Example of initiative to induce more active delegation on Uniswap

Following up on recent ENS Metagovernance call, I would like to bring here example of what Uniswap is doing to increase voting participation.

You can find full thread here.

Gauntlet ran a simulation for them, which gave positive results.

TL;DR

They are going to channel portion of fees from LPs to those agents who delegated their tokens to decision makers of their choice. Effectively it’s a tax on LPs.

Potential problems:

Token holders might delegate to some “burn” address and just get yield. Defense: it is possible that some people will do that, however even if certain percentage becomes more engaged, that is already a win.

UNI token becomes yield generating, as such subject to Howey test. Defense: tax will be accrued within pools and can be swept by any agent (bots) and distributed to UNI token holders. That way ecosystem becomes so large, so it would be impossible to pinpoint single agent subject to Howey test.

I know that point of financial incentive on ENS token been discussed in great detail many times over. Community constantly demands to get a cut from registration. Just to be clear, I’m not making this post to advance this agenda. This is just an example of how things are done in other major projects.

If we think carefully, we might be able to come up with similar mechanism to induce higher participation rate.

Line of thinking which I’m seeing right now is more aligned with “artificial seeding” of higher participation - such as VETO mechanism, proposal to distribute tokens to select delegates, or distribute tokens to stewards. Whereas ideally this process should be happening organically.

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There has long been a conversation about sharing registration and renewal fees with .eth users. To be clear, this has always been a complex and difficult discussion to navigate, so please bear with me as I attempt to understand the example you have provided.

If we draw an analogy to Uniswap’s approach to increasing voting participation, we would see the following framework applied to ENS governance:

  1. ENS DAO incentivizes users to delegate by financially rewarding them for delegating to decision-makers.
  2. These rewards are paid from a liquidity pool derived from .eth registration fees.
  3. The rewards are swept from the liquidity pool and distributed to ENS delegators.

Does this hypothetical scenario resonate with the example you provided above?