Multicoin Proposal to Implement Governance by Token Lock and Commit-and-Reveal

Hi Mango Markets Community,

We are Tushar Jain and Spencer Applebaum from the Multicoin Capital team. Multicoin Capital is a thesis-driven investment firm that invests exclusively within the crypto ecosystem. We manage a hedge fund and a venture fund with several billion in AUM, investing across both public and private markets.

Because we run both a hedge fund and venture fund, we have unique market insights as it relates to early-stage DeFi platforms. We are primary counterparties to all of the major CeFi market infrastructure providers, including but not limited to market makers, OTC desks, lenders, exchanges, custodians, staking providers, etc. We speak with these players on a daily basis to understand their pain points and why they have been hesitant to participate in the DeFi ecosystem. We use these conversations to drive a lot of our theses in the venture fund, and we think that Mango Markets solves a lot of problems existing DeFi derivatives platforms face.

We are DAO members and MNGO governance token holders who participated in the public sale along with the rest of the community. We purchased ~$10 million of MNGO tokens at the same price as all of you. Based on on-chain data and discussions with other participants, we believe we are one of the largest holders of MNGO tokens. As such, we have a significant amount of “skin in the game” and are incentivized to drive value for all stakeholders in the project.

Proposal Summary

On-chain governance helps make governing decisions open and transparent. It is intended to support decentralization of the protocol governance to the community as the Mango Markets protocol continues its journey toward complete decentralization.

Traditionally, on-chain governance had the following features:

  1. Equal weight – “One Token One Vote”
  2. Limited skin in the game – no cost to vote

This approach is vulnerable to people borrowing tokens to vote. With the low voter turnout seen with governance votes in many other protocols, this attack vector is fairly easy to execute. We anticipate a higher signal in the voting process when voters have to own the consequences of their votes.

“One token one vote” also commonly concentrates voting power in the hands of whales and early miners and adaptors. This can lead to smaller holders becoming disenfranchised and disengaged from governance. Large holders can also manipulate the voting process by concentrating their votes at the end of a voting period.

We propose a governance implementation that consists of two parts, explained in detail below.

Vote Power by Lock

Anyone can call a Mango Markets governance vote to a vote with a minimum of 1,000,000 MNGO voting power (defined below). This will be a variable that can be adjusted by governance. This minimum vote threshold is necessary to protect against spam proposals. The voting power used to call a vote will also be eligible to vote.

We recommend that the voting process lasts for 3 days. The reveal period—which we explain in detail below—lasts 1 day.

During voting, MNGO holders can lock up their tokens in a “staking contract”. The minimum lockup period is 30 days and the maximum lockup period is 1,460 days (both the minimum and maximum time thresholds can be decided by MNGO governance).

A person’s voting power is determined by 1) the amount of MGNO they vote with, and 2) the amount of time they commit to locking up their tokens.

There is a linear multiplier for time applied to the amount of MNGO voted with. For the maximum amount of 1,460 days, users receive 500x the voting power. For the minimum amount of a 30 day lockup, users receive 1x the voting power.

As a simple example, let’s imagine Alice, Bob, and Charlie all have 100 MNGO:

  1. Alice chooses to lock up her tokens for 30 days, and thus her voting power is 100
  2. Bob commits to locking up his tokens for 730 days, and thus his voting power is 250 * 100 = 25,000
  3. Charlie commits to locking up his tokens for 1,460 days, and thus his voting power is 500 * 100 = 50,000

As the lockup burns down, so does the voting power. For example, if Charlie locked up his 100 tokens for 1,460 days and 730 days have passed then Charlie would have 25,000 vote power for any vote that happens at that time. This is to ensure a gradual decrease in voting power such that users don’t go from having a lot of voting power one day to zero voting power the next day.

At the time of a vote, the voting contract looks at how many tokens a voter has and how long they are locked for. Voters can always extend their lockup period just prior to voting. Locked tokens can vote as many times as they want.


One of the challenges with the aforementioned locking mechanism is that most participants will wait until the last minute to vote. This is because there is a cost—namely, giving up liquidity—to vote. As such, if a vote is going someone’s way, she may not want to participate and lock up tokens.

In order to incentivize honest voting and maximal participation, we propose that Mango governance adopt a commit-and-reveal scheme. With this feature, votes would be submitted anonymously. Upon the completion of the voting period, there would be a 1 day reveal period in which participants can review the results of the vote.

The result of this should be maximal participation for important decisions because individual participants won’t know whether their vote will matter or not.

Voting Mechanics

The minimum threshold to win a vote is 60%. We believe that dApps should only change when there is broad consensus amongst stakeholders and seek to avoid giving too much power to narrow majorities.

Benefits of these mechanisms

  1. Consequences to voting (locking up tokens), so less risk of low conviction votes.
  2. Having a contentious vote is extremely time-consuming and requires longer lockups (because people will want more power to swing the vote), so it is worth building consensus on a proposal prior to voting.
  3. Locking via vote creates scarcity on the circulating market supply of MNGO for all network participants.
  4. Much less oligarchic than one token one vote, partially preventing whales from de facto control of governance proposals. In governance by lock, whales who try to control contentious governance decisions start locking up tokens and bearing the cost.
  5. The Mango Markets early contributors and developers have entirely unlocked tokens. As such, if they want outsized influence on the direction of the protocol, they should show that they have skin in the game for an extended period of time.


  1. With the commit-and-reveal mechanism, participants may lock up tokens longer than necessary because they won’t know if a vote will be contentious or not.

How do you propose to implement these proposals?

Whilst I understand the intent of the proposal I don’t believe that the locking mechanism proposed will encourage smaller holders to participate, in fact I feel it could do the opposite. Many smaller holders need liquidity far more readily than large whales and therefore to lock tokens for long periods is not feasible. If anything this setup would further solidify the control of large whales such as Multicoin over the protocol, as they can happily lock a significant amount of MANGO for the max period and boost their already large voting power by the max multiplier.

What about a system with a diminishing lockup boost multiplier. As an example your first 1000 MANGO locked for 1460 days grants the 500x multiplier. Your next 9000 locked at 1460 days only grants a 250x multiplier. Your next 90000 MANGO locked at 1460 days grants 50x and so on (all scale factors controlled by governance).

A system designed to encourage participation from smaller holders should more heavily incentivise smaller holders than large holders.


In general I like the idea of empowering longer-term committed MNGO holders more than those who are not committed enough to lock tokens for a period.

A few points, some of which came up in the discussion on Discord last night:

  • I don’t think commit-and-reveal is necessary. Your main point seems to be to address the opportunity cost of locking MNGO tokens up (ppl want to just collect interest on it instead of locking to get more voting power). To address this from a different angle, why not empower locked-token-holders even further by giving them, e.g., a proportionate cut of Protocol Revenue (so, normal MNGO holders = no revenue, must lock to even get access to the flows)?

  • I think commit-and-reveal may even be dangerous. The more proposals get added, the more overhead there is for the community to manage it and make sure that proposals are good, properly coded, and in the long-run interest of the project. If we can’t even see the progress of the votes, it does not create urgency (positive or negative) for others to be involved. It makes it also harder to have proper discussions about a proposal that has a certain amount of progress one way or another.

  • What about letting locked token holders bitch out early, to unlock, for a fee (a % of MNGO, based on the locking period) – with that fee going to the DAO? So if I lock for 4 years, and immediately want to unlock, it will cost me 50% of my MNGO. If I lock for 30 days and want to unlock right away, it costs like 5% of my MNGO.

  • To push back on (4): a large VC firm like MultiCoin has maybe a timeframe of 4-6 years on their MNGO investment (maybe more, but ultimately you need a return to your investors in fiat terms). So, you and similar firms who are empowered to lock for around 4 years will support initiatives that maximise MNGO value (or value to locked MNGO holders) on that timeframe and do whats best in your interest there – what i would call still fairly short-to-medium term. But Mango should live on forever, infinitely, and so your interests there may not be aligned with the true long-run interest of Mango. It’s not clear to me this is less oligarchic either. A system where people are literally buying votes (in form of MNGO) and the wealthier ones can confidently lock everything for a 50,000x boost (as its a lower % of your total holdings) can very well perpetuate an even stronger oligarchy than already exists now on Mango (which is an oligarchy of the devs, who have MNGO as a fairly high % of their portfolio)

  • One thing I want to emphasize too is that locking should REALLY mean locking. No transferring, no trading. Locking should be a commitment to really and truly lock, none of these games of rehypothecation

  • Quorum – you mention 60% as the threshold to win a proposal, but we need to have a minimum quorum as well. And the 50,000x power boost means we have to think carefully about what quorum will mean here and ensure that these huge multipliers are not enabling people to dominate votes – but also so that the quorum can reasonably be met too.


First up, it’s great to be having this discussion.

TL;DR for me is that I don’t believe the proposed mechanism incentives the smaller holders of the token, but it does provides additional benefits to the top holders.

If for instance, we took holders 4 through 23 at 20% of their stack locked for the maximum duration, there’s about 53 billion votes. If the next 1000 holders lock 100% of their stack for the maximum duration, it’s 49 billion votes, thus being easy and potentially cheaper to defeat whilst also removing them from the market for the lock up period, making it more vulnerable to manipulatation.

In terms of responding to the benefits of this system:

  1. I don’t know that low conviction votes are truly an issue, as I think we can assume people will vote in their best interests.
  2. Agreed that building consensus prior to the vote is the correct approach.
  3. Agreed that there should be some locking mechanism for MNGO.
  4. As per my original point, I don’t believe this is the case at all unless whales are fighting amongst themselves, which is unlikely if the proposal stands to benefit them.
  5. Skin in the game is important, but I think you’re likely to find that most of the early contributors/developers are participating in the direction of the protocol both with their time, effort and votes. When you’ve birthed something, you’re much more likely to nurture it than to be ambivalent or to try to burn it to the ground.

I’m not entirely sure what the correct way to incentive people is, but it’s more likely that a carrot, not the stick, will be a better approach. Locking tokens for 4 years is a stick because the only benefit you receive is “more voting power” and up to 4 years of opportunity cost. That won’t and doesn’t sound attractive in my opinion. The carrot would be to actually reward those who lock and vote with their tokens by giving them something more tangible than something that may or may not payoff for them in 4 years time.

Without thinking too hard, this could take the form of a lottery that rewards a small number of random voters with a small amount of MNGO. Yes, this wouldn’t incentivize whales to vote because winning would represent a very small % of their holdings, but it could definitely improve the amount of smaller holders voting because the reward is likely to be a more substantial % of their stack. I believe they will likely still vote in their best interest as mentioned above, but they need better motivation than a little more voting power.

Whales will still have the incentive to vote, because they will want to vote in their best interest regardless. And whilst I believe they will likely take more time to calculate the probable and more pleasing outcomes of any given vote, I’m not sure it entitles them to more voting power with less risk.

I know the lottery suggestion is not perfect and some caveats exist with a system like this, but I firmly believe that it’s incredibly difficult to beat small financial incentives over exposing small holders to opportunity cost for minimal/negligible gain.

1 Like

Some governance committees I’ve been apart of in the past have mulled over very similar setups as described above. One of the main sticking points that we think keeps this otherwise worthwhile setup from being a good move was that it just creates a hole that someone will fill with a liquid staking token.

LargeHolder knows that they plan to keep a large amount of tokens invested for X years. They can then create a contract that will issue 1-to-1 derivative tokens (let’s call them vMNGO, v for voting). They represent an underlying token, and should be trading at spot minus the value that everyone attributes to the lock up. They can be locked up for the max duration, to become maximally effective when voting. SmallHolder comes along, wants to vote on a proposal, and rather than having a 1x vote power, they purchase vMNGO, to amplify their voice.

When the proposal is over, SmallHolder can send back their vMNGO, retrieve the equivalent amount of MNGO, and go on their way. The loss of value would be the economic value that is placed on a vote, which now makes it more akin to a pay-to-play situation, as there is now a path for a short-term party to have the same say as an extremely long term party, yelling over all of the other small holders for a fee.

Implementation wise, it would probably be a matter of just setting up multiple contracts so that certain votes can be for or against a proposal, or even multiple contracts for period of lock up, thus subsequent amplification power/price-per-token.

In the same vein, another issue stems from the possibility that after a period of time this method is undesirable and governance will “try something new” instead. The LargeHolder may have a ton of tokens vested for the max duration. Rather than leaving money sitting idle if there was no longer a purpose, they would surely create a derivative contract to create liquidity for themselves should they see the need.

1 Like

This proposal seems likely to benefit a few specific groups of people rather than the wider Mango community.

Most people can’t afford to lock up tokens for 4 years. They have bills, living costs, they need to be able to handle unexpected medical expenses or other life crises. 4 years is too long a timeframe for them to commit their funds, no matter how much they believe in the long-term future of Mango.

Only two groups of people can realistically lock up tokens for 4 years:

  • Rich people

  • Venture Capitalists (VCs)

Do we really, as a community, want to give a 500x governance multiplier to just those two groups?

Mango has managed quite well so far without VC backing. There were no pre-sales, and no favoured VC entities. If VCs wanted tokens they had to buy them in the token sale the same way everyone else did, and at the same price. It would be a shame to let VCs and whales dominate Mango now after such a fair launch.

VCs typically have long-term horizons for their projects. It’s reasonable for them to have plans to buy and hold tokens for 4 years no matter what volatility there is in the investment within those 4 years. Their locking of tokens in that situation would be inconsequential to them - they’d be acting like that anyway - but with this approach to locking they’d get 500 times more governance voting power, for free.

I’m not saying that VCs are all bad, nor am I saying all VCs are bad. They can be helpful allies and stakeholders! I just don’t believe they should get special treatment. (If they want 500 times more voting power, they can do that by buying 500 times more MNGO!)

It seems to me the above proposal would attract the very worst of the predatory VCs out there and then give them inflated influence.

I’m not against token lockups but I really hope we as a community can come up with a more equitable approach than this.


I refuse to think of this as in multipliers larger then one, but just as 1 MNGO locked for maximum duration = 1 vote. Apart from that I think this proposal is actually really good, and I’m super happy to welcome the Multi-coin team in this forum. From my point of view you are a well respected member of the DAO and I am glad to have you help build this project.

  1. All DAO members should lock to signal long term alignment to receive voting rights. We need a way to incentivize future builders to not immediately dump their tokens, but become active member of the DAO, locking is the best way I can think of to transfer large quantities of MNGO without transferring the value attached to them.

  2. We need to define a maximum lock period. 4 years feels catered too much towards profit driven investors. My personal expectations for the Mango Project are way more long term. I’d like the lockup period to be 40 years, I don’t plan to retire before. This doesn’t mean that everyone needs to lock for 40 years, Spencer (or anyone else) can still lock for 4 years, but he should only have 10% of my voting power. He won’t be here, when I will deal with the consequences of his votes. I can only remind everyone, the inspiration behind Mango is to build an exchange as decentralized as bitcoin. What are 4 years in the history of bitcoin? Are we trying to time the next super cycle, or building the future?

  3. Hidden voting is an awesome feature no other DAO has used. Can’t wait for a contributor to start working on this. Seems like a great way to get familiar with the governance code base and should be worth a large MNGO grant.


I think 40 years is a bit much. I doubt there is much practical difference in incentives between a 10 (which seems like a good option to me) and 40 year lockup. Agreed that 4 years is too short to be the max.

I can think of votes in which one would vote differently depending on a 4 vs 10 year lockup. What’s an example of such a difference for a 10 vs 40 year lockup? If there is a good example of this, I’d be convinced.

The only difference I can think of is that with a 10 year lockup, I (or a high value adding DAO member such as Max or Multicoin) can shift to not being long-term oriented in 3-6 years or so. So the practical benefit of a longer lockup is not the object-level longer-term orientation at the moment, but a commitment to thinking long-term in the far future as well. I don’t think this is something the DAO should incentivize–ensuring the long-term orientation of current votes is enough.

Why does the max lockup matter if anyone can simply choose to lock for a shorter period of time? Because then the DAO is optimizing the vote pool for “I love Mango and will love Mango in 20 years too, so can lockup lots of money” rather than simply ensuring that voters are not voting with short-term interests. Or, viewed another way, simply rewarding members with low time preference.

My main hesitation with locking tokens was I thought all locked tokens can actually be transferred. For example, instead of locking directly with the DAO program, you send your tokens to a different DAO interface program that then locks into the DAO. Any actions you’d want to perform would go first into your DAO interface program. The interface can be used to freely transfer ownership of the locked tokens.

But Armani found a good solution this. The program can just check that lockup instruction is the first in the transaction which implies the instruction did not originate from another program.

I’m also attracted to the idea of very long lockups (e.g. 40 years or 100 years), but I think it could lead to a different set of problems. For example the voters with 100 year lockups might be encouraged to distribute more of the value out to token holders because they can’t sell. Something that increasing voting power up to 10 years sounds good to me. And also, I don’t think the multiplier should be as large as 400x. Maybe something linear with the number of years of lockup?


A long lockup does support the commitment to an ongoing Mango Markets. My investment is small (450k tokens) at present but I continue to add to it. However, as an investor at 59 years of age, a 40yr lockup is not enticing. There needs to be a balance.

1 Like