There is currently no such thing as a passive Algo holder. Everyone participating in governance has Algo price exposure and therefore market risk and the governance program is no different than a staking pool where one earns a reward for locking up their exposure for a 3 month period of time. The fact that this isn’t currently considered a part of the Algorand TVL is an administrative issue and not a real problem to solve because everyone participating in governance is exposed. There is also a great upward price benefit to people permanently locking up Algos for an extended period of time.
We should not be creating a dynamic between Algo governance participants and other forms of Defi. We should expand governance rewards and increase the hold time significantly so we have extreme upward pressure on the price AND SIGNIFICANTLY increase the incentives provided to the rest of the ecosystem to drive increased utilization on Tinyman, Algofi, Pactfi, Humble, Yieldly, Folks Finance and etc.
We also shouldn’t just assume that all the capital sitting in Algorand governance will just flow to the rest of the ecosystem if the program changes. The capital may permanently leave Algorand because there are people there who have been hurt by the hack in our ecosystem and from the collapse of some tokens prices in our ecosystem. Don’t just assume they won’t leave Algorand.
In summary, we don’t need to create an us vs them mentally in Algorand. The Defi utilization problem, the TVL problem and governance are three separate issues that can be resolved without anyone losing. Algos are not scare resources at this time and we need to make them scarce.