Algorand Governance Period #5

Algorand Governance Period #5 enrollment kicked off the first week of October and was extended beyond the usual two week period by an additional week. For the first time on Algorand, users will not only be rewarded for casting their votes with ALGOs but are given extra rewards for participating through DeFi protocols like GARD Protocol, Folks Finance, or AlgoFi in order to introduce the community to Algorand foundation-backed services.

Analysis of Algorand Governance Period #5 Measures from the GARD Founders

As the founders of a leading DeFi and liquid governance protocol, we’ve engaged with a wide array of perspectives when it comes to the future of Algorand. We hope that by sharing our thoughts we will advance important conversations. We’re qualified to weigh in on Algorand Governance because we were the first project to build/deploy a liquid governance solution. Further, we’ve been students of Algorand Governance since long before it was even live. In this write-up we will discuss the current measures as well as the changes to existing Foundation initiatives. We will also offer suggestions for future improvements in search of support and to ignite change.

Governance period 5 concerns three initiatives; there are two adjustments to existing programs as well as a brand new proposal. The first initiative is meant to increase the rewards paid out to governors that participate in governance via DeFi protocols. The second initiative is meant to expand the capabilities of the xGov program which was approved in governance period 2. The third, final, and new initiative is to create an NFT portfolio curated by the community.

In regard to the first initiative corresponding to measures 1 & 2, the choices feel much too similar. Oddly enough, there are no options to roll back governance rewards paid out to those who participate via DeFi protocols, keep them the same, or cancel them altogether. Given the limited options, the GARD team is in full support of increasing these rewards to 15M ALGOs. However, the GARD team and broader Algorand community are left with the following questions: Why aren’t other related measures on the ballot for us to vote on? Why does the amount have to increase?

One potential answer is that the Algorand Foundation may be trying to fulfill its 200M ALGO promise to the Algorand DeFi community. So far, only ~14M of these ALGOs have been distributed. The remainder have been canceled with no official explanation or press release thus far. On first glance, paying out 15M ALGOs to users who participate in governance via DeFi platforms each quarter appears to be great success, however, one realizes that the only DeFi product being incentivized is liquid governance which doesn’t guarantee or incentivize more robust DeFi participation. The community must let the foundation know that other projects are important and that there are more high value actions that can help draw in new users to Algorand as well as convince current users to take more risks. The current planned incentives seem to leave Algorand DeFi disadvantaged to other chains.

The lack of long-term value from governance ALGOs has been a past critique of governance. Imagine if these ALGOs, or a portion of them, were paid out to each DeFi protocol to use discretionarily to onboard new users to Algorand and incentivize high value actions on their respective platforms. Further, imagine if the foundation ran a marketing campaign around these efforts to bring in users from other chains during a potentially long crypto winter. This type of campaign would have the potential to add long-term value and bolster all projects. It would certainly increase the return of the governance rewards/funds spent by the foundation to the whole chain.

Paying existing community members to use smart contracts is not the same as onboarding new users or fostering DeFi. Onboarding users is expensive, and the foundation should allow the community to allocate funds to explicit marketing campaigns and programs. The protocols that have been building on Algorand for years have unique insight into executing their long term visions and improving DeFi for everyone that even the foundation may not grasp.

Algorand protocols expecting support for growth have been ignored as the foundation continues to change and discontinue programs meant to support them. With the cancellation of the Aeneas program, why wasn’t the community asked to dedicate Algos directly to DeFi projects? While community rewards are important, the foundation must allow voting for other uses of funds, especially marketing & growth as decided by DeFi protocols and DeFi participants.

The second measure covers the establishment of 1-2M ALGO to be distributed by the community to fund new Algorand projects. It is unclear where these ALGOs will originate or how the community would manage this treasury. The GARD team is in support of this initiative, but would like more details so that we could further aid its establishment.

The last measure to be voted on is similar to measure two, however, it doesn’t establish what process decisions would be made in order to acquire its NFTs. The xGov process could certainly be used, however, another possibility would be for the community to elect specific NFT curators. Each curator might receive a budget every quarter to acquire unique NFTs for the community and interact with the respective communities they purchase from. It would also make sense to outline how many of the ALGOs can be allocated to “blue chips” (this needs to be defined by a certain amount of sales denominated in ALGO) as well as to ensure a certain amount of ALGO is dedicated to supporting new projects/artists. It’s certainly important for the community to buy artwork from “significant” artists as we know that these communities have helped enrich all of Algorand but it is also important to discover new artists and foster their communities as well to ensure both innovation and new talented projects continue to come on-chain.

To conclude, the GARD team is optimistic about the changes coming to Algorand, however, it believes that there is significant room for improvement in how governance measures are introduced. We look forward to governance moving entirely on-chain as well as the establishment of the xGov initiative as we believe it’s an important piece of moving changes to be implemented by governance programmatic. We hope this article inspires improved governance procedures and more detailed explanations for future measures.



Period 5, Voting Session 1

DeFi, xGov Grants MVP and NFT Collection Distribution

There are 5 measures this for Algorand Governance Period #5. Here’s a breakdown:



Measure #1 – Allocating up to 15MM Algos to DeFi for the Next Governance Period

In this measure, governors vote on the allocation of either 15MM or 10MM Algos to support our DeFi ecosystem.

If Option A passes, the General Governance pool will be 55.5 MM Algos, minus community allocations to other Measures. If Option B passes, the General Governance pool will be 60.5 MM Algos, minus community allocations to other Measures.

Voting options for this measure are:

  • A. Allocate 15 MM Algos to DeFi for Q1/2023.

  • B. Allocate 10 MM Algos to DeFi for Q1/2023.

The Foundation supports Option A.

Measure #2 – Approving of up to 2MM Algos for a Community Funding pilot program via the xGov process

The xGov ARC is currently being drafted, and we intend to publish it for community feedback in the second half of December. To prepare for the xGov implementation in the new year, we propose allocating up to 2MM Algos for a Community Grants pilot program. If this Measure is approved, Algos would be made available for projects proposed by the whole community, upvoted by the xGovs and approved by General Governors.

If this measure passes and the pilot is successful, the Foundation anticipates bringing further measures to expand the scope of this program in the future.

We will consult with the community to create appropriate proposal safeguards and rules, including the following:

  • Must contain milestones and deliverables;

  • - Must comply with the mission of the Algorand Foundation to develop the ecosystem and must adhere to non-discriminatory principles;

  • - Must be built on Algorand and contribute to the ecosystem’s overall health.

  • - Do you approve the allocation of Algos for the community grants pilot program via the xGov process?

Voting options for this measure are:

  • A. Yes

  • B. No

The Foundation supports Option A.

Measure #3 – Allocating up to 2MM Algos for a Community Funding pilot program via the xGov process

If Measure 2 passes and the Community Funding pilot is approved, then Measure 3 will decide the amount to be allocated for this program.

Please indicate your preferred allocation amount.

Please vote on Measure 3 even if you voted No to Measure 2. If measure 2 is not passed and the majority do not support the Community Funding pilot, then Measure 3 will have no effect.

If Option A passes, the General Governance pool will be 68.5 MM Algos, minus community allocations to other Measures. If Option B passes, the General Governance pool will be 69.5 MM Algos, minus community allocations to other Measures.

Voting options for this measure are:

  • A. Allocate 2MM Algos to xGov Community Grants

  • B. Allocate 1MM Algos to xGov Community Grants

The Foundation supports Option A.

Measure #4 – Approving of up to 600K Algos to seed a Community curated NFT Collection

We propose to allocate funds to support NFT creators on Algorand and to establish a Community curated NFT Collection to drive ecosystem growth.

By purchasing digital assets created on Algorand, we aim to support NFT creators, communities and projects, build a collection that can be showcased at in-person and virtual events, and provide stimulus to Algorand’s burgeoning NFT ecosystem.

The Foundation sees the creation of this Algorand NFT Collection as a “low risk, high reward” opportunity to raise awareness around NFTs, drive new creators and users into Algorand, and engage with the existing community.

In this initial instance, the collection management - buying, receiving, selling, and giving away pieces within the collection - would prioritize primary sale or shuffle acquisition for direct creator support and be determined by a committee consisting of both AF and community stakeholders.

Do you approve the allocation of Algos to seed the establishment of a Community curated NFT Collection?

Voting options for this measure are:

  • A. Yes

  • B. No

The Foundation supports Option A.

Measure #5 – Allocating up to 600K Algos to seed a Community curated NFT Collection

If Measure 4 passes and a majority wish to establish a community-curated NFT Collection, then Measure 5 will decide the amount to be allocated for this program. Please indicate your preferred allocation amount.

Please vote on Measure 5 even if you voted No to Measure 4. If measure 4 is not passed and the majority do not support funding a community-curated NFT Collection, then Measure 5 will have no effect.

If Option A passes, the General Governance pool will be 69.9 MM Algos, minus community allocations to other Measures. If Option B passes, the General Governance pool will be 70.2 MM Algos, minus community allocations to other Measures.

Voting options for this measure are:

  • A. Allocate 600K Algos to seed the establishment of a Community-curated NFT collection

  • B. Allocate 300K Algos to seed the establishment of a Community-curated NFT collection

The Foundation supports Option A.