Hey everyone,
I wanted to start an open discussion about a challenge that’s emerged with the launch of Bonzo and Sirio and the ability to borrow large quantities of $SAUCE.
The Problem
Now that it’s possible to borrow $SAUCE, governance is no longer about how much $SAUCE someone holds - it’s about how much capital they have access to. This means that large players who don’t actually hold $SAUCE long-term (or believe in the protocol) can borrow heavily for short periods to sway votes, potentially overriding the interests of actual long-term $SAUCE holders at almost no cost.
This creates a risk where governance decisions could be influenced by short-term opportunism rather than the collective vision of those who are genuinely invested in SaucerSwap’s future.
Potential Solutions?
I don’t have a single definitive answer yet, but I’d love to hear ideas from the community. Some potential approaches to mitigate this issue might include:
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Warm-up period before governance participation: Requiring users to hold $SAUCE for a certain duration before their tokens become eligible for voting.
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Cool-down period before voting with borrowed funds: Implementing a delay for newly acquired (or borrowed) $SAUCE before it can be used in governance.
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Weighted voting for long-term holders: Giving more influence to tokens held for longer periods (e.g., vesting-based governance models).
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Differentiating borrowed vs. owned tokens: Exploring ways to distinguish between borrowed and natively held tokens for governance purposes.
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Time weighted voting - instead of a snapshot at the final moment of the voting period, sauce devoted to a vote over a period of time might earn weight toward the vote. (While this one wouldn’t eliminate the influence of borrowing, it would at least increase the length of time borrowers would need to borrow sauce.)
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A steeper curve or one time penalties to borrow $SAUCE on Bonzo & Sirio. This likely requires collaboration with lending/borrowing platforms.
These are just some initial thoughts - what does everyone else think? Are there other approaches we should consider? Let’s brainstorm ways to keep governance fair, decentralized, and aligned with long-term $SAUCE holders interests.
Looking forward to hearing everyone’s thoughts!
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I’ve just realized that maybe it’s as simple as the voting system looking at the Bonzo contracts for supplying and borrowing Sauce and xSauce and giving supplying accounts equivalent vote power to what they’ve supplied on Bonzo and subtracting borrowed vote power from all borrowing accounts.
Thus the supplier retains voting ability even when supplied and the borrower doesn’t gain votes, and it’s once again required to buy and hold sauce to deploy its voting power.
There’s issues with that the team discussed.
Smart contract reads and that it would be difficult verify past results.
Now to everything else you have said.
Warm up period would limit new accounts in participating. Where its good or bad is up for discussion.
It would be an interesting question how to implement a cooldown period. Open up a mirror node specifically for borrow events for SAUCE and just have a ledger to tack on deductions on top of the current system?
Weighted voting could be easier. I wonder how it could happen. Keeping snapshot data the team gets and have a time weighted vote. It would probably be a giant table of hourly snapshots. Or maybe minute snapshots. 
Increasing the borrow fee during governance votes would be the easiest to implement, if that is something the other protocols are willing to do. Maybe get a cut of that increased fee to the infinity pool. It would kinda suck for those would have borrowed SAUCE for longer term. Alternative ideas was put out there like a minimum time hold for borrowed SAUCE and xSAUCE before repaying.
Great point about the difficulty of verifying past results - that does make it complicated. Perhaps we need a bit more in the way of analytics platforms for historical data being built before that will be easily verified, if it ever is.
Yeah, no idea what I was thinking about a cool down period, maybe I kinda just thought of a warm up period and my head threw in the phrase cool down because they often go together for other things like exercise?
I do agree increasing borrowing costs during voting would be the easiest, and I imagine Bonzo might be easy to coordinate with since they’re quite responsive and seem to be very much earning a reputation as good actors in the space so far, but I do wonder about future lend/borrow platforms that might crop up and how agreeable they might be and that could set us at square 1 again.
I did a little more research and it seems the prevailing method to handle this issue is a Vote Escrow (veToken) Model (Curve, Convex, Frax, Balancer, Radiant, Stargate, Platypus, Canto, Aerodrome, etc) where hodlers must lock tokens to gain voting power so borrowed tokens can’t immediately be used unless they’re also locked for the required period, but it would seem you also then need a system to prevent the veSAUCE from being deposited in lending/borrowing platforms or the whole problem starts again. It also might compete with xSAUCE, which is a bit self-defeating, unless perhaps only xSAUCE can be deposited for veSAUCE and then veSAUCE is soul-bound to the account that staked it OR if veSAUCE had a very high % fee on transferring it to discourage trading/lending/borrowing it - but that would of course need to be implemented in a way so that if you did simply lock up tokens to get veSAUCE and later unlock them that you don’t incur the fee in the process.
Also on top of all that, the # of votes needed to get past a DAO vote might need to be dynamic and setup as a % of the total circulating voting power at any given time, in case nobody has much veSAUCE out there vested enough to vote on a proposal at all.
It certainly gets complicated fast.