CV Params Deep Dive - Minimum Conviction (aka Minimum Threshold)

This is a repost from the TEC Forum to educate the 1hive community about the Parameters of the honey economy :smiley:

With Love,
Commons Swarm

h/t to Lauren who wrote this post:

What is Conviction?
Conviction Voting is a token-weighted decision making protocol in which tokens are staked on proposals to indicate preference and voting power, aka “Conviction”, grows over time. Conviction is a combination of the number of tokens staked on a proposal and the length of time they are staked for.

Minimum Conviction

The Minimum Conviction dictates how many TEC tokens are needed to pass a proposal, no matter how small the amount requested. On the Commons Config Dashboard (CCD), the Minimum Conviction is set as a percentage of the effective supply, where effective supply is the number of tokens actively voting on proposals.

Minimum Conviction makes it so that any requests for funding under a certain % of the Common Pool all take the same amount of conviction to pass. This protects the Commons against malicious attempts to steal funds by submitting many proposals requesting very small amounts of funds that may require very little conviction to pass.

On the CCD, the Minimum Conviction is set using a slider and you can see the effect this parameter has on the Commons by analyzing the graph. The graph has a curve that represents the Conviction required for a proposal to pass. This curve is affected by the % of the effective supply voting on the proposal (y-axis) and the amount of time required to pass the proposal. The Minimum Conviction is represented by the explicit horizontal asymptote at the bottom of the curve.

Minimum Conviction is an adaptation of the parameter Minimum Threshold, renamed to suit the CCD.

Design Considerations

A low Minimum Conviction makes it possible for proposals to be passed and Commons initiatives to be funded even in times of voter apathy. However, it does make the Commons more vulnerable to the malicious attack described above. A higher Minimum Conviction ensures that proposals require serious engagement in order to be passed, but a very high Minimum Conviction would make it very difficult to pass proposals at all, slowing down the rate of progress.

Keep in mind that the Conviction Growth rate directly impacts the rate at which proposals are able to be passed, and the ability for proposals to be passed at all is a function of multiple parameters including Minimum Conviction.

Suggested Range

0.1% to 3%

Related Parameters

Spending Limit
Conviction Growth
Minimum Effective Supply

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Hey @griffgreen thanks for taking the time to gives us abit more insights into this. I have one question about conviction voting which was brought up but no one had an easy explanation for which you may be able to answer with ease.

"How does conviction voting ensure fairness between whales and minnows in an organization like 1Hive? "
I realize this may have been answered in a more technical explanation so i apologize in advance for my arrogance :heart:

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Great question ,)

Working on a longer forum post that addresses this, but to name a few:

  • No downvoting means whales can’t drown out minnows. In other words minnows can propose and support things they care about without fear that whales will silence them

  • The time dimension (as represented by conviction growth) rewards persistence / consistency (this narrows the gap between persistent minnows and fickle whales)

  • A well chosen minimum conviction gives minnows the ability to pass proposals without the help of whales (and even in spite of them!)

  • A well-chosen spending limit puts a natural brake on the ability of whales to continually exploit the voting system and drain funds from the common pool: as proposals pass and remove funds from the treasury, they become increasingly harder to pass because they now represent a larger proportion of the shared treasury - this is especially true of larger proposals

Having said all that, the real magic happens at the intersection of conviction voting, the covenant and celeste (the latter two essentially exist to protect the interests of minnows)

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This is such an important point… downvoting is an obvious feature that many want to add… but the ability for minority groups to have a voice is one of my favorite parts of conviction voting.

I think its cool of course to see some garden experiment with quadratic downvoting some day… but i am skeptical about the cultural implications :smiley:

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Thanks for the insights Sacha! I am wondering though how does this also entice whales to be part of our community? I don’t see whales as being good or bad but i was wondering what would drive someone to invest large sums in organizations like the ones we are attempting to build? As @griffgreen mentioned downvotes are not something that are part of the current voting system but being a whale also increases the risk of the investment. Do you guys think downvoting could potentially bring a voice to players that have a higher stake within a project giving them a sense of security on their investment?

Again, great questions.

To zoom out a little, at the end of the day, I think we need to get the balance right between

(1) Attracting capital

(2) Keeping important stakeholders accountable to the needs of the broader community

(3) Giving the broader community enough leeway to experiment with ideas that founders / large holders may not immediately see the value of

(4) Ensuring that decisions are, as far as possible, backed by skin-in-the-game

Within this context, I don’t believe downvoting is necessary in order to attract capital(1), because there is already a strong sense in which conviction voting gives those with more skin-in-the-game, more of a say(4). Downvoting would also add a lot of resistance to accomplishing (3), and would potentially negatively impact (2) as well.

While we’re not quite there yet, getting the balance right between attracting capital and ensuring governance power isn’t determined purely by it, is precisely the raison-d’etre of our governance structure i.e. Conviction voting + Covenant + Celeste.

For example, if the parameters are chosen well, Conviction voting can enable both (3) and (4).

(4) is essential because it ensures that those who don’t have any interest in the long-term success of our community can’t unduly influence how resources are allocated, and/or which policies are enacted.

(3) is essential because it allows for a fiercely loyal community to form (i.e a culture in which all participants feel they have a voice / at least some agency in influencing the future direction of the DAO).

As a final thought, a well-thought out and peacefully enforceable social contract (i.e a Covenant + Celeste) should help accomplish both (1) and (2) - in the sense that if enough deep thought has been given to the Covenant, both investors and the broader community are kept accountable to each other.


P.S.

what would drive someone to invest large sums in organisations like the ones we are attempting to build?

While I can’t speak for everyone, I’ve articulated my personal thesis here

But I think we still need to deliver on this expectation

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Thank you for the in-depth answer Sacha! im bookmarking this so i can share this when the question arises :heart:

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With Celeste, doesn’t it make sense to have a higher spending limit? Kinda sounds like before 1Hive had Celeste we were just using the spending limit as the poor man’s Celeste.

It’d be nice to have the option to fund really big projects as long as it had widespread community support and didn’t break the Covenant.

It’s true that with Celeste this is less of a concern, but a well thought out spending limit is still desirable as an additional safeguard.

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