So as well as the above some of the detail I wanted to get into with the RFC relates to the perceived positivity and separation of the gauge types.
My understanding of how C3 works is that there is a percentage of C3 rewards set aside for the leadership team to do with as they wish, 10% for KlimaDAO as part of the partnership, a proportion for bridging, and another pile to be distributed to gauges.
The gauges have been distinguished by @cascade into four types: Bridging, Liquidity Pairs (like UBO/Klima), Single Sided that allow the ability to hold carbon (like UBO) and another for rewarding investors in partner protocols (wsKlima).
I'm going to ignore the bridging proportion as C3 set aside a fixed amount of rewards for bridgers (at least in the first year, which for sake of argument lets assume will continue into the second year given the tokenisation hiatus, but an update on C3's strategy would be helpful to clarify) it means the other three gauge types share the rest of the distributed pool based on how holders vote with their veC3: LPs, holders, and partnership token holders.
The core of the issue is that, because there is fundamentally less risk with holding UBO/NBO/MCO2 instead of the equivalent LPs, token holders are incentivised to lock, for example, UBO instead of UBO/Klima and then direct the rewards to that gauge. This is a "bad thing" because there is less liquidity in the pools then there otherwise could be and slows down the development of the on-chain market.
An example might be, if the amount of UBO is static (as it is now), 50% of UBO is locked in the UBO staking gauge and 25% in UBO/Klima the cost of swaping UBO to Klima might be 100% more than if 50% of UBO were locked in the UBO/Klima pool (the percentages are made up, included only for demonstration purposes). As holders notice this liquidity is drained from the UBO/Klima pool to be added to the UBO gauge and costs continue to increase as liquidity dries up. The ability to attract new projects is therefore significantly impeded.
Assuming my understanding is correct, and no one pokes too many holes in the above example, then there are three questions I would ask:
1). Why were single sided gauges included as a proposition when C3 went live?
2). Are the gauges working as intended in the current ecosystem (i.e. no tokenisation)?
3). Given where we are now, is it expected that the single sided gauges will return to what was expected on them originally?
To try and answer some of my own questions:
1). I believe the original strategy from C3 was that single sided staking gauges were part of the incentive to off-chain token holders to bring carbon on-chain (as well as bridging rewards).
2). I would say not, as since no new carbon credits can be onboarded right now the bridging rewards are not being distributed but staking rewards are.
Therefore, I think the key decision points are whether the C3 leadership team think significant tokenisation will restart early in the New Year or that is might take longer, and they feel the staking gauges will work as intended once that occurs. If either of those are answered no, I think this RFC has a lot of merit - capping the amount of rewards possible for bridging, LP staking, and single sided staking (I don't see the benefit in separating out single sided staking of partnership tokens into a separate category, personally) might be worth exploring. I think there will be some costs/challenges to doing that (such as reputational damage from having sold the single sided gauges differently when setting them up and damage to investor confidence due to people having locked for up to a year under a certain expectation that then changes, but these are surmountable).