Proposal to End COMP Liquidity Rewards Fails
A governance proposal by Tyler Loewen, a member of the Compound community, was initiated on April 15, 2022. The Proposal 100 was a second step toward eliminating the COMP rewards program.
However, on April 21, the proposal failed by a small margin. While 499,849 votes were against Loewen’s proposal, 492,678 votes supported the proposition.
According to Loewen’s proposal, the original objective of the program was to distribute COMP tokens to users. However, Loewen noted that the practice of farming COMP for profit became a problem, adding that most of the tokens distributed by the rewards program are usually sold off.
The proposal further stated that such practice was disadvantageous to the protocol itself, users, and COMP holders. For Loewen, removing the current rewards program is the best option, while suggesting the launch of a “new one with the sole purpose of kickstarting new markets: kickstart rewards.”
Venture capital giant a16z, was in full support of Loewen’s proposition. In a tweet thread by Jeff Amico, head of a16z’s crypto network operations, said that most of the rewards go to recursive positions, which although it boosts volume and total value locked (TVL), such practice hardly helps with organic growth.
Amico, however, said that:
“Winding down the original program does not mean ending incentives permanently. We’re supportive of replacing the current subsidy with more targeted programs aimed at new markets, and would support / encourage progress on those efforts as a fast follow to Prop 100.”
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