Incentivizing DAO participation: Ideas and Strategies

grasponcrypto.eth · December 6, 2021, 9:41pm

These are some great ideas! I would also suggest that we get some very simple ideas down, and consider a gradient of implementations.

What I mean is that if one attempts to make a very complex yet accurate system, it could take significant time and resources; meanwhile, participation declines and the project becomes a bit lost and forgotten.

So it could be beneficial to consider steps, or degrees, of implementing such strategies. One could be a very basic incentive for short term compensation even while not being an efficient long term strategy, but used more as a stop-gap during interim phases as longer term solutions are discussed and designed.

I do not really have any good input on what that may be (the delegation fee covered by DAO is a great one), but throwing the idea out there as food for thought. I know in other projects where such ideas have been mentioned, the discussions lead to very complex designs and scenarios that are not quickly feasible and the discussion and participation drops until the idea is simply left abandoned.

So perhaps setting some goals and deadlines could allow an implementation gradient to be a possibility.

zadok7 · December 7, 2021, 1:09am

Some points to consider that I’d like to bring up. Currently, there are some who haven’t voted because it’s slightly difficult. In order for a user to delegate votes to themselves, they have to claim their airdrop, then delegate the votes over to themselves. Maybe someone can check me on this, but I did not see a way to delegate until the airdrop was claimed. Some users won’t claim until next year maybe due to having their taxes reflected for 2022.

Also, it would be great to figure out a way to vote without needing to spend so much gas. Maybe some kind of L2 voting? I feel like this would include more people, and the DAO could shoot out more proposals for voting without worrying about the community needing to continually spend gas to place votes and move things forward.

rrylia · December 7, 2021, 1:41am

The top 3 bullets in the summary of your OP are good objectives which I support. This is interesting, been meaning to find the time to reply as I’ve seen various threads on this topic.

After reading a number of them tonight, I think my opinion (not necessarily correct) is that some types of participation, if we want people to help the DAO and undertake those roles to a proper standard, may need to offer some form of incentivisation / reward. The strongest arguments I have seen are that if this doesn’t happen, then there is a risk you polarise the people that can make significant contributions as either (or both) (i) people with significant wealth to spare, who don’t need to be compensated for their time; (ii) people with significant time to spare, who have the most free time to give away. I’m not sure that’s a very good representation of society or that it would be beneficial to the DAO’s decisions. There is a huge proportion of humanity who don’t fit into either one of those categories.

The following groups are my rough sketch of contributors in order of importance (up for debate):

Core team
Working Group members
Community support (if not in any of the above groups)
Delegates
Community participants
Voters

I don’t intend to diminish the role of a Delegate at all - but if there are no matters to vote on, then the Delegate (nor Voter) is required to do anything. I appreciate that’s hard to imagine right now when there is so much to discuss!

I’m not sure about funding anything from Registration fees - what happens if there are no registrations, or ETH prices go to historic lows for reasons we can’t yet foresee? You could validly have a situation where we had a healthy community of participating users, actively supporting the DAO, but with no new registrations (my personality type is always thinking “what if, what if”).

On bullet 3, you could charge people a dormancy fee (for holding ENS tokens and neither voting with them, nor delegating them) - and potentially use this as a source of funds - but I think that’s incompatible with Article II of the Constitution. It would however move ENS tokens to people actually wanting to participate.

Worth further discussion, I only wish I had more/better ideas for you.

nick.eth · December 7, 2021, 2:34am

You can delegate to yourself by clicking the “Enter ENS or address” button on the right and entering your own ENS name or address.

daylon.eth · December 7, 2021, 2:42am

This sounds like a great project to work on through Flipside. Eventually I think it will become crucial to have a more sophisticated representative system than 1 token = 1 vote. But one step at a time. It would be nice to have some type of delegate explorer and analytics.

AvsA · December 7, 2021, 1:19pm

In this thread about gas subsidies for delegation I propose something that I think would be cool and combines these suggestions: a campaign to redelegate every year, to celebrate the airdrop anniversary.

Every november 8th, we could launch a website with some delegate statistics, showing most and least active delegates, as well as a list of most inactive votes (a list of token owners whose tokens were never used to vote, listed per balance) and some other fun statistic. We could have simulated campaigns of both new delegates and those looking for reelection and create some talks between them. Maybe, instead of having the “free redelegation” service be individualized (lastRedelegated>365 days), we could simply reset it every november 8th and allow everyone to redelegate for free once until the next november (lastRedelegated < 2022-11-08).

It could be a fun way to get more participation on the DAO and to make sure more votes were delegated.

Ginge.eth · December 7, 2021, 6:28pm

Problem: Less Informed Users Voting

$ENS carries with it a great responsibility. It literally has full control over the DAO. IMO we dont want less informed users voting on proposals without a full understanding of what they are voting for and/or why, simply to receive incentives.

What if we had a simple quiz about ENS, and basic Web 3 principles as a small hurdle. It could serve two functions:

Basic understanding of the principles voting upon
encouraging people to learn, and providing resources to educate themselves.

AvsA · December 7, 2021, 6:52pm

Quizzes before voting have a long complicated history: who writes the quizz, who decides what are the answers, or the cuttoff, etc. It’s been long used to disenfranchise people.

I don’t even think it’s a problem, as most people are likely to simply choose a delegate.

Ginge.eth · December 7, 2021, 7:06pm

I like positive incentives to encourage people to learn, instead of negative deterrents. A quiz would not take very long to make, and I think basic understandings are important. A safe fail to have delegates who have basic understandings. The problem was brought up in the original post, are you suggesting that the problem be removed from the document?

grasponcrypto.eth · December 7, 2021, 7:11pm

I think it should be stated that most users who care to participate will likely choose a delegate.

Unfortunately, while it was very easy to choose a delegate during the airdrop claim, it is not so easy to do so if one simply buys $ENS off uniswap - and likely that a very large % of those buying on uniswap have not done so. Thats why I believe some incentives would be nice to drive users to find out more about participating an delegating. They will be encouraged to do so by missing out if they do not. Though there is the problem of needing to make it easy to delegate at any time…

I do agree, though, that a quiz shouldnt be a requirement. Could be a fun to have, if the community wished to do so, without making it any kind of requirement. And outside of the quiz, perhaps having some clear and precise Summary and/or Pros & Cons for every proposal be made available to everyone - could even have delegates sign stating they’ve read it. The document sign wouldnt be a requirement but could still be used as a signal to who is active and not just voting but also researching, etc.

grasponcrypto.eth · December 7, 2021, 7:14pm

Very well could be determined to not be a problem. I’m fine with that! I wrote up the OP more as a kick start. I wanted to have ideas placed that would encourage discussion and activity.

That said, perhaps the problem has no true solution, but ideas such as a Summary (i mentioned in my previous post) and even a Quiz, could be supplementary. Though I would agree that both should be voluntary and not any requirement. Though in the end participation in those could be used as a weight to help determine delegate activity and compensation, or even to help with default sorting on any delegation UX for ENS holders - aka the most active delegates could be placed higher on a list than those who do not participate in the “extracurricular” education.

I do like that!

daylon.eth · December 7, 2021, 7:27pm

Just putting it out there that the possibility of buying votes could be a problem too. As far as solving the issue of informed delegates, really only time, reputation, and contribution can be used to gauge trust.

fig · December 7, 2021, 7:28pm

@grasponcrypto.eth thanks for taking the time to explore this topic and bring it up.

Nobody wants to discuss the threat and potential of waning participation, but it is important to be considered early to strengthen and improve the DAO.

As a governance team, I would like to speak on the problems of informed voting, user participation, and disparity of delegate control.

Problem: Actual Participation

With over 19.6k members, ENS DAO boasts one of the largest voter communities on Snapshot. The image below shows the disparity of governance sizes and is a testimony to ENS:

On this metric, I do not think actual participation is decreasing. We are three votes and it is too early to diagnose if there are participation issues. Instead we must promote and watch trends of future votes.

I agree with the solution for this (possible) problem of being:

An example would be Algorand’s governance model (linked here). They divide Governance into four epochs and reward participants 15-18% on an annual basis. The only caveat is they must vote on every proposal to be eligible for the rewards. I would point this out as a potential model for our community.

Problem: Less Informed Voters

In my opinion, this is the largest deterrent to governance participation.

The solution could be resources dedicated to creating an education page, where votes and proposals are posted in an unbiased format. This information paired with a UI tool which plugs into Snapshot could create more frequent participation and a smoother voting experience.

I along with others would be happy to provide more info on the creation of this resource.

Problem: Too Much Control To Any Single Delegate

This issue is ubiquitous in DAOs. Early solutions have been incentivizing and allowing redelegation and introducing a limit on a delegate’s voting power. However, quadratic voting is something to explore.

Please see below on a visualization of quadratic voting:

Introduced mid-summer 2021, Vitalik expounded on the idea of quadratic voting for DAOs and protocols (article here). This voting mechanism has been used in actual elections, in Colorado 2020, and has potential outside of crypto.

By adopting quadratic voting, or a modified voting mechanism, ENS could more fairly distribute voting power among delegates and cement itself as a new, innovative DAO.

Instead of modeling off of others, we could be the model.

grasponcrypto.eth · December 7, 2021, 7:35pm

This is an amazing idea! One could even set the quadratic vote pool as the top option in the delegation UX, such that any user who does not know who to delegate to would have the easy option of delegating their vote into the quadratic pool.

I agree. This is in line with the “simple summary” idea i mentioned a few posts above. It could be supplementary in nature and not any gatekeeping device, but by allowing readers to sign messages confirming they’ve read, it could be another gauge used for participation recording. Not sure if anyone has seen ethereum studymaster, but its a neat little project which has similar functionality in that one takes a lesson and signs the lesson confirming they’ve completed it.

Your first point is forcing me to dive in for more information so I can’t respond to it with any substance. thank you for taking the time to pitch in here!

zadok7 · December 21, 2021, 9:42pm

I like the idea of making it abundantly easy for voters to be well informed. Once the Working Groups form, maybe we could think about releasing more videos on the ENS YouTube channel. An idea could be to release a short video for every proposal that needs be voted upon. I think the creation of Working Groups will open up some bandwidth to do these types of tasks.

I’ve noticed some hosts in the ENS community are now able to record Twitter Spaces. This would be helpful to have Twitter Space recordings that the community can listen to if they were not able to attend. These should be archived somewhere easily found. Again, I think the Working Groups will be able to tackle some of these tasks.

natebeck · December 21, 2021, 11:07pm

I too really like the idea of a website that highlights delegate participation.

grasponcrypto.eth · December 22, 2021, 5:00pm

In my opinion, the DAO Participation strategy should be a layered approach. Tackle it in pieces. Here are a few of the layers as I see them.

Average ENS holders with $ENS delegated to ACTIVE Delegates
Delegates and Key Participants - Users actively participating in DAO Proposals. Either creating proposals, or simply voting on proposals, or both.
ENS Core participation - Core team and others actively maintaining and developing ENS
Active participants within ENS community - This is a broader spectrum, could be users active in discord and the forum helping users, raising ideas, bringing forth problems and fixes, etc etc

I listed these in what I believe is in order of difficulty. No. 1 should be the easiest.

If a user has their $ENS delegated, and their delegate votes on a proposal, they receive an incentive payout. There really isnt much to quantify here, either their votes were active or they werent.
If a delegate votes on a proposal, they and their “constituents” were active and they receive incentive payout. Not much to quantify here either.
This is really only complicated by quantifying who precisely is a Core Participant. This would be less incentive and more compensation.
This would be the most difficult to implement. Quantifying active participation within the community as a whole is difficult. Forum, Discord, Twitter, Reddit, etc. - What is active participation, how to prevent it from being ‘gamed’, who is eligible, how would eligible users receive their incentives as many of these technologies are not directly linked to web3, especially not by default.

I imagine that later on, No. 4 could encompass the entire Compensation and Incentives idea if and when it is done correctly and well. Until then, it might be a good idea to implement some very basic and simple incentives to “get the ball rolling”. If not, I fear an all-encompassing solution could take years to implement, leaving the community to slowly lose participation by disinterested parties.

For simple participation incentives one could either set a base proposal “fee”. Something like 1000 $ENS, purchased from DAO wallet funds from ENS fees (via uniswap?), distributed proportionally to all addresses which participated, either directly or via delegation. Now 1k ENS is completely made up, just throwing a number out there to not have a blank.

Another idea would be to set a % of fees earned by ENS since the previous proposal to be used to buy $ENS from the market (again, uniswap?) and distributed proportionally to all participants in said proposal. This has the downside of one proposal “earning” more or less than another based on how long since the previous proposal had been submitted, but in the end it would average out.
An example would be if 4 weeks since the previous proposal and 50k ens names were registered/renewed for 1 year (assuming all 5 char+ names at $5/yr for simplicity) then ~60 $ETH entered ENS wallet since previous renewal. say 25% goes to proposal incentives then ~15 $ETH could be used to buy back $ENS and distribute accordingly.

I like the second idea since it should be highly sustainable, and would not really touch existing funds as it would essentially be using a % of ‘earned’ funds as they come in.

Anyway, just some ideas as I want to try and keep this discussion alive!

Schuschereba.eth · December 22, 2021, 6:27pm

I agree that starting with some basic incentives as soon as they can be worked out, is better than waiting for a more elaborate plan to take shape.

In most situations, starting with something (even if that something is small) is always better than waiting to start because not everything is clear.

rrylia · December 22, 2021, 9:19pm

I like this approach, this was the type of idea I was thinking in my earlier post, but you’ve articulated it far better than I did.

I also checked the Constitution and I don’t think this would be against it, as it should fall under “development and improvement of the DAO”, so long as that does not just cover technical development, and includes social and participation development and improvement as well.

Of your two ideas, I also like the 2nd more, as its more self-sustaining. Ultimately I don’t think it really matters if one proposal “earns” more than another, since the goal is more active overall participation (not for one specific vote of period of time - its not like a retail holiday sale, for example). An alternative way to do this is to have some sort of running last x (6?) months average fees earnt by ENS and use that figure for any votes, which would balance it out a bit more. But this is probably over-complicated, only needed if there are flaw(s) with the method you set out.

grasponcrypto.eth · December 23, 2021, 3:15am

Thanks for your input! I agree that simpler is better, especially to get started. The idea is to make a simple but effective idea as an interim solution while a more elegant long-term solution is designed and built. Then down the road we can simply replace the interim with the more elegant.

The benefit here would be a quicker time to market to keep participation up and draw in more while leaving the door open for adjustments and improvements moving forward.

ENS essentially started in this manner as well, with domain and subdomains being the original and only pieces to the solution, while more elegant and elaborate additions, such as avatar and twitter handles etc, came later.