Proxy Vote buying concerns and possible solutions before inflation based funding is introduced

It all points out that inflation based funding will be implemented, despise my continuous moral based arguments against it. There is one governance issue nobody is mentioning, since there will be inflation based funding for development, the developers (proposal injectors) that submit or inject proposals to technologically improve KyberSwap either by scaling it or by making it more cost efficient to all parties (traders, voters and LP’s). The problem is that proxies since they are the ones that vote for their delegators, they don’t have a collateral requirement investment in KNC that would disincentivize them to make bad decisions or to collude with funding proposals injectors that would offer them Monero in exchange of votes, Proposal injectors will always be looking for proxies to offer them money in exchange of their vote. Proxies delegators won’t even realize this because all this will be done behind the scenes in private messages in telegram.

  • One solution, is to put a pre-requisite to proxy owners to own KNC collateral or bonds that they can lose by making irrational decisions, vote buying most probably will lead them to make irrational decisions. Setting up max delegators caps depending on how much KNC proxy owner put as a collateral. i.e if they own 10,000 KNC - they will be able to accept 100,000 KNC from delegators 1/10 ratio. That way their collateral will also be at risk, currently there is no minimum KNC collateral needed to operate a proxy, so they don’t have any incentive to make rational decisions and with collateral they would be disincentivized to collude with vote buyers.

  • or the other solution is obligue them to perform a verifiable internal on-chain voting within their proxies, so proxy delegators can participate directly on the DAO and not only be the will of the owner of the proxy who votes for all their delegators, and only allow these compliant proxies to participate.


if kyber became a native asset on cardano, you could just jump straight into a good voting system that works.

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Or tezos for that matter. I don’t care about that, i just want TEAM to give me a solution to this problem. IF they want to push inflation based funding, then they should give us a solution to vote buying with proxies.

@ShaneKyber @loiluu @defidude please comment. I did my own thread regarding inflation based funding and 100% collusion possibility with proxies. I’m expecting a reasonable answer to this problem. I proposed solutions, what are yours? Please comment something, because is looking weird that everybody is silent against an obvious problem. You guys wanted inflation base funding governed by the DAO, okey but this cannot be done without fixing first the DAO vulnerabilities that are a threat to the DAO kyber governance system, which are the proxies vote buying issues. Please comment about the two solutions:

  • Only let to participate collateral based proxies 1/10 max cap delegators. Meaning they can accept only 900% more of the amount of collateral of the 100% collateral they own, a total of 1000%.

  • Or only let to participate proxies that they have a on-chain verifiable internal vote. Which is unsustainable because having to vote will defeat the purpose for delegators to save in gas costs.

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First of all, this is a valid concern that could theoretically happen to any governance protocol. I dont think any solution would be able to address this concern since the payment happens out of hand. And at the end of the day, its how much that the attacker would want to pay.

However, I would like to mention that many voting pools have their own mandates. For example, have separate pools for voting to optimise for DAO reward and rebate separately. Or Binance have communicated that they would only vote on the last day and would follow the most voted option then. This will help potentially address the concern that the pools/ proxies would vote against what they have communicated to benefit some other parties.

Another angle to look at is that at the moment its totally open and permissionless to operate a voting pool, this would give rise to many pools later and give knc holders more options to switch between pools if the delegated one deemed to have issue. Introducing more barriers like that you suggested, IMO, would only increase the barrier for people to operate voting pools, and greatly impact the decentralization of the voting pool market.

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First of all, is an exception, @defidude proxy doesn’t have internal vote system, his voting decision making is centralized. So not all proxies are like and not all proxy owners will have the best intentions to make rational decisions.

You are not looking at this objectively, we agree that inflation based funding is to be introduced, you asked for safeguards, THIS is a safeguard, not a barrier or impediment. The best solution is to require them to own collateral that they can loose because of bad decisions, this greatly reduces the chances for proxies owners to make irrational decisions or been bought off. There is no excuse to not implement this Safeguard. This is NOT a “restriction or barrier” as you say it, anyone is able to start a proxy because anyone is able to buy KNC from the markets. The system is open to anyone to participate as long as they own collateral, then with collateral, they will be able to operate freely however the want, if the proxy owner want to have a internal vote system, he can have it, if they the proxy owner want to have centralized decision making and vote for their delegators, then, he can have it as well. Delegators are free to choose which proxy owner to be with.

Tezos, governance works like this, validators needs to own collateral in order to be able to receive delegators, me for example, i have 110,196 XTZ and i can receive up to 1,120,896 + 35,716 XTZ left capacity, so my validator delegator capacity is almost full:

You may tell me, oh but tezos is a blockchain and kyber is a dapp, that is NOT an excuse because governance works basically the same, nobody can buy me that easily because i own 400,000$ that i can loose by making irrational decisions.

You can’t defend proxies in the name of openness and permissionless because applying a collateral requirement is NOT a barrier as you call it, is a SAFEGUARD. It remains open and and permissionless as long as collateral is owned. You think this requirement is a “barrier” yet in Tezos there are 500 validators and increasing.

Tezos governance is well thought, Kyber should be too. You may be biased if you refuse to see the objectivity of my argument, after inflation based funding is implemented, you can inject any funding request proposal, and collude with @defidude or other proxy owners that does not have an internal voting system (because not all will be like This is not a barrier, this is a safeguard to protect our voting system from malicious actors. You just failing to see the objectivity and masking it, in the name of openness.

I my self own 42,000 KNC, i will open up a proxy which will have a total capacity of 420,000, remember that owning collateral also INCREASES proxy owners incentives to run one (not a barrier), because they can INCREASE % fee charged to delegators, since now they own collateral, they should charge more because more risk and work to do to find out which are the most rational decisions for their collateral to increase in price and in consequence their delegators KNC as well.

This is fundamentally needed @loiluu , you can’t deny the objectiveness of my rationalities. I only want the best for kyber and you are leaving biassedly an open door to collusion and vote buying. Kyber Devs proposed inflation based funding for future development, okey, let’s do it, but fix the proxy governance issue, you ask for a safeguard, THIS IS A SAFEGUARD, yet you call it a “barrier”. You are defending something which is indefensible.

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I agree this is very concerning, I don’t see why proxies owners shouldn’t own some KNC as collateral, these are actors that may own 0 KNC and care less. This way they share the risk with real KNC owners on making bad decisions. I like the 1/10 collateral/max cap ratio proposal. This can only bring security to our DAO.


It’s been 4 days and nobody has said anything about this issue. There is not much participation. I don’t think this project is heading back to the top 100 in CMC. I have the best intentions, I want the project to succeed, but this is a serious flaw, allowing proxies owners to start one without owning anything, without risking anything, and having infinite voting weight capacity, is simply an obvious vector of attack, specially with inflation based funding introduction, there will be collusion, people requesting funding will be contacting proxy owners 100%, and proxy owners with infinite delegation capacity. If they at least had a collateral that they can lose by making irrational decisions, this is the only way to this issue to be mitigated. Please, @ShaneKyber I have 100K USD invested in Kyber, I’m not taking this lightly. This is not a barrier, this is a SAFEGUARD. You really want to leave that door open, seriously? You can’t hide behind “all governance systems have vote buying concerns”, yes, they do, buying individuals is one thing, but buying proxy with unlimited delegation capacity, (a conglomerate of individuals delegating all their voting weight to 1 guy) is another. Yes there are proxies like xtoken, not all proxies are like that. Proxies just can’t be allowed to have a 0 KNC investment and unlimited delegation capacity.

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@tezoswakenbake i think you should make others aware of this and ensure people participate here. If no one participates then this likely wont happen based off of one community member’s thoughts


I just want to point out, that exchanges are a separate issue.

I’m talking about proxies. Yes, even if we put a requirement to proxies to own collateral and a maximum delegation capacity according to their collateral, exchanges will continue to own collateral that are not theirs. But that’s a separate issue. Because delegators will still prefer to delegate through a proxy since using an exchange will mean to lose custody of their KNC, proxies will have that advantages over exchanges. I’m telling you this, from experience, I’m a “proxy” in tezos, my delegation capacity according to my collateral is FULL, delegators prefer to delegate through a proxy instead of delegating through an exchange. But we need to push this requirement for proxies to own KNC and have a maximum delegation capacity according to their KNC collateral. We can’t let these actors to OWN 0 KNC and have INFINITE delegation capacity specially when inflation based funding is about to be introduced.

Looks at my balance, i have 110,363 XTZ but a maximum capacity (right side) of 1,154,049 and is almost FULL.

Now, imagine if I had no maximum delegation capacity and no XTZ requirement to own a “proxy”. It would be a disaster for tezos governance. IT would mean that i would be risking nothing, that I could have an infinite delegation amount capacity, meaning having infinite voting weight influence that I could use to sell for money.

What do you think is going to happen when inflation based funding is to be introduced in kyber, with these proxies actors having a shit to of influence and 0 risk? You just have to use common sense. I’m not against PROXIES, In fact, yes let’s have proxies, but make them have this requirement that it will be a safeguard for securing our governance system.

IF not, is will be abused.


I think skin should be required of proxies and their weight should be proportional to their skin in game but then people will say this allows only current KNC whales to magnify their voice…but i do agree those entities with significant stake in gov should have significant amount of KNC in project and someone with 0 KNC having 100k knc worth of voting power is a bad idea


I 2 would support this collateral to proxy ratio


They want to leave the door open so proxy negotiate with looters in the future. @loiluu you still defending it in the name of “oh no, it would be a barrier”, really? You want actors with 0 KNC and infinite delegation capacity? REALLY? You were asking for safeguards in the inflation thread. But here, this is not a safeguard for you, this is a “barrier” for proxy owners. Now you will begin to think it objectively? Or no? Or is it because you are biased? It couldn’t be a more objective safeguard for our DAO. Now proxy owners will be commenting here soon, which are biased as well. Many of the comments in the inflation thread were biased, now dynamic supply will be done, okey, but fix this proxy threat to our governance system, or I’m out. You guys will basically force me to sell all my KNC in the market, which is about 42,000 KNC


I can’t believe there is only 3 guys actually raising up these concerns that are quite concerning. I own quite a lot KNC too. Please Kyber community, wake up, why this thing with the proxies was not carefully thought off before they were introduced? It is an obvious attack vector.


well in this last epoch Binance made a “mistake” and did not vote with the community…we should not have to trust Binance and rather than move the voting to an existing 2nd layer solution like matic which would result in greater individual voter participation you advocate delegating to 3rd party proxies some of which have no skin in the game…IMO if delegation and inflation are the future of KNC 3rd party proxies should be required to have a minimum stake of their own KNC staked in their delegation pool and to number of KNC delegated to that pool should be proportional to the amount of KNC staked


New updates: @loiluu said in the telegram chat, that the 1/10 proposal cannot be done “because of the way ethereum works” IDK how true is this statement, we will have to verify it with another ethereum developer.

But, then if we take this statement as true for a moment, then we conclude that since there is a huge risk of looting through inflation by collusion between proxies and devs. Then the only solution for this is to move kyber ecosystem to second layer solutions, so the small fishes don’t have to rely on proxies due to high gas costs and fees, and they can vote according to their individual rational self-interest. In the meanwhile we migrate to L2, we cannot introduce inflation based funding due to the huge risk to our DAO that proxy collusion represents.

These are all rational, logical, and objective conclusions. Unless @loiluu finds a way to make proxies own a skin in the game. We can’t proceed with inflation based funding.

@ShaneKyber proposed quadratic voting, which means that the rich list will have less voting weight vs the poor to “mitigate” this risk, this is not only NOT a solution, but is unfair, the rich should have their fair proportional voting weight according to their balance, is in their best rational interest, they are the ones that are more interested in doing rational decisions, just because proxies are high jacking the rich list places with KNC that is NOT EVEN THEIRS NOR HAVE ANY SKIN IN THE GAME, we should not diminish the voting weight of the genuine rich guys that invested in KNC. This radical solution @ShaneKyber proposes, is heading us to a failed democracy/socialism instead of the good governance. There is a BIG difference between the concept of democracy which always fails, and good governance.

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100% agree and with the number of ETH project both in and out of defi to layer 2 solutions such as matic or xdai i am sure we could easily migrate to one of these soltuions to facilitate the DAO voting

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I agree 100% with this post. There must be a solution to this issue before inflation base funding is to be introduced. Please fix this. Do not make the code unfair to the investors on the top of the rich-list, which is really unfair, and we have more to lose. We are the investors and supporters of KNC since the ICO and by doing this, is like saying that you don’t care about KNC Investors.

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@loiluu says,

“that’s why we wanted to whole community to vote for it”

but @loiluu the whole community is inside proxies right now! This is very convenient, they are already in control, they got all the small guys!, they will vote yes to inflation. You are just washing your hands. And then, once inflation is set, devs will be able to inject funding request proposals and collude with proxies owners so easily so the funding proposals is passed!

Be objective, this happened in EOS and other projects with proxies, proxies were able to open up a proxy with 0 EOS collateral and infinite delegation capacity, in EOS there was no gas fees, voting was completely free, still, people preferred because of laziness to delegate their vote to these proxies, these proxies were bought, there was proof all over the place! And there was NO GAS FEEs, imagine NOW our situation that there is HIGH gas costs in Ethereum and small delegators are forced to be in proxies pools! Our situation will be worsening because of high gas fees!

People tell me my accusations are “baseless” BUT history is not taken as proof or evidence, is like socialism, this time it will work! I promise!


@loiluu and @ShaneKyber ease erase the off-topic and inappropriate comments. There is no reason you guys allow these ad hominem that only seek to attack me and not the argument.


So I made calculations of the previous ephoc. Make your own conclusions.

Pools have 15% of the current vote

Pools, Founders, kyber dev team, kyber marketing team have: 34%

Binance + pools+ founders + kyber dev team, kyber marketing team have a total of: 70.55%

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