Disable CREAM borrowing

Summary

Disable CREAM token borrowing on C.R.E.A.M.

Motivation

Cream token borrowing being the native governance token of CREAM, can be temporarily borrowed to vote for proposals. Thus an actor who owns no cream token, need merely borrow to vote for his/a proposal and repay it back. An actor who owns CREAM is less inclined to put proposals that may harm Cream protocol.
Disabling borrowing also prevents from aggressive Shorting, which is more favorable to CREAM holders in terms of pricing.
Just like AAVE token is not borrowable, CREAM token could be Used as Collateral only

Proposal

For : Disable Borrowing for Cream token
Against : No change

1 Like

How about borrow cap for CREAM token? That way CREAM supplier could still earn interest and the effect on voting won’t be that big?

I think it’s well intended and good idea. There is only about 60,000 CREAM (~10% circulating supply) on the platform which isn’t a lot but still enough to flip any vote so far if someone wanted to. Bigger issue is that there isn’t community engagement as a natural defense so using a market based approach like this is a good protective measure until (if) community ever gets stronger

2 Likes

That would be a good compromise, a maximum borrow percentage (i’m thinking 25%) of total supply.
That would reduce hostile takeover impact but still let lenders gain interest income.
Also lowering Reserve Factor for CREAM to increase rates for lenders.
The idea is to enhance Cream token valuation.

1 Like

Aside from the borrow cap for CREAM token, there is also one possible solution to mitigate this situation. We could modify the strategy of score calculation. For example, the score could be the average of different balances.

score = (B1(snapshot block number) + B2(snapshot block number - 10000)) / 2

In this way, borrowers will need to borrow about 2 days or their balance will be discounted.

I’m with CREAM borrow cap.

Disabling CREAM borrowing would result in another issue. The best solution is to build our own governance mechanism that fits our needs perfectly, but before it comes to that we can implement borrow cap to mitigate the risk.

I’d love to know what else solution we could have, if any.

And we should also begin to discuss borrow cap level.
@goldenboy suggests 25% and I like that.
What do you think? @Kiba @lumberg @Jeremy

I think borrow cap is good compromise and 25% cap is fine.

Since the concern is about governance I think it makes more sense to set the cap at a fixed number that wouldn’t overturn a vote based on past voting history numbers. I think 15,000 CREAM is about the maximum someone could borrow and vote on a proposal without having unilateral power. That 15,000 number would be adjusted manually based on governance engagement instead of automatically based on crCREAM supply. Thoughts?

2 Likes

The CAP should be for the whole supply. Nothing prevents multiple borrowings from different accounts.

2 Likes

I like the idea! Let’s go further with it!