Incentivizing DAO participation: Ideas and Strategies

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.

Coltron.eth · December 23, 2021, 6:28am

There’s a lot of different ideas above, so forgive me if I missed something. This post is spitballing off @grasponcrypto.eth’s initial post.

Voting vs. Actual Participation

I think there is a distinction to be made between exercising voting power and actual participation. Although voting and delegation are essential (and should be incentivized), it’s not the best metric for measuring for determining who is putting in the work to improve the DAO and ENS.

With the forthcoming working groups, I imagine that the bulk of the heavy lifting will be performed by the Stewards and Contributors there. The inception of these working groups will provide a platform to demonstrate involvement beyond voting power. Determining a mechanism to quantify, and a structure to incentivize, participation at this level makes more sense.

Although quantifying actual participation is nuanced, the working groups in themselves could be the mechanism for proving actual participation. They inherently prove humanity, are Sybil resistant and provide a quorum to prevent bad actors.

Other Mechanisms for Determining involvement

Task-specific bounty system with estimated hours, deliverables, assignments, etc that distribute pre-determined incentives.
Accounting for calls/meetings attended with incentives proportionate to the hours dedicated.
A to-be-developed system determined by each working group to determine meaningful involvement by a contributor w/pre-determined incentive structure.

Possible Incentives

$ENS or other currency.
POAPS that gate rewards and prove work.
Poll community to determine what they will value the most?

There’s a lot to be fleshed out, but getting hung up on delegation and voting power alone begins to look similar to the traditional power structures present in centralized organizations. True, we need a wide pool of voters, but meaningful work also needs to be performed to ensure ENS has a future.

New members and accessibility.

Following the airdrop, we should also consider how a new-coming, high-value contributor can get involved without overcoming the financial barrier of acquiring $ENS on the secondary market or attaining delegations.

To me, high-value contributors may not be those with the most delegations or even those well-recognized in the space. As a public good and decentralized organization, the DAO mustn’t become only accessibly to the OG’s or those with financial means.

I generally favor anything that preserves equality, levels the playing field, and encourages involvement from all.

I like @AvsA’a the idea of a “yearly campaign” to ensure that delegates remain relevant and tokens do not become effectively “locked.”

_{(This probably deserves an edit, but my thoughts for now.)}

grasponcrypto.eth · December 23, 2021, 3:36pm

Some great info!

Voting
I agree on the fact that there is a distinction between voting and “actual participation”. I think voting, and the participation there, regardless of how little it may be, should be incentivized. This is to encourage high voter participation!

The more active votes there are, the more difficult it becomes for any one entity to amass enough control to exert their own influence over the DAO as a whole. Voting may not require much effort, but this does not mean that it is not important! Thus, it should be incentivized to not only hold ENS, but to ensure that it is being assigned to ACTIVE delegates. *Active delegates being important here, because assigned to an inactive delegate ultimately renders those votes useless.

Actual Participation
The other topic you touched upon is “Actual Participation”. Personally, I prefer the term “compensation” when referring to encouraging “Actual Participation”. I prefer that because it more properly defines that one who is activiely participating is spending their own time and resources to help the DAO, and thus are not simply being incentivized to do so, but are actually being compensated for their time.

I like to think of a DAO as a self-run company. No company would attempt to incentivize unpaid workers to perform work in the hopes of receiving an incentive down the road. They, instead, compensate the workers with a salary or pay for their time.

Thoughts
Both of the above actions are a necessity for the DAO to succeed, but each likely require a unique strategy to ultimately find a successful solution. Further, quantifying actual participation is likely going to be very complex and nuanced as you mentioned, thus I suggest starting very simple to get the ball rolling and allowing the DAO to audit and adjust as needed - or even ultimately scrap the phase 1 incentives with a long term elegant solution.

On that side, you have some great ideas such as bounties and POAPs. I LOVE POAP. I wrote an article highlighting POAP and the capabilities they bring to web3, the possibilities they open up, and how useful they may be in the future. POAP is a useful tool that ENS should leverage. POAPs for joining twitter spaces, discord calls, etc will be very useful. HOWEVER, there is one caveat…they have to be carefully delivered. We would need to ensure that POAPs are indeed being delivered to those who are participating, while also ensuring they are not being delivered to farmers. Easy to do if manual (well, manual is not easy, you know what I mean), tougher if attempting to automate.

My main goal would be to get a simple incentive started sooner than later. Perhaps one solution would be to set incentives with a 3 months lifetime, such that a proposal would need to be created in 3 months to either continue the incentives or propose a modified incentive plan based on successes and failures of the prior generation of incentives.

natebeck · December 26, 2021, 3:20am

I really like this comment - I believe that the smaller working groups will likely be able to identify/quantify active participation better than the DAO as a whole. In fact perhaps we could run a few experiments across the several working groups to identify more / less effective approaches.

natebeck · December 26, 2021, 3:22am

I have seen the Bankless DAO leverage POAPs effectively (seemingly). Might be good to investigate what is working in other DAOs in this regard.

zadok7 · December 28, 2021, 4:26pm

This is important to future of ENS…

I agree some changes in the delegation UX would make this more easily noticed. This could be very visible so that holders would re-delegated if their delegate was not using them. Maybe histories, charts, popup link with their Delegate Application on Forums. Of course an “incentive payout” would get this noticed as well…

ENS holders noticing no incentive would encourage them to move their delegation. This makes sense. Although my question is, do you think that should be incentivized by $ENS? In my opinion maybe it should not. I think that would encourage a lot of gaming of voting possibly. Would people just vote because they know they are getting immediate valuable rewards($ENS) back? Maybe it’s better pegged to a reward token that can be traded later for something but doesn’t have any immediate value? These could even be NFTs?

I agree with @coltron. There should be some distinction between incentivizing voting participation and participants in working groups. I think solving that will be an evolving process, but exciting to see what the community comes up with!

Agree

rancidcanyon · December 31, 2021, 10:31am

This may or may not be helpful, but I really think this idea would be a very easy way to hit two birds with one stone; simultaneously incentivising participants and keeping everyone informed on the goings on.
I’ve seen this work in streaming quite well, and it generally plays to a natural psychological need in humans.
It could be extremely effective and welcoming for participants who feel like they don’t know how to contribute.
The only potential for inequity is that twitter spaces/discord calls/etc. can be difficult for people in different timezones and who may speak different languages. So if we follow through in implementing this some care would need to be put into an equivalent more inclusive system.

Coltron.eth · December 31, 2021, 3:51pm

Absolutely. It would be important to make sure there is equal representation across time-zones. This can be accommodated by an alternating or rolling schedule.

Any sort of proof of attendance should not be weighted heavily and should remain non-monetary. Attendance counts are very easily gamed, but I think they also are important for helping developing a holistic understanding of an individual’s participation. I really wish there was better tooling for generating metrics.

I would be in favor of awarding them on the basis of a longer time-frame, say Working Group election cycles, every two quarters, or whatever the natural demarcation is. A longer time-horizon may prevent farming, address concerns about equity, and encourage continued involvement. For example, if a contributor is inactive for a month due to other commitments, but meets a pre-defined quarterly participation they would still be eligible. On the other hand, if someone is only active for a month they may not meet the minimum. This may not be practical though.

The more that I mull this over it becomes apparent that ENS is more than just a naming protocol, or even a DAO… it’s becoming a community with a culture. Looking at the Twitter sphere, Discord, and the different channels of communication people are really attaching themselves to what ENS stands for.

In the sense of being self-run company, it’s imperative that the DAO leverages and fosters this emerging culture and community that has organically arisen around it’s product. You can’t manufacture this.

Compensating people monetarily is important, but maintaining that underlying foundation of community is going to create a positive feedback loop; preventing contributor turn-over and attracting talent.

People leave high-paying jobs because they aren’t valued. People stay in low-paying jobs because the community/culture makes them feel intrinsically valued. I’ve seen this first-hand and it is worth remembering.

cthulu.eth · December 31, 2021, 4:04pm

This is one of the things that attracted me to ENS. The community, the team, my fellow mods and the users we support are all absolutely wonderful, and the most diverse set of individuals I’ve encountered anywhere. I’m having a lot of fun, and it indeed does feel like its own subculture.

Communities are very fragile and I think that a lot of this is testament to alisha’s skill as community manager

Soscrypted · January 2, 2022, 3:25pm

The community is very enthusiastic and passionate. I see no reason to jump toward doing so much governance for governance sake or because its early. I could put more energy going towards building and imagining what else can come from our ENS community, and helping provide resources for using the ENS names.

natebeck · January 4, 2022, 2:29am

After reading through most of these posts and doing some thinking and research I believe that Contributor compensation is a going to be a big nut to crack and also very important to get right. I think a difficult topic like this will require a smaller group of folks willing to put in research and analysis. Perhaps this topic could be one of the top priority items for the meta-governance working group once it is up and running. I could see the working group doing some or all of the following 1) researching success/failures of other DAOs so we can learn the past (perhaps sushiswap is a failure example?) 2) researching tools/processes that can support compensating contributors (such as Sourcecred or Coordinape) 3) crafting experiments we can run across the working groups 4) obtaining community input 5) writing proposal drafts

natebeck · January 9, 2022, 2:00am

In case anyone else has an interest I found these resources on the topic of DAO compensation to be of interest and potentially valuable for our learning. I am sure there may be others but wanted to provide as a start. DAO compensation is such a new concept that I am sure we all have lots to learn.

Blogs/Newsletters:

Twitter Threads:

Tools:

https://coordinape.com/

natebeck · January 14, 2022, 2:20am

Another blog post with some ideas we might want to try. Exploring the Web3 Tipping Economy