Personally, I think the issue here is about governance a
Prop #564 PICA/OSMO External Incentive Match was passed with only 37% of the participating vote in favor of passage. A 63% majority of participating votes did not favor passage; 4% were against and 59% abstained.
Because only a 45% minority participated, Prop #564 was passed by a 17% eligible vote minority.
The analysis conducted by @JohnnyWyles in regards to setting a 40% Yes Quorum finds a very strong correlation between the percent of vote abstaining and percent of vote in contention (correlation coefficient = 0.87).
See: Yes Quorum Parameter - Google Sheets
Additionally, even though Prop #564 is a question about matching external incentives, I would argue, it is really a question about a liquidity swap with another DEX like that of Prop #420 OSMO/WYND Token Swap for Protocol Liquidity.
Both Prop #564 and #420:
were passed by a minority of participating votes and eligible votes;
only 35% of participating votes, or 21% of eligible votes, were favor of passing Prop #420.
were passed by basically the same minority votes. Validators basically voted the same way they did on Prop #420 as they did on Prop #564.
relate to new small DEX tokens. (For comparison, Wynd DEX currently has $1.4 million TVL, which is a little more than Forge DEX’s $1.2 million TVL. Pablo DEX meanwhile has $0.4 million TVL, which is less than CSwap’s $0.6 million TVL.)
Both have one year terms.
** the WYND/OSMO and PICA/OSMO currently have low 7-day trading volume and the same 7-day swap fee APR. (WYND/OSMO = $25 with 1.7% swap fee APR. PICA/OSMO = $2,600 with 1.7% swap fee APR.)
The vote on Prop #564 also closely resembles that of Prop #497 LIKE/OSMO Match External Incentives, which failed.
- A majority of eligible votes failed to vote on both proposals; both had a 45% participation rate. And essentially the same percent of participating votes abstained; 53% abstained in Prop #497 while 59% abstained in Prop #564.
I also find it interesting that Composable Finance has noted in a blog post that Osmosis has already committed to creating a OSMO/KSM, ATOM/PICA, and OSMO/DOT pool on Osmosis, yet in scanning through the none the one Osmosis blog post and two from the Community Updates blog, nothing about these three pools were mentioned.
This isn’t to say that we should strive to make the external matching incentive program more efficient, effective, sustainable, and collaborative. Rather, I think addressing the underlying governance problem by moving forward with a vote considering the adoption of a 40% Yes Quorum would more than likely have prevented the passage of Prop #564 and other ‘contentious’ proposals that passed despite a 3/5th super majority of participating votes being cast against passage or abstaining.
And regarding abstaining, I repeat, principled principals (and principled agents) should always have the right to participate in a vote AND vote abstain due to a conflict of interest.