[Discussion] What an 'effective delegate' means to the ENS DAO

Summary:

This post aims to gather resources from the DAOspace on the active delegate incentive programs, their mechanics, and lessons learned in one place. We hope that this information will help the DAO have a healthy discussion about this topic and reach a consensus on the next steps.

Rationale:

Based on various resources and proposals that have been made on this topic, we compiled a summary of the main arguments for and against this topic.

Compensation is a powerful incentive to attract skilled and competent individuals who commit full-time to participating in governance. This helps ensure that decision-making processes become efficient and effective, leveraging the expertise and dedication of experienced professionals and leading to better outcomes for the DAO.

Unpaid delegate work risks relying on volunteers, potentially leading to inconsistent commitment. Enthusiasts, true fans, and wealthy idealists are the only ones who’ll stick to an unpaid role or malicious actors who fake it until they can execute a governance attack.

On the other hand, compensation may incentivise rent-seeking behaviour among delegates, prioritising personal gain over DAO interests. Introducing performance metrics and compensation structures may also encourage delegates to game the system by focusing on meeting compensation criteria rather than acting in the best interests of the DAO. This undermines the integrity of governance processes and diminishes trust in delegated actions.

Further Reading: 1, 2, 3

Overview:

Research link: here

  • We looked at programs at MakerDAO, Optimism, Arbitrum, 1inch, Uniswap, AAVE, and Hop.
  • On average, $1.4M is or will be spent on incentives in the latest incentive round
  • 131 delegates participated in earning incentives in the latest round of delegate incentives in the DAOspace and some delegates participated in several DAOs
  • DAOs with larger budgets attract more delegates, but that does not mean each delegate is compensated more on average
  • The median budget is $66000/month, involving 11 delegates and per delegate compensation of $5000.

Mechanics:

All incentive programs focus on the voting activity of delegates and their ability to justify their stance on any given issue and have a cap on delegate compensation. However, there were a few nuances with other criteria and some interesting new ones. We will dive into each of these below:

  1. Voting Weight Threshold

All DAOs employ some minimum voting weight threshold to participate in these programs. The most common threshold is equal to or higher than the amount of tokens needed to post a proposal on Snapshot.

While this approach restricts newer delegates or those with a smaller network from gaining sufficient voting weight from qualifying, approaches by Optimism, 1inch and Uniswap have attempted to address this issue. Optimism compensates the top 100 delegates, allowing them to plan and set a budget while leaving the minimum threshold for the larger community to compete. In contrast, 1inch DAO has set three voting weight tiers, allowing delegates to receive compensation even with lower voting weight. Uniswap makes it optional to have this threshold provided the delegate has passed a proposal on the snapshot, which they have authored or co-authored.

  1. Voting Participation

While participating in voting is easily the most critical criterion, some DAOs have made compensation proportional to voting activity. Most have a threshold that delegates have to meet in order to qualify for fixed compensation.

  1. Communicating Rationale

The ability of a delegate to justify their stance on their vote is also widespread amongst the majority of the DAOs. This not only helps maintain a certain standard for compensation but also allows potential delegators to decide whom they want to delegate to based on the delegates’ ‘political opinions’.

  1. Forum Activity

While some DAOs include some sort of feedback from the delegates on the proposal as grounds for compensation, this is not a widely adopted practice. In fact, programs with this criterion have realised the gameability of this metric and will be phasing it out.

  1. Reward calculation

While all programs agree on a compensation cap, some have chosen to allocate compensation proportionally based on a formula. At the same time, most approaches used a fixed sum compensation. Rewards can take various forms, including stables or native tokens as well as points on a dashboard.

  1. Other Contribution Bonus

Many programs account for other types of contribution, such as being a role holder in the DAO, attending meetings, or exceptional contribution, as grounds for additional compensation. AAVE’s Orbit Program disqualifies delegates from participating if they are service providers for the DAO.

New Additions:

Some of the newer programs account for additional metrics such as ‘Authored/ Co-authored passed proposals’ and a ‘Minimum Delegation Time’ of 3 months as criteria for participation in the incentive programs. In almost all cases, the incentive programs were proposed and managed by delegates, except in the case of Optimism, where the foundation stewards the program.

Besides these specific factors, some DAOs employ additional specific criteria:

  • 1inchDAO wants Recognized Delegates to be voted in by the DAO to be eligible for compensation
  • Uniswap DAO has a points system to choose the top 11 delegates who will be eligible for compensation

Disclaimer:

All information gathered here is pulled from publicly available data or sources. Any discrepancies result from undisclosed data or sources which could be unavailable in the public domain.

Open Questions:

  • What type of delegate participation is valuable for the growth and sustainability of ENS DAO?
  • Should such participation be incentivised?
6 Likes

This is a great post.

2 Likes

Thanks for the feedback @ENSPunks.eth

As I see it there are two parallel questions to answer here:

  • Should the DAO incentivize inactive voters to becoming active or
  • Should the DAO instead agree on what is valuable delegate activity and incentivize those behaviours?

In many cases, such as OP, Arbitrum, 1inch, uniswap, the delegates have to undergo a manual verification process facilitated by the foundation to receive the final payments. Generally I agree that there should be a sybil check before sending out delegate rewards. https://passport.gitcoin.co/ offers a good way to do this in a decentralised way, and the DAO can setup specific checks to enforce this.

I’m not sure I would agree with that - on the contrary, it’s a significant burden, especially when complex proposals come up.

2 Likes

It’s true there are some with millions of dollars of $ENS that don’t seem to vote unless they have some interest in the vote or otherwise I rarely see the participate.

With only ~200 $ENS delegated to me, I actively vote and participate. I probably let my bias get in the way on this.

1 Like

It would be nice if we could get the make the forum user statistics table back again. There is important information there that the DAO should have access to. I think it’s an integral part of overall evaluation of participation as a delegate, contributor or steward. I’ve requested to have this back multiple times and I was met with the question form of my statement of why it’s important.

Again, it would be nice to make that available once again.

1 Like

I believe some stats can be directly accessed via url ENS DAO Governance Forum

1 Like

Where did you find this page? I have been looking for this and asking for this for quite some time now.

Hey @jengajojo — thank you for starting this discussion. I think it’s important that we begin creating a shared understanding of what ‘effective delegate’ activity means to the ENS DAO.

As I mentioned in this past week’s Meta-Governance Working Group call, I believe that an effective delegate:

  1. Understands and aligns with the ENS DAO constitution.
  2. Adds value as either a developer, steward, or as a delegate (anyone can be a delegate).
  3. Is a good public representative and advocate in the space

This is an extremely broad attempt at defining desired delegate activity, but I’d ask the community to keep this in mind as they enter the discussion.

2 Likes

Thanks for the feedback @estmcmxci I’d like to encourage other MetaGov Stewards to add feedback here as well.
CC @5pence.eth @AvsA

2 Likes