[1IP-26] Remove st1INCH(v1) Voting | Modify st1INCH(v2) and v1INCH Voting Weight Calculations

2.1 General Proposals
1

Author:

@RoundElephant

References:

Simple Summary

This proposal seeks to modify the 1inch DAO governance process with the following changes:

  • Remove st1INCH(v1) voting and delegation strategies from the 1inch Snapshot space.
  • Change the st1INCH(v2) voting and delegation strategy to use Unicorn Power instead of token balance.
  • Replace the existing 20% weighted v1INCH strategy with a strategy that emulates the power decay of UnicornPower – i.e., fully vested, and unclaimed, v1INCH, will have greatly diminished voting power. v1INCH that is at the beginning of its vesting contract has full 1:1 voting parity with st1INCH that is at the beginning of a 2-year lock.
  • Increase the Snapshot proposal creation requirement to require 100,000 Voting Weight (currenlty 25,000).

Abstract

If passed, this proposal will modify the 1inch Network governance process to better reflect staking changes made alongside Fusion mode:

  • By removing st1INCH(v1) for the governance process, 1inch Network will fully complete the transition to the new staking contracts.
  • By using Unicorn Power to calculate Voting Weight, instead of token balances, the 1inch DAO governance process is better aligned with the revamped 1INCH staking mechanics.
  • By greatly reducing the voting power of fully vested v1INCH, the DAO will ensure that only those who have a longterm stake in the protocol will be able to make decisions that control 1inch Network.
  • By increasing the proposal creation requirement, we can ensure that proposals which hit the final Snapshot vote already have a non-trivial level of support.

Motivation

  • With the passing of [1IP-11] 1inch Staking Pods in December, 2022, the DAO began the transition away from the legacy staking contracts.
  • [1IP-14] Update 1inch DAO Voting Process to Include st1INCH(v2) put the infrastructure in place to allow the new st1INCH to participate in governance.
  • This proposal marks the full deprecation of st1INCH(v1) as its only remaining utility has been voting on Snapshot proposals.
  • If st1INCH(v1) is never removed from the voting system, it will have an unfair advantage compared to st1INCH(v2) as the latter’s power diminishes over time.
  • There is currently over 10 times more st1INCH(v2) staked than st1INCH(v1) ← this shows that there has been enough time for all active participants to migrate.

Specification

v1INCH

v1INCH is the non-transferable ERC-20 token which represents 1INCH tokens that are currently locked in the vesting contract. These tokens are held by backers, advisors, and core contributors. Redeeming fully-vested v1INCH for the underlying 1INCH is a manual action that must be taken by the holder.

Currently, all v1INCH, no matter where it is along its vesting contract, has a flat 20% weighting compared to st1INCH. This proposal calls for a treatment of v1INCH similarly to that of st1INCH(v2) – v1INCH will have more voting power if there is more time remaining on the vesting schedule (with a 2-year maximum). Here is a breakdown of how the voting weight will change according to the unlock schedule:

  • 1-year cliff to full unlock: 22% voting power
  • 1.5-year cliff to full unlock: 47% voting power
  • 2-year cliff to full unlock: 100% voting power
  • 3-year cliff to full unlock: 100% voting power
  • 4-year cliff to full unlock: 100% voting power

Example 1

  • Address: 0x812D157dd6CF4aAc6bEfcEd2CE92B725cBEEc39A
  • v1INCH balance: 37.5M (only 12.5M is locked until June, everything else is fully vested and claimable)
  • VotingPower:
    • Current scheme = 7.5M votes
    • New scheme = 1.73M votes

Example 2

  • Address: 0xf2d10DBFB999cF85b0D0a81c9ae70fde5B80310f
  • v1INCH balance: 250K
  • VotingPower:
    • Current scheme = 50K votes
    • New scheme = 17K votes

Example 3

  • Address: 0x317E1b409C0809f0Dd56b8Fb84185e2982106287
  • v1INCH balance: 8.57M (everything is locked)
  • VotingPower:
    • Current scheme = 1.71M votes
    • New scheme = 2.49M votes

Example 4

  • Address: 0x03429fA2D2Ba986D5b9F619c616fE4077a297B98
  • v1INCH balance: 500K
  • VotingPower:
    • Current scheme = 100K votes
    • New scheme = 276K votes

Snapshot

The 1inch Network Snapshot space will be updated with the following changes:

  • Remove st1INCH (v1) voting and delegation strategies
  • Remove the existing 20% weighted v1INCH strategy
  • Add a new voting-power-weighted strategy for v1INCH using this contract: VestedVotingPower | Address 0xfB7246C98B6e6C8529c06359B237566e5Bc4677C | Etherscan
    • This contract gives onchain mapping for the appropriate vesting contract of each v1INCH holder.
    • This is an onchain expression of the logic described in the previous section.
  • Change the proposal validation strategy to require 100,000 Voting Weight when creating a new proposal.

Token Contracts

Rationale

Onchain mapping of vesting contracts to each v1INCH holder was a prerequisite for this proposal as there was no other way of determining if a holder’s v1INCH tokens were fully unvested, partially vested, or fully vested. The 1inch core contributors have deployed the VestedVotingPower smart contract that does this mapping.

It is important to note that st1INCH(v1) holders will still be able to unstake their 1INCH at any point in the future.

Considerations

This proposal will have no cost to the 1inch DAO Treasury.

As opposed to st1INCH(v2), st1INCH(v1) does not require a timelock to participate in governance – a bad actor could use this lack of a time-commitment to abuse the 1inch goverance system. This proposal will prevent that as all votes will only be cast by timelocked tokens.

Once passed, the reality.eth proposal acceptance criteria, and the 1inch DAO governance documentation, will need to be updated to reflect the change to v1INCH voting weight and the proposal validation strategy.

6 Likes
2

Hey all, I wanted to give a brief explainer on how to use that VestedVotingPower contract to see what the revised voting weight will be for any particular v1INCH holder. I think it is important for everyone to get a good feel of how this will change up the voting power of individuals. I’m not a developer, and even I’m able to do it via Etherscan:

  • Go to the contract’s Etherscan link and click Contract → Read Contract (here is a direct link to this page).
  • Expand 6. votingPowerOf
  • Enter the address of the v1INCH holder in the account (address) field.
  • Clear Query and it will show you the result as a uint256 (it can be converted to normal decimal using Etherscan’s built-in uint256 converter).

Since voting power constantly decays, you will notice that addresses from the examples have lower power than when the examples were created. This also demonstrates how voting power decays faster as the addresses approach their final unlock.

1 Like
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Hey @RoundElephant, support the proposal which introduces long-term alignment to the DAO.

can you elaborate on the rationale on

‘Increase the Snapshot proposal creation requirement to require 100,000 Voting Weight (currenlty 25,000).’

2 Likes
4

Raising the threshold is meant to ensure that proposals already have a measurable level of support before they enter into their final vote. 100,000 is 1% of the quorum, this is closer to the thresholds set forth by other DeFi projects (but still far lower):

5

Hey @RoundElephant, the majority of our votes are from v1INCH, and delegated
Not sure if it’s an excellent idea ATM; according to the snapshot, there are only 5 delegates with more than 100K voting power! And in the boardroom, we can see there are no more than 45 accounts with 100K voting power that has voted at least once in the proposals.

6

This has been progressed to the phase-4 vote: [1IP-26] Remove st1INCH(v1) Voting | Modify st1INCH(v2) and v1INCH Voting Weight Calculations