[5.8][Social] ENS Steward Vesting Proposal

DAO-Wide Draft Proposal
1
Status Draft

Edited to update wording based on Meta-gov steward and @nick.eth feedback

Abstract

Following discussion in the Metagov funding request thread and feedback on the Temp Check Proposal, we have put together this amendment proposal which looks to add the requirement of vesting to ENS distributions to stewards for the current term.

Under the current proposal, the MetaGov Working Group will be distributed liquid ENS tokens which will then be distributed individually to stewards. As discussed on the forum and on Meta-Gov calls, these tokens should be vested in order to ensure long-term alignment of stewards with the DAO, whilst ensuring that they are able to use the tokens to particiapte in governance.

This proposal is only in reference to adding vesting to current term steward allocations. With more discussion and input needed for any other changes to steward compensation going forward.

Specification

All ENS disbursements to stewards will be vested on a linear 24 month schedule from the time of their appointment. In line with the 12 month term that each steward serves plus an additional 12 months of vesting to encourage longterm DAO alignment.

This vesting will be implemented by using Hedgey which allows stewards to access the full voting power of their allocated tokens up front, whilst ensuring that the monetary value of these tokens can only be accessed based on the vesting schedule.

All ENS marked for steward compensation will be transferred via executable proposal to the metagov WG multisig. Term 5 stewards were appointed at the beginning of Q1 2024, and as such are already 4 and a half months into their term.

For the current term’s stewards, ENS vesting will be scaled retroactively based on the time since their appointment. ~37.5% of ENS will be distributed to stewards directly from the multisig, whilst the remaining ENS will then be deposited into each steward’s vesting contract. These contracts will be set up by Hedgey.

Vote

  • Yes. Apply vesting to the current term
  • No. Do not apply vesting to the current term in line with the 2023/2024 guidance
  • Abstain

This vote adjusts the structure of ENS token distributions to stewards, and if passed, the Meta-gov working group will implement this vesting schedule (and associated tooling) for all ENS token distributions to stewards.

2

I support this proposal. Thank you @James for pushing it through to the finish line.

2 Likes
3

This change will align incentives between stewards and the DAO, hence I vote, yes to apply vesting to the current term. Additionally, I would like to invite the author to evaluate the results of change after 2 years and propose amendments based on success/failure of this initiative.

1 Like
4

In many different threads I argued that liquid or vested it is still just money, there are couple of other mechanisms missing here to make token distribution aligned meaningfully with Steward performance

  1. Is KPI, token should only be distributed provided certain KPI are reached
  2. Accountability / Risk , as I was brining analogy in another thread, typically high pay comes with risk and accountability - doctors are liable for their mistakes, same way as accountant for example. Within present framework none of that is applicable.

Given all of the above I would like to propose to add another option - to reject provision of token all together. I believe that this is necessary for two reasons - 1 is that there were quire a few voice in favour of that option, their voice should be heard, 2ndly - I believe that it is prudent as first step to introduce KPI’s and accountability before we can bring forward substantial rewards.

Community may disagree with me, and still choose to distribute tokens, which will be fine - paraphrasing @AvsA "we are only interpreters of tokens holders will’, but I think its necessary to include all voices.

5

I’ve said this before - an EP is not the place to be referring to “we” and expressing opinions. An EP should objectively state the change and the reasoning behind it; there is no “we”.

Likewise - the specification says what will happen; it doesn’t “propose”. Consider how this reads after the proposal passes; it’s documentation of a change to ENS.

The specification needs to be a lot clearer and more specific: directing the stewards to appropriate x ENS tokens from the DAO and vest them to stewards over [period] using [mechanism | a mechanism of their choice].

6

Snapshot proposal now live

https://snapshot.org/#/ens.eth/proposal/0x1f328fd1fda5f3cabfdace3e521403def7ad41b0b0582e27334c135cd23c511d

7

“For the current term’s stewards, ENS vesting will be scaled retroactively based on the time since their appointment. ~37.5% of ENS will be distributed to stewards directly from the multisig, whilst the remaining ENS will then be deposited into each steward’s vesting contract.”

— Excerpt from the Specification of the ENS Steward Vesting Proposal, paragraph 4.

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@James can you confirm the following:

  1. Liquid ENS Distribution Event: The first liquid distribution event will occur on month 9 when the cumulative tokens vested will be 3,750 tokens, representing 37.50% of the total allocation.
  2. Remaining Token Distribution Events: The remaining tokens will be distributed on a monthly schedule from month 10 to month 24. Each month, approximately 416.67 tokens will be distributed, concluding with all 10,000 tokens fully vested at the end of month 24.

—

You are right. The reality is that the ENS DAO can only advise on the best use of $ENS. Delegates, however, are free to choose how they utilize their governance distribution. They can choose to either: 1) continue participating in governance by voting and submitting proposals, 2) delegate their voting power, or 3) sell it for cash.

Governance distribution is not categorized monetarily; instead, it is its own category, as described in the Q1 spending summary.

—

Yes, I agree. In its current state, the proposal lacks specificity and can be misinterpreted, as demonstrated by commentary from the Meta-Governance Working Group Meeting Minutes (May 7, 2024).

Before it moves to an Executable Proposal, I suggest that the Meta-Governance Working Group more actively advise the proposer on the structure and content of this proposal, to lessen the potential for misinterpretation and make it “airtight,” so to speak.

As a first step, I’ve prepared a table that can be drafted into the content of the Executable Proposal, assuming that initial distribution event begins on month 9:

Month Cumulative Tokens Vested Percentage Vested
1 0 0%
2 0 0%
3 0 0%
4 0 0%
5 0 0%
6 0 0%
7 0 0%
8 0 0%
9 3750.00 37.50%
10 4166.67 41.67%
11 4583.34 45.83%
12 5000.01 50.00%
13 5416.68 54.17%
14 5833.35 58.33%
15 6250.02 62.50%
16 6666.69 66.67%
17 7083.36 70.83%
18 7500.03 75.00%
19 7916.70 79.17%
20 8333.37 83.33%
21 8750.04 87.50%
22 9166.71 91.67%
23 9583.38 95.83%
24 10000.05 100.00%

How does this look for everyone?

8

I would like to argue that since an ENS distribution event is only possible after an Executable Proposal passes, the current rate of earning or distribution should continue proportionally with elapsed time.

For example, if an Executable Proposal for transferring ENS to the Meta-Governance Working Group multi-sig for distribution among stewards is executed on or after July 1st, the ENS distribution amounts to 5000 ENS, which is 50% of the total distribution of 10000 ENS, as opposed to the 37.5% originally suggested in the Social Proposal. The remaining balance is then applied to the vesting schedule.

—

The table that I’ve provided merely illustrates a scenario where the DAO follows the directive in the proposal that states: “ENS vesting will be scaled retroactively based on the time since their appointment. ~37.5%” — it’s important to note that the proposal doesn’t specify a scheduled distribution date and assumes a scaling consistent with the proposal’s drafting date in April 2024.

9

I don’t think your table is correct @estmcmxci.

10

Since the proposal did not specify a start date for the initial governance distribution or the monthly amount of tokens to be vested, I assumed that the initial distribution of 3750 ENS would occur in the ninth month. This assumption aligns with a hypothetical 24-month schedule, averaging 416.67 ENS per month, resulting in a total of 10,000 ENS.

The table is merely a suggestion which I hope leads to a wider discussion on what the distribution schedule actually looks like.

—

As demonstrated, there are several interpretations of this proposal happening all at once, so I am attempting to bring attention to this fact through a hypothetical — my point is that the Executable Proposal should be much, much more specific.