I am a big fan of what algofi and folks finance are doing to allow Algos to engage in both defi and governance, however think it should remain as a ‘third party’ solution, and trying to incentivise governers to take extra risk for more votes is a really bad idea. The purpose of Algos is security: to secure transactions (nodes) and to secure the direction of the chain as a whole (governance). If people want to use their algos to participate in defi, sure go for it, but I don’t think it should be necessary to take the risk and complication to maximise votes. It would probably also be very unattractive to institutions wishing to buy algos to secure the chain, and we want buying algos to be an attractive proposition, raising market cap and thereby providing greater security.
Having additional governor rewards for going through defi, or in general participating in the ecosystem, I am not against. But extra votes/voting privilages (like xGov) I do not want to see. Regardless of what is voted on this round (if anything; no need to rush a poorly thought out plan) I would like the option of voting for changing governance to something similar to the system originally proposed by Silvio back in 2020, which I thought was fantastic: providing the right incentives and balances in a clear and simple way. This does not cover how to propose new voting measures, but as a system of normal (non-xGov) governance I much prefer it to the 3 month soft lock, which I find too short a commitment, too slow to respond to previous votes, and not keen on all algos being ‘unlocked’ at the same time. A rolling system makes more sense to me. A longer lock may also encourage defi interaction with algos.
For however the xGov system will work, I think we should vote on using the method proposed in 2020. It is important to get right, and not imperative to get done immediately. Something like having an online stake over a certain amount (e.g. 50k) participating in consensus is straightforward and encourages participation nodes. A small reward (e.g. 1%) to all online stake would also encourage participation - if I am holding algos anyway I may as well put them to work, even for only 1%. xGov wallets could then propose measures to vote on, and any measure that got over a certain threshold (e.g. 20%?) of support could be put to the wider governance community. Each xGov wallet can give their support, weighted by number of algos, to as many measures they think need voting on. xGov rewards should probably not be further incentivised beyond ordinary governance rewards, or the addition reward should be very small. In general, for the foreseeable future, I would be more than happy with the foundation choosing the measures based on what is being requested in the community.
For relays, I personally like the reward structure of deciding a number of relay nodes ‘required’, deciding what a fair reward is, then splitting the total reward across all performant relay nodes. E.g. if we want 100 relays, and think 2000 algos a month is a fair, reasonable reward, then share 200,000 algos a month between all perfomant relays. This strongly encourages setting up new nodes when there are fewer than 100, and cost saving and competition when there are more than 100. There should probably be some weighting relating to how performant a node is (based on uptime/availability/latency) as well as geographical location, if possible. This is to spread relays out and stop centrilization in one country/continent.
These numbers are obviously able to be changed through governance, and at some point will be paid out of the transaction fee pool. The remaining fees can then be used for governance rewards, and maybe for ecosystem incentives, should governors think that is beneficial.
Apologies for what is probably rambling, I’ve never been good at getting thoughts on paper. My main point is I want to vote on switching to the method of governance proposed by Silvio in November 2020. Also, 1 Algo = 1 vote is essential in my view.