CIP - draft: Should CoW introduce veCoW incentives and a revenue source?

Governance Inactive Proposals
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This proposal is a start for discussion, but imo needs more debate and in-depth input, as there still are many assumptions and inconclusive suggestions.

I agree with @edo and like to encourage reworking the draft until a broad consensus is achieved.

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Hi everyone, appreciate the discussion.

I also believe we need more wide-scale discussion on this. Perhaps a panel of some sort in the discord where community can listen in and in an easy format follow along with the arguments?

One thought from me while reading the above is that we donā€™t necessarily need to add fees to all trades, why not just add fees to the CoWs we find? Thus we are still always in the worst case neutral for the end-user.

If we find a CoW, we could impose a fee equal to, say, 20% of the USD value of that CoW improvement in execution price.

If we go with this approach, we are still the best place to execute (always), and finding CoWs is still an enormous px improvement for the trader.

Thanks!

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Adding to my comment above, I also firmly support the notion of providing $COW stakers with a share of revenue. I agree that $veCOW is not necessarily needed. Recall that the purpose of the $veCRV token for example is to allott long-term CRV holders the highest voting power and thus the largest say in where CRV emission goes. It is crucially important for the Curve protocol that emissions are directed with longevity in mind. Thus, putting the majority of this power into the hands of forced long-term holders achieves this goal.

We do not have this kind of setup here. We incentivize solvers equally as I understand it. We do not direct emissions in some kind of political way.

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This is also my idea of how CowDAO can generate revenue from the protocol. Instead of giving back all the surplus we give back only a percentage of it. Nevertheless we need more volume and more CoWs and trades in each batch to get there.

Also true. We canā€™t compare what CowSwap provides with all the examples previously mentioned. People believe that if COW gets locked it means thereā€™s less selling pressure but thatā€™s not exactly true. We have funds vesting every day, we have solvers receiving rewards, soon the affiliate program also distributing tokens. On the other side we have people that donā€™t really need to buy COW. They can buy to get some discounts but Iā€™m not convinced of the ratios in place.

In my opinion, creating a veCOW model can be interesting if veCOW is used for:

  • boosting discounts (COW holders get the discount already in place, but veCOW holders more or the same with less tokens)
  • boosting voting power (in my opinion, this boost canā€™t be greater than what vCOW gets)
  • eligibility factors (for solvers, for the affiliate program ?and more?)
  • revenue distribution in the future (not yet)
  • more?

Anyway, all this things can be done with COW but a veCOW model is needed if we want to take into consideration how much we boost and reward holders considering the period locked. The longevity here doesnā€™t matter from a liquidity perspective (we donā€™t need X amount locked to keep a pool attractive) but it matters from a commitment perspective.

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A few months later and the proposal rings as true as ever. The price of the token has been continuously dropping. Generating revenue is a must.
Beyond token price it will help on the marketing side as weā€™ll be able to relaunch the affiliate program and have a real incentive for partners to refer users by sharing revenue with them.