Exclude Exchange Votings from KyberDAO?

Dear community,

There have been heated arguments here and there about Binance (could potentially be any exchange, but in this case it happens to be Binance, since they get lots of KNC deposits). A user on twitter recently brought up the idea that maybe the DAO can just exclude Binance from voting. While there might be technical difficulty in implementing this idea, I certainly think we should discuss within the community to see whether we should do it.

The pros is that we could incentivize more users to actually cast their vote themselves by withdrawing from Binance. And thats also the cons, since it will be more troublesome for them to do so.

Please let us know your thoughts. If there is enough support, we can actually submit a KIP and bring it up to the DAO for the actual votings.

I don’t agree, Binance is also a user, you don’t have the right to choose a user

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Exclude Binance from voting meaning those who delegate their votes to them wouldn’t get rewards? That doesn’t seem right.

I think that this may be a valid concern in the future. However, as of right now, I don’t think that we should exclude exchanges from voting. The issue is that a lot of people are staking with Binance to get rewards without having to vote themselves due to ETH fees. If Binance no longer gets rewards for their staking users, the users might either sell their KNC or join a staking pool. People may not trust a 3rd party staking pool over Binance causing them to sell. People flocking to one staking pool will also put us back to square one if a staking pool gets too big. I feel that excluding exchanges from voting is not the right move.

There are two issues at play here.

  1. Should exchanges vote on behalf of users? tl:dr maybe.
    If users express explicit consent to having binance voting on their behalf.
    I dont think that as part of the binance staking process such an ask is explicitly presented to the user.
    Also there should be some proof that the funds voting indeed match the funds locked in binance’s staking service. Given that the round number of 20M is too convenient, the odds of that happening organically are 1/20M.
  2. Should binance be allowed to use its discretion to vote. tl:dr no.
    If their purpose is to claim rewards on behalf of users, then they can have 2 accounts and vote yes on one and no on the other.

Maybe they can implement some kind of internal voting for holders and they finally vote what the holders choose.

I believe that the reason it is 20 million exactly is because that is where Binance has capped it at for staking KNC with them. If you go to: PoS crypto | Best crypto PoS platform | Binance and check the 90 day and 60 day staking for KNC, you will see that they are sold out of those.
Binance Staking Launches KNC, KAVA & ONE Super Rewards with up to 31.49% APY | Binance Support

I honestly believe that leaving it the way it is is fine for now. We haven’t had any issues with Binance voting yet. Not everyone wants to have to vote every week or 2. Binance gives them an option and there are more people that trust Binance than 3rd party staking pools.

I think that there’s more reasons to not do it, then do it.

Against:

  • this is censorship
  • you can’t cost effectively delegate your vote, so small holders get excluded entirely
  • how would you do it effectively when exchanges can change addresses
  • how do you draw the line for which exchanges can vs can’t vote

for:

  • prevent single interested party controlling the vote

Although I am not in favor of Binance using its voting power without consulting its users (I remember the Steem saga all to well…), I am also not in favor of blacklisting addresses from voting. Its a slippery slope. Better not go down that path.

I rather see this a problem of the current KNC holder community rather than a DAO design. Just imagine if the DAO is able to collect more fees that worths people of staking for themselves instead of putting on binance, it would solve this problems.

On the other hand, there is no way for us to block any specific users because they can just change their addresses and participate again. Quadratic voting power might be a “better effort” to lower the gap between whales like Binance and the rest, however, It is an overkill for now because the Kyber Team still has great power over the DAO (creating the actual proposals). Later on, when the community and the team are both ready to transfer that authority to the community, quadratic voting might be a good option.

P/s: even for quadratic, people can just split their voting powers to different addresses to optimize their voting outcome (reward and proposal consensus).

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