The first ALGO Governance Poll and Why it’s Important

As all my fellow Algorand holders are already aware, governance is finally upon us! And for those who don’t know, the Algorand Governance Program is essentially a way for the Algorand community to guide the project by committing their ALGO to 3 month governance periods, during which they’ll be required to vote in governance polls in return for rewards (https://algorand.foundation/governance/proposal).

Anyways, even though the signup phase for the first governance period has only just started, we’ve already been presented with our first governance poll. Titled “Governance Period no. 1, Vote no. 1, Measure no. 1” (G1V1M1), and what makes G1V1M1 so important is that it’ll decide how rewards are distributed in return for governance for the foreseeable future. The two options are as follows:

Option A

“The Governance rewards amount for 2022 will be 282M Algos (70.5M per quarter) while maintaining the current simple locking mechanism: the rewards are distributed among the governors who vote and maintain the committed Algos in their wallet for the entire quarterly period. Governors failing to do so will lose their rewards, but will incur no further penalties.”

Option B

“The Governance rewards amount for 2022 will be 362M Algos (90.5M per quarter) with a slashing mechanism: the rewards are distributed among the governors who vote and maintain the committed Algos in their wallet for the entire quarterly period. In case of failing to do so, Governors will be subject to an 8% slashing of their committed amount, on top of losing their rewards.”

Basically, Option A would leave the amount of rewards distributed each governance period unchanged, with no penalty for opting out of governance early, whereas Option B would increase the total governance awards available by around 15%, but introduce a 8% slashing penalty for anyone who withdrew their ALGOs from governance before the end of the period. What this means is that if Option B were to pass there would be more rewards available, but you would be putting down 8% of your ALGO each governance period as a deposit, and if you for whatever you reason needed to opt-out of governance early, that 8% would be taken from you and returned to the Algorand Ecosystem Resource Pool. Now of course the process is a bit more technical than what I’ve presented, but this is the basic rundown. If you’re interested in reading into the specifics here’s the link: https://algorand.foundation/governance-period-1-voting-measures.

Personally, I think I will be voting against Option B because as much as I enjoy a higher percentage return on my investment, I don’t want to run the risk of one day needing to opt-out of governance, or even forgetting to vote in a poll, and lose 8% of my return in the process.

To any other ALGO holders who plan to take part in governance, which option do you lean towards and why?