposit remains fairly high.

7 Likes
11

What if rather than decreasing to 7 days, we include a shortcut in the polls whereby once the majority has voted (like of 51% vote in favor of Columbus five) the poll ends early.

1 Like
12

If including a shortcut in the polls once the majority has voted is possible I like that better than decreasing the voting to 7 days

13

This is an excellent response and while at first I was unsure, I think lowering the minimum to 50 LUNA is a great idea. We can always raise it later with another proposal if on chain voting becomes spammy, but I think this will help governance become more decentralized. Thinking about extremes, a high minimum deposit makes the protocol more centralized, as only the whales at the top can ever start a vote and they would never submit a proposal they don’t like, leading to the direction of the protocol being controlled by them. At the other extreme, having no minimum deposit makes the protocol more decentralized as anyone can submit a proposal to direct the future of the protocol. Obviously both extremes are extremes and are not practical, but I would rather err to the lower minimum deposit side, which is why I support this proposal. 50 LUNA is also still a lot to many people to risk for very little reward.

1 Like
14

I think something like this has to happen, however, and I have no idea of the technical limitations so bear with me.

What about making the deposit limit dynamic with the LUNA/UST price required?

So we vote for whatever we deem as acceptable UST LUNA equivalent (50 LUNA at todays price is ~$2500 UST).
is $2500 UST LUNA equivalent the threshold we want to have for LUNAs worth to initiate a vote? If that is the case then why not just have that be the target price and whatever LUNA is average or median price is over e.g 3 months (1Qtr), that will be the LUNA required to deposit to initiate the vote?
That gets rounded up/down to nearest LUNA.

This means that we will only ever need to adjust the $UST equivalent amount going forward since LUNA price always fluctuates makes managing this from abuse pretty difficult.

Anyway just some of my LUNA dust worth.

1 Like
15

How about making the poll duration a minimum of 7 days so if someone want’s to propose something they think will take longer to market and get the votes they can make it 14 days or even longer. High priority or populist polls can then go with the minimum of 7 days for a fast tract approval.

Plus duh, if a vote gets an unassailable affirmative vote then sure, why not let it end immediately unless the creator specifically wants it to take the full period regardless.

16

Remember that 512 LUNA used to be under $500 and during the May crash it was $2500. Did we have a problem with proposal spamming back then? Not that I’m aware of. Somewhere around $1000 to $5000 feels about right to me but given the current LUNA trajectory I think 50 LUNA could soon be over $5000. Therefore I’d tend to the low end of 20 LUNA, maybe a compromise going with the powers of two… 32 LUNA?

1 Like
17

Technically this isn’t possible in the current governance module implementation. To add that feature, it would require forking the governance module from the Cosmos SDK.

1 Like
18

just noticed that the last-ranked validator has ~55k LUNA staked so 50 LUNA is ~0.1% of the staked LUNA and assuming 10% commissions and 10% APY, the cost to the validator is ~1.5mths of his rewards. probably fair when viewed through this also

you have my vote!

1 Like
19

I think this proposal is constructive and beneficial

20

yes. Let’s do this. The limitations was set for a more innocent time when $Luna was less than $0.30, w/ a smaller community, and a lot less projects. It’s time to lower the barriers to new ideas and active participation.