KPI-Based Vote Incentives = Future of France
Vote incentives have been one of the hottest DeFi trends of 2022, owing to the growth of vote-escrow models seen in the space. In 2020, Curve Finance launched its highly successful ve-model whereby holders could lock their CRV in exchange for veCRV, and take part in voting on gauge weights.
Gauge weights are weights designated to liquidity pools for emissions distribution. I.e., if veCRV holders vote on a certain pool to have a 40% gauge weight, it will receive 40% of the weekly emissions.
The success of ve-models was accelerated by the growth of vote incentives; these are incentives paid by Liquidity Providers (LP) to veCRV holders to vote on a gauge weight favorable to the LP’s pool.
However, the current vote incentive hosting services have shown that KPI-based payouts are not possible in a decentralized manner. A good example to highlight the same would be the vote incentives offered to fBEETS holders for the biweekly gauge voting of BeethovenX.
In BeethovenX, each vote incentive is innovative and KPI-based, and is communicated by individual protocols directly to fBEETS holders. The voters have to simply trust that the protocols will pay the correct amount while also hoping for a timely payment!
Since some of the incentives are paid out in volatile tokens, a delay of just one day could cause a large difference in the $$$ value of the payout to voters.
Votehoven (a vote-incentive platform for BeethovenX) has not been able to solve this problem as they do not have a decentralized method to determine the individual payouts to the voters. As a result, BeethovenX is currently limited to a vote-delegation service.
Under the existing model, the vote sponsors have little control over the ROI that their vote incentive will achieve. Also, they usually cannot target desired votes % obtained, the $$$ that they pay per vote, or other useful performance metrics.
Essentially, we believe that the current vote-incentive solutions are heavily centralized and lack efficiency. This article looks to do a deeper dive into vote-incentive solutions, address their shortcomings, and discuss how Lobbyist Protocol can solve them.
Inefficiencies With Current Solutions
With current available solutions for vote incentives, incentivizors can only provide the incentives and hope that the target vote % is achieved. Hopium is definitely not healthy, and Lobbyist Protocol wants to offer its users a “Hopium-Free” experience.
Scenario A: Voters Achieve Target Vote
Scenario B: Voters Don’t Achieve Target Vote
QiDao Protocol + Lobbyist Protocol
Following QIP047, a total of 0.65 Qi per block (around 180k Qi per week) will be distributed to all the vaults across all chains. This allows eQi holders to move incentives for borrowing to the specific vaults of their choice.
The most active participants include Gotchi Vault who offer incentives for the “vGHST” vault and several other whales like “Miyazaki” and “Mozzz” who offer incentives for “mooBIFI” and “mooSCREAMLINK” respectively.
Current Vote-incentive Landscape For QiDao
As per the illustration above, incentivizors would like to keep the payout per 1% of votes constant at 1,000 $Qi. In their mind, this is the most that they are willing to give to voters. If the votes they receive are less than the target of 10%, incentivizors end up overpaying for the votes that they get.
Enter Lobbyist Protocol
Lobbyist Protocol enables smart and deterministic payments for trustless KPI-based payouts of vote incentives for anything from gauge votes, governance decisions, liquidity mining, and even KPI-based grants. The only requirement is that the source of truth is open source and publicly available for verification.
The Advantage Of Using Lobbyist Protocol
From the illustration above, it can be seen that Lobbyist provides protection in case the target vote is not obtained and will also allow voters to price vote incentives more accurately to determine the floor price for a competitive bribe.
Bribers also have the option to place a binary option vote, in which the entire amount is paid out if the target KPI is achieved, and nothing is paid out if it falls short.
At launch, Lobbyist Protocol will look to address the shortcomings of vote-incentive distribution that currently exists in QiDAO. Through Lobbyist, QiDAO will become more efficient in its gauge-weight mechanism and its LPs will benefit from increased emissions to the pools of their choice. Vote incentives have been paramount to the success of ve-models, and Lobbyist solely looks to improve on the existing architecture.
The duo of QiDAO and Lobbyist is the core value of DeFi 2.0 — we’re excited for what’s next, & will also be opening up our protocol for DAOs on all EVM chains, starting with Polygon and Ethereum!