May 18 | 3 min read
On April 6th 2022, in an open letter from 1KX and SET, the investors laid out the difficult realities the current bear market conditions were placing on the Index Coop. As part of laying out their concerts, they highlighted a series of steps the investors were requesting the Index Coop to take to ensure the longer term viability of the protocol. Top level indications included:
1. Getting clear on product strategy
2. Doubling down on financial sustainability
3. Incentivising top leaders and talent
4. Improving relationships with methodologists
5. Bring building back.
Following up with this open letter, the Set and 1KX returned to the forum on April 22 with a proposed INDEX token delegation to the Index Coop Council (ICC).
“We view delegation as a key way to expand the set of participants who have a meaningful impact on governance. Done well, delegation should reduce the surface-level concentration of voting power, and enhance the quality and diversity of perspectives impacting governance.”
As the final step in this delegation, on May 10th, the Index Coop investors made good on their delegation with the following notice:
In a surprise move, the delegation exceeded expectations, bringing the total ICC cumulative vote to 415,000 INDEX. Putting this into perspective, this amount is enough to change the outcome of the six of the last 8 Index Improvement Proposals (IIPs) as demonstrated below in the chart below:
In reality, the influence is likely even greater given that segments of past votes are part of the delegation passed over to the ICC.
As we look at metagovernance - the impact is even more pronounced given just two ICC voters have the power to pass a quorum confirming the vote. Today, if metagovernance votes do not hit quorum, they are referred to the “metagovernance committee” for consideration and vote. If the ICC can reliably participate in these votes, Index Coop could eliminate the Metagovernance Committee simplifying the process, saving money, and deliver further decentralization.
Both of these charts can be found in the latest Index Coop Governance Report.
This move signals a confidence in leadership which has not been demonstrated by Index Coop investors before. Given the Index Coop Council is an elected body which is up for vote every six months, this delegation can be seen as a direct referendum on leadership. Set and 1KX have been clear on their expectations - delegates are expected to display honesty, engage in debate with good faith, and take a collaborative approach to improvements, and be directionally aligned with what it takes for long-term Index Coop success.
This said, both organizations stated that delegation can be snapped back at any moment with or without cause. We are excited to see how the leadership uses this new responsibility.
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