►
Description
Know Your MIP #06: Governance Rewards
MIP49: Governance Rewards would allow the Maker community to reward MKR holders for locking their MKR tokens in Governance. Join host @juanjuan for @prose11’s presentation on how this MIP works and the potential benefits and risks to the Maker Protocol.
Agenda and Discussion:
https://forum.makerdao.com/t/know-your-mip-06-governance-rewards-friday-february-19th-18-00-utc/6615
Governance Forum:
https://forum.makerdao.com/
Disclaimer: These calls and the summaries are produced and hosted by MakerDAO community members. Content produced by the community are not the statements or views of the Maker Foundation.
B
Welcome
everyone
to
know
your
myth
number
six.
My
name
is
juan
and
I'm
here
joined
by
a
bunch
of
people
interested
by
maker.
Today
we're
going
to
be
covering
nip
number
49,
so
it's
maker
tokens
in
in
governance
and
rewards
about
it.
So
I'm
going
to
give
the
floor
to
pros
11.
That's
going
to
tell
us
more
about
this.
C
Awesome
yeah
happy
to
get
the
platform
here
to
present.
I
think
I'm
going
to
share
my
screen
and
put
together
just
a
few
slides
for
you
here
yeah,
so
governance
rewards
move
number
49
here
to
tell
you
what
it's
all
about,
how
it
works,
and
maybe
we
can
have
a
nice
discussion
in
terms
of
questions
about
it,
opinions
that
sort
of
thing.
C
C
C
Obviously,
there's
a
lot
of
problems
with
that.
It
also
has
some
nice
benefits,
though,
in
terms
of
like
using
government's
rewards
as
an
incentive
to
to
counteract
that,
for
instance,
it
will
hopefully
encourage
participation
and
governance
like
now.
You
have
a
reason
until
you
would
have
a
reason
to
lock
your
mkr
in
in
governance
and
hopefully,
therefore
use
it
in
voting
also
enables
dividends,
a
different
form
of
share
appreciation
of
basically
allowing
the
mkr
investment
to
to
pay
off
other
than
the
buyback
and
burn
model.
C
So
in
terms
of
this
mip
in
particular,
it
specifies
very
few
things.
It's
basically
setting
up
the
avenue
for
for
governance,
rewards
sam
hexanot
on
the
forums
he's
put
together
some
code,
that's
kind
of
based
off
of
unit
swaps,
lp
and
how
they
were
rewarding
uni
tokens
for
people
that
had
tokens
staked
essentially
on
their
platform,
so
that
that's
one
avenue
to
go
like
right
now.
C
The
staking
for
the
rewards
are
opt-in
and
overall,
it's
it's
based
on
the
kind
of
surface
revenue
profit
is,
is
a
good
way
to
like
think
of
it,
but
it's
basically
money
that
otherwise
would
have
been
going
towards
the
buy
back
and
burn.
So
that's
not
necessarily
profits,
but
it's
excess
revenue
when
the
surplus
buffer
is
full,
so
basically,
revenue
that
is
not
currently
going
to
expenses.
B
C
C
So
it
would
be
pretty
easy
to
base
it
on
a
feed
like
that.
If
you
wanted
to,
but
I
guess
I
wouldn't
necessarily
want
to
make
a
specific
recommendation
on
how
you're
basing
off
the
liquidity
only
that
the
more
liquidity,
the
higher
the
rewards
in
theory
would
need
to
be
in
order
to
secure
the
the
platform.
C
B
B
C
Yeah,
absolutely
so
in
theory,
depending
on
your
jurisdiction.
Obviously
we
don't
know
what
every
mkr
holder
situation
is,
but
the
distribution
of
these
there
they
essentially
are
dividends,
so
that
could
act
as
a
taxable
event
for
for
most
people.
Obviously,
do
your
own
research
find
your
own
tax
things,
but
it's
often
because
some
people
may
not
wish
to
create
that
taxable
event
for
themselves.
E
Is
there
a
future
road
map
for
this,
whereby
any
of
that
distribution
would
be
instead
of
paid
and
die,
allocated
or
put
together
some
type
of
smart
contract
to
have
it
be
converted
into
mkr
to
lock
it
back
in
the
same
contract
so
that
you're,
in
effect
doubling
down
on
your
existing
governance?
And
you
just
you
whatever
your
tax
liability?
Is
you
pay
yourself
off
to
the
side.
C
That
is
like
a
possible
path
forward.
This
doesn't
make
any
recommendations
specifically
towards
that,
but,
for
instance,
let's
say
we
allow
governance,
rewards
and
there's
a
program
in
place.
It
would
then
be
pretty
easy
to
build
a
smart
contract
that
that
does
that
very
thing
and
would
allow
further
people
to
to
opt
into
it.
C
F
Add
to
that
there's
a
pretty
healthy
conversation
when
sam
introduced
the
technical
part
of
this
before
it
became
a
mip,
and
that
was
one
of
those
discussions.
I
think
it
went
into
a
couple
of
different
angles,
but
I
mean
I
believe
it's
basically
like
whatever
the
reward
mechanism
would
be,
can
be
set
by
governance.
So
if
they
want
to
change
it,
they
can
do
that.
G
G
E
It's
to
some
element,
it's
just
quote
found
money,
I
mean
if
you've
got
whatever
mkr
you've
got,
you've,
got
it
locked
in
a
governance
contract
and
I'm
you're,
just
making
up
a
random
number
and
a
thousand
die
is
allocated
to
you
for
this
governance
reward
and
it
shows
up
in
your
wallet.
I
mean
it's,
your
conscious
decision
to
then
probably
need
to
take
30
or
40
percent
of
that
send
it
to
the
government
to
the
irs
and
the
rest
of
it.
The
entire
thousand
was
found
up
until
that
point.
E
A
C
C
C
And
I
guess
kind
of
the
opinion
that
the
tax
I
don't
know,
obstacles
or
or
the
downside
to
the
taxation
is-
is
worth
dealing
with
in
order
to
help
secure
the
the
protocol
with
the
idea
being
that
this
will
encourage
more
mkr
to
be
deposited
in
governance
and
hopefully
keep
it
safer
than
it
would
be
without
it.
I
guess
yeah.
I
guess.
G
E
F
E
A
H
H
H
E
No
and
that's
not
that
it's
that
under
the
current
setup
right
now,
if
forget
any
burn,
excuse
me
any
distribution
of
profit
right
now.
The
buy
and
burn
model
indirectly
benefits
any
current
mkr
holder
by
in
effect
deferring.
So,
if
you
own
just
pick
a
random
number,
100
mkr
and
you
own
100
and
ten
years
goes
by
and
you
still
own
a
hundred
the
amount
outstanding.
Assuming
that
we
do
good
loans,
the
amount
of
burn
happens.
E
Therefore,
the
circulating
supply
goes
down
your
individual,
your
100
mkr,
the
quantity
didn't
change,
but
the
value
should
have
market
appreciated,
as
that
value
was
indirectly
given
to
you
by
a
stock
buyback.
So
whenever
you
go
to
sell
that
mkr
in
the
future,
not
only
have
you
deferred
all
the
gains,
but
you
never
had
taxation
during
that
prank
during
that
framework,
because
nothing
was
ever
delivered
to
you
directly.
It's
very
tax
efficient
in
that
way.
H
G
H
The
motivation
here
is
that
incentives
right,
I
think
the
community
has
been
asking
for
that,
and
you
see
other
communities
doing
it
and
it's
worked
for
them.
I
mean
synthetic
says.
I
mean
they've
done
a
magical
job
of
incentivizing
their
community.
So
I
think
this
is
the
reason
why
this
mip
was
put
forward,
but
yeah.
C
H
B
C
C
And
I
I
would
like
to
think
so,
but,
like
I,
I
think
it's
a
very
worthy
discussion
to
have,
because,
obviously,
if
the
protocol
is
not
safe,
then
the
mkr
isn't
worth
anything
anyway,
but
if
you
have
to
completely
destroy
its
value,
just
to
keep
it
alive,
that's
not
doing
great,
either
yeah.
So
the
only
thing
I
didn't
get
to
with
the
previous
slide
was
that
basically,
the
mip
itself
also
describes
kind
of
a
six
week.
C
D
C
E
B
E
A
E
C
Mechanism
yeah,
certainly
I
guess
there's
some
question
then:
do
you
want
the
options
to
be
directly
tied
to
actual
on-chain
voting?
Are
there
other
governance
actions
that
you
might
want
to
incentivize
with
those
as
well?
I
guess
this
kind
of
narrowly
focuses
on
the
idea
of
getting
more
mkr
on
the
hat
and
whether
or
not.
A
E
E
C
A
C
C
I
was
just
gonna
say
yeah.
Those
are
definitely
some
of
the
the
problems
with
it.
One
kind
of
cool
thing
is
for
the
upcoming
dss
gov.
Obviously
we
don't
know
for
sure
how
that's
going
to
work,
but
based
on
the
documentation
they
provided.
There
is
going
to
be
like
an
active
and
inactive
mkr
within
the
hat
system,
so
that
might
provide
a
very
easy
way
to
distribute
these
governance
rewards.
I
Yeah,
that's
correct
peyton
I
mean
what
you're
talking
about.
There
is
the
snapshotting,
so
you
you
identify
and
be
able
to
set
a
period
of
time
that
mkr
is
deemed
active
or
inactive
based
on
a
user's
participation,
and
then
we
also
need
to
start
looking
at
delegation
and
how
do
we
reference
activeness,
based
on
delegates,
not
only
delegates
but
also
the
individuals
that
have
forwarded
their
in
care
to
the
delegate,
because
they're
still
helping
support
the
hat,
of
course,
by
putting
their
own
care
in
the
system
so
yeah?
I
We
we
need
to
discuss
that
and
understand
how
that'll
work
and
or
how
this
will
work
as
a
as
a
module
as
a
modular
component
to
that
bss,
gov
system
jumping
off
the
back
of
what
matthew
was
saying.
I'm
also
not
a
tax
guy,
but
it
seems
similar
to
you.
Could
you
could
always
put
rewards
into
like
some
sort
of
an
expiry,
limited
pool
and
have
people
redeem
like
they
do
today
for
airdrops,
I'm
not
sure
what
the
tax
implications
of
of
that
is.
C
No,
I
think
those
are
some
really
excellent
points
so
that
initial
post
that
did
inspire
this
map,
sam's
kind
of
code
and
contract
that
he's
been
working
on.
I
believe
it
does
work
in
a
similar
way
to
that
with
with
the
uniswap
pools.
I
don't
know
if
it's
like
from
from
a
tax
advantage.
I
don't
know
if,
because
you
have
the
ability
to
claim
them,
it
might
be
treated
the
exact
same
way
again.
C
That
would
probably
need
to
be
like
a
tax
professional
that
could
answer
that
for
you,
but
I
know
that
was
part
of
the
design
choice
for
for
sam's
implication,
and
I
guess
the
idea
behind
this
mip
in
general
is
to
kind
of
pave
the
way
for
those
ideas
to
come
through.
So
if
this
were
to
be
passed,
then
sam
could
could
float
his
implementation
as
an
idea
say
it's
this
much
based
on
this
and
then
the
community
would
would
debate
those
parameters.
C
Yeah,
I
guess
fundamentally
right.
The
problem
is
that,
right
now
there
are
places
where,
where
you
can
store,
where
you
can
lend
your
mkr
and
and
get
yield
on
it,
the
governance
contract
is
not
one
of
those
places,
so
mkhr
holders
are
financially
incentivized
to
keep
their
mkr
outside
of
our
system,
and
that
puts
our
system
at
risk.
Is
this
the
best
way
to
deal
with
that?
D
On
that
note,
I
know
someone
is
like
one
of
the
the
mqr
like
holders
have
told
me,
you
know
if
you're
yield
farming
on
it,
you're
still
going
to
get
like
30.
So
if
we're
trying
to
be
competitive
to
some
of
this
yield,
farming
like
if
we
say
we're
not
going
to
go
that
high,
I
I
think
that
the
idea
that
we're
trying
to
stay
competitive
for
people
not
to
lend
elsewhere
is
kind
of
a
tough.
Like
reasoning
right,
if
we're
saying
oh
yield,
farming
is
30
or
something.
C
Yeah,
that
is
definitely
a
good
point,
because,
if
we're
trying
to
compete
with
like
30
yields
like
there's,
you
know
there's
no
way
it
would
break
the
the
mkr
system.
However,
I
do
think
about
it
like
in
terms
of
just
like
the
fact
that
you
can
generate
a
few
percent
just
for
depositing
it
over
at
ave.
C
For
instance,
even
if
you
don't
collateralize
the
position,
so
we're
kind
of,
in
my
mind,
attacking
more
of
the
the
lower
risk
strategies
for
for
generating
yield
and
kind
of
tying
it
more
to
the
idea
again
of
dividends
of
it
being
tied
to
protocol
performance.
So
in
theory,
if
you're
voting
for
better
things,
if
you're
participating
in
governance
and
that's
resulting
in
in
more
revenue,
more
profits,
then
in
theory
your
your
token
would
be
allowing
you
a
piece
of
that
appreciation.
B
B
B
B
H
D
H
You
know
what
maker
mkr
is
intended
for
right.
We
all
know
that
it's
there
to
protect
the
system,
it's
a
backstop
for
the
system
for
the
maker
protocol,
so
yeah
it
just
wouldn't
work,
and
I'm
sure
you
know
derek
would
would
say
the
same
right.
Derek
I
mean
I'm
pretty
sure
you
looked
at
that
option.
It
just
doesn't
work
for
maker,
but.
B
But
yeah,
that's
what
I
was
saying
if
we're
trying
to
to
keep
maker
from
going
out
in
the
market,
this
would
not
work.
But
if
we're
trying
to
encourage
participation-
even
doing
I
don't
know
or
or
giving
out
tokens
that
are
just
used
for
voting
in
some
l2,
it's
probably
the
best
solution
right
then
gas
would
be
virtually
free
and
potentially
people
could
vote
without
moving
their
their
tokens.
So
that's
why,
if,
if
we
know
which
problem
we're
trying
to
solve,
it
would
be
much
easier
to
to
debate
a.
C
Yeah,
I
I
think
it
kind
of
ripples
out
into
many
different
areas
which
makes
it
really
difficult
right.
There
are
a
lot
of
reasons
why
you
you
could
oppose
governance,
rewards
and
the
reason
for
supporting
it.
I
guess
they're
also
varied,
but
in
general
they're,
either
protocol
safety
or
other
people
are
doing
it.
So
we
should
too,
which
one
of.
C
E
Just
out
of
from
a
governance
perspective,
where
is
this
mip
in
the
whole
cycle
of
things,
because
it
sounds
like
we
really
need
to
get
some
consensus
somewhere
before
spending
the
engineering
resources.
It
kind
of
taps
into
a
broader
issue
of
everybody's,
got
lots
of
ideas,
there's
no
shortage
of
ideas
in
the
community
and
it's
shortage
of
execution.
That
comes
around
to
be
the
constraint,
and
you
know
before
we
I
mean
I
would
definitely
want
to
make
sure
we
really
have
people
on
board
before
we
start
getting
teams
to
develop
this.
F
It's
in
rfc,
so
some
of
the
conversation
we've
had
today
would
probably
be
like
incredibly
useful,
just
articulating
the
the
different
trade-offs,
because
it
seems
like
a
venn
diagram
and
it's
like
it's
convex
decision.
But
then
this
other
vector
comes
in
and
you're
like
wait.
What
about
this
part?
And
I
think
that
there's
a
few
different
decisions
and
debates
that
need
to
happen
like
juan's
100
right,
it's
like
which
problem
is
it
trying
to
solve,
because
it
seems
like
it's
trying
to
solve
two.
B
C
C
D
H
B
So
yeah
I
mean
saying
on
the
on
the
chat
that
potentially
this
would
come
after
the
keg
which
would
come
after
liquidations
2.0,
so
there's
still
some
roads
to
go.
I
guess
even
for
reviews
and
audits
and
whatnot
and
they're
registering
real-world
assets
as
well.
So
I
guess
me
21
and
22
would
go
first.
B
A
A
A
couple
of
people
mentioned
voting,
but
this
isn't
actually
like
the
incentives
aren't
linked
to
voting
in
any
way
in
this
right.
It's
literally
just
as
long
as
it's
in
the
governance
contract,
it
would
get
the
rewards,
which
kind
of
sidesteps
the
issues
around
how
you
reward
voting
because
it
gets
complicated
then,
but
so
for
reference
like
there's,
like
twenty
thousands
maker
on
ave,
which
gets
like
point
one
three
percent
right
and
it's
still
unhappy,
and
it's
like
no
you're
farming
or
anything
on
that
right.
A
So,
even
if
that
doubles
to
like
a
hundred
thousand
maker,
it's
still
then
like
one
and
a
half
percent
which
is
still
higher
than
what
it
is
but
like
there
isn't
that
much
like
natural
lending,
like
borrowing
demand
for
makeup
under
normal
circumstances,
so
the
apr
is
low,
like
absent
of
light
yield
farming.
It's
probably
would
make
more
sense
with
this
system
to
have
the
mkr
in
the
maker
governance
contract
rather
than
on
landing
platforms.
B
Right
but
that's
what
amy
was
saying
that
if
potentially
you
are
you
want
to
yield
farm?
What
you
would
do
is
you
would
land
your
maker
at
ave
and
then
borrow
whatever
token
is
in
fashion
to
go
and
yield
farming
so
you're,
not
really
looking
at
the
1.6
and
you're
not
really
competing
with
that
you're
competing
with
the
whole
mechanism
behind
it
right.
B
I
was
trying
to
think
well
matt's
idea
like
if
you
could
have
like
a
pool
kind
of
like
a
priority
pool
where,
where
you
would
burn
before
I
don't
know
if
it
makes
sense,
because
then
you
would
potentially
distribute
the
maker
that
you
just
bought
from
the
burn.
So
that
would
not
work.
I
guess
there's
no
way
of
burning
this
maker,
so
you
will
have
to
do
something
with
options
or
something
like
that.
A
little
bit
more
creative.
I
guess.
A
A
F
D
Just
very
quickly
going
back
to
what
matt
said
a
while
ago
about
whether
people
like
which
benefit
that
we
want
like
which
benefit
or
what
problem
we're
trying
to
solve
and
just
trying
to
get.
Maybe
a
signal
on
one
of
the
other
two,
because
I
feel
like
we're
trying
to
optimize
for
all
of
it.
So
maybe
there's
like
you
know,
people
actually
want
it
more
for
the
rewards
side
and
someone
wants
us.
Actually
they
want
to
care
more
about
security
side.
D
C
Yeah,
head
on
to
the
forum,
like
I
said,
this
is
mip
number
49
governance
rewards,
so
you
can
search
any
part
of
that.
It
should
pop
right
up
for
you
and
kind
of
exchange
on
the
discourse
there.
I
know
a
bunch
of
you,
I've
already
seen
on
there.
So
thank
you
for
that
participation
and
yeah
any
particular
comments
about
editing
sections,
adding
new
thoughts
like
that
would
be
great
because
it
is
in
its
rfc
period
for
at
least
a
little
while
longer
here
and
if
there
are
any
edits.