[TEMP CHECK] ENS Steward Vesting Proposal

Abstract

Following discussion in the Metagov funding request thread on discourse, we have put together this amendment proposal which looks to add the requirement of vesting to all ENS distributions to Stewards moving forward.

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 thread, we firmly believe that these tokens should be vested in order to ensure long-term alignment of these stewards with the DAO, whilst ensuring that they are able to use the tokens to vote in governance.

We do not believe current stewards are likely to sell their allocated ENS and walk away from the DAO with the monetary value before the term is over. However, it seems prudent to introduce mechanisms that prevent any chance of misalignment between the DAO and stewards.

It is also important to note that in our opinion, we shouldn’t be allocating value to stewards denominated in ENS tokens at all. This proposal will only touch on adding vesting to steward allocations and won’t outline incentive changes to the stewards given this should be discussed before the terms begin.

Over the longer term, we would support a change in the steward compensation structure where stewards could still receive a high amount of value, but in the form of increased USDC and a fixed USD ‘value’ of ENS tokens. As well as supporting stewards being delegated token amounts from ENS DAO or multisigs.

Specification

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

This could be a longer vesting schedule (for example using 3/4 years similar to ENS Labs) but we feel 2 years allows for there to still be significant value distributed during a stewards term, as well as baking in longer term alignment.

This vesting can be implemented by using Hedgey (or similar tooling) which would allow stewards to access 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.

One final note is that stewards joined each working group on the 1st of Jan 2024, meaning it’s been ~2.5 months since joining. Our proposal would be this acts as a ‘cliff’ within the 24 month vest.

Vote

  • Approve the addition of vesting on all steward ENS distributions
  • Do not approve vesting
  • Abstain

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

5 Likes

I think if one is to be receiving USDC as compensation on a regularly scheduled basis ( i.e, stewards), then distributed ENS tokens shall be vested. If the recipient is not receiving a compensation by ENS DAO or Labs then there should not be a requirement for vesting.

Can I ask a few questions, with no intentions of disagreeing, but to understand:

  1. Why are we so fast into writting a proposal, rather than having a wider feedback session?
  2. Why are we changing the rules for the current stewards if we were voted in before this? In my view, (we can change the amount to 50 ENS if that’s the case), the DAO wouldn’t honor the agreement due to social pressure, it sets a bad precedent and bad governance, of quid pro quo: we can change the rules anytime regardless of previous commitments.,
  3. Why does it sounds like this proposal is based on expecting the worst from the Stewards? It sounds like a punishment almost.

Nevertheless, thank you for putting this up James.

  1. We felt there’s been a significant amount of feedback in the previous thread - with a number of large delegates agreeing that adding vesting is important, we’ve also structured this as a TEMP CHECK initially and not a proposal for this very reason.
  2. Disagree, the primary issue as described above is allocating a fixed amount of ENS tokens (if the token was to 20x again, would you still have the same perspective that every steward should get $4m?) - Changing the amounts feels a little to strong (lets work on a comp proposal for next term) so adding vesting and setting this precedent feels like a decent compromise. The DAO isn’t changing rules, it’s adding a security measure given an initially flawed proposal that allocated a fixed amount of ENS tokens rather than a fixed amount of ‘value’ or delegation.
  3. This proposal isn’t expecting the worst from stewards, it’s simply trying to address the fact the last proposal didn’t reach quorum and we need a way to progress the meta-gov budget proposal.

As always thanks for the energy and reply! :blue_heart:

2 Likes

It’s important to note that there are actually two things being put forward in this proposal: approving the concept of vesting itself and making it retroactive for the current term. There should be an option for voters to express their opinion on both matters.

I would modify the proposal as follows:

One final note is that stewards joined each working group on the 1st of Jan 2024, meaning it’s been ~2.5 months since joining. Our proposal would be this acts as a ‘cliff’ within the 24 month vest.

Becomes

Current Term 5 (2024)

Working group rules 11.5 states “Compensation Guidelines shall be defined prior to the Nomination Window for each term and can only take effect for the following term”. As such the compensation of current term of stewards has been decided by the previous term. This proposal would override this rule. Cliff start would be considered as jan 1st.

And I would suggest the choices to be a multiple approval choice:

  • approve vesting for future terms
  • approve vesting retroactively for current term
  • do not approve vesting in these terms
  • abstain
1 Like

Good call out on the retroactive vs future vesting discussion - as mentioned above, the compensation conversation for the following terms can be discussed over the coming ~9 months before the next term. But lets change this vote to just apply to the current term.

  • Approve vesting retroactively for current term
  • Do not approve vesting
  • abstain

Wait, wasn’t it originally suggested that the first tranche would be distributed according to the Term 4 Guidance? See below:

I agree that this is a reasonable timeline, but why are we reneging on the prior term’s guidance if it’s what was agreed upon? It is essentially a vested distribution already, as the voting power is being delivered in two separate tranches, six months apart from each other.

Reneging doesn’t set good precedent moving forward. This topic would have otherwise been left alone if it were not for the intense and persistent framing of the governance token as compensation, probably due to its price benefiting from market conditions, imho.

That being said, I will not be obstinate in supporting a change of governance distribution to Term 5 stewards, provided there is consensus. I must admit it feels somewhat like a ‘gotcha,’ this coming from a first-time steward, how do you think future stewards will feel if delegates can freely change the rules?

Without observing or respecting decisions that have been made in the past, I am afraid that the DAO is subject to low-integrity maneuvering.

That’s exactly right. Maybe the logic behind the governance distribution has been naive up to this point, but it doesn’t mean that current stewards should be punished for it. If delegates voted for the current Working Group body, then they should trust them to handle their newly endowed voting rights with a sense of responsibility and duty.

Otherwise, it casts a shadow over their efforts over the last 800 days. I believe we, as a DAO, would be remiss not to reward steward efforts with sovereign voting rights.

Yes, I agree, good call. BUT, we should take a step back and get to the heart of the matter, which is, should the Term 5 guidance stand? Going straight to a vote without acknowledging this seems like we’re skipping steps.

I believe that the first social proposal that should be put up for a vote is whether or not the Term 5 compensation guidance should stand. Then, and only then, should we follow up with a proposal for governance distribution.

1 Like

Both contributors and stewards should have same vesting schedule. Contributors are full-time workers so there is no reason to give them longer/shorter vesting than stewards. Better to have the same schedule for everyone to avoid further breakdowns in mutual trust.

If past decisions are wrong and causing significant frustration, disagreement and animosity among core contributors and administration, then there is no harm in correcting them; correcting the path to follow best known practices is not low-integrity maneuvering. In fact, continuing with the same dodgy ways against clear legal and ethical precedents is most certainly low integrity bike shedding. Legal and ethical precedence is of utmost priority, everything else - including any decisions made by popular vote that equate to self-dealing - is secondary.

I will highly encourage you to sit with a lawyer friend and talk this over. These are not new concepts; these have been enshrined in civil, criminal and corporate law of almost all countries since decades. There are no grey areas here, only lack of knowledge on this matter among the stewards.

1 Like

Personal opinions don’t belong as part of an EP. Feel free to post these in the thread, of course, but the EP should be objective and limited to discussing the proposal.

There is nothing magic about a 4 year period; in fact, my expectation is that when the 4 year period runs out, active contributors will be due for a new grant of some kind. The grants only continue to vest while the contributor is working at Labs, so a more consistent equivalent position would be for the steward grant to run for 12 months, the duration of a steward term.

When I said ‘contributors’, I was referring to this group:

I didn’t have ENS Labs or other already vested distributions in mind. 4 years is too long anyway for stewards; 2 years seems appropriate (to me personally) for 1 year of service.

I would also suggest, for good measure that any proposal that suggests a change in rules have a section which details changes, as a Pull request to the published rules in GitHub.

So the full proposal would have the justification but also it’s important to say which of these rules is to change and what will be the new wording. I would suggest this is how bylaws should be treated moving forward.

1 Like

are you proposing that the DAO should just do away with governance dist to stewards


I think it’s important to note that we have had lengthy discussion on the timeline and mechanism of distribution but have not touched on what metric or factors will be used the determine eligibility to receive distributions. Stewardship is an obvious shoe-in, but what requirements must have been met for contributors and developers? Contributions from both ‘categories’ per se, are elastic whereas small initiatives can sometimes have more of an impact than the amount of physical and mental energy, vice-versa.

No, I am not. Please do not misrepresent my values and what I stand for.

Nobody is misrepresenting anything.

Great feedback, pleased we made this a temp check so this can be updated in the ‘final’ proposal - The top paragraph agree can remove, the second paragraph I think it’s worth keeping (just reframing).

Happy to include a rule update/change, but as discussed in the Meta-Gov call sounds like we don’t need any direct update :saluting_face:

I’ve given more thought about it and here’s what I’ve gathered:

  • Given that we are not moving forward with the metagov budget into an EP due to the result of the last vote
  • Given that we are all in agreement that vesting is a good idea for all future ENS grants and future steward compensation (I’ve mentioned in both my ENS distribution proposals)
  • Given that this is not a general rule change on vesting but rather a decision on applying to a single action

I would suggest you change your proposal in a few key aspects.

  • Abstract: we don’t need to reference the metagov funding thread anymore. Instead I would say something like this:

“In 2023, the term 4 of the Metagov working group made a guidance on the forum post that the next term should be compensated with 10k ENS, in two tranches given at the end of each semester. This guidance was required because we had recently passed a proposal that prohibits Stewards on making compensation decision for themselves and only setting the standard to the next one. While the value and manner of distribution is the same as it was in term 4 and 3, which had passed, due to the limitation of time, that particular suggestion was never put to a ratifying vote on the DAO. Current Metagov has stated that they will propose that a vesting schedule be proposed for the next term, as it’s their role on rule 11.6.”

“We want to propose to retroactively change the term 4 guidance to include a 24 month vesting, to all stewards starting this term.”

I’ve tried to describe the whole situation the most neutral way I could.

Maybe the options should be:

“Yes. Apply vesting to the current term”
“No. Keep the 2023 guidance.”
“Abstain”

1 Like

I would add that the proposal explicitly references the Term 5 compensation guidelines. This would enable delegates to accurately discern for themselves whether to continue following the Term 5 guidance or not.

that’s not quite right, distribution of liquid tokens was not approved for term 4, it is something stewards did voluntaristicaly

not everyone agreed on the amount of compensation in that long thread

so my thinking the options should be:

“Distribute tokens. Apply 3 years vesting”
“Distribute liquid tokens”
“Don’t distribute tokens, keep only USDC denominated part of compensation”
“Abstain”

this way everyone who had some opinion back in that thread can choose appropriate option

all stewards from all working groups should abstain from this vote, because even if you are not MG group, this vote still affects your position indirectly by setting a precedent

EDIT:

All of this discussion here, if you look around, there is a very clear precedent within banking system. It used to be case that cost of loan was very opaque, there was some percentage, then there were comissions, fees etc etc, eventually regulator made banks to disclose REAL cost of loan expressed in percentage.

This discussion here, is exactly the same, we are talking about disclosing REAL salary of Stewards, it doesn’t matter what is the structure of that compensation - it cannot be opaque. Especially given the fact that ENS is public good. Everyone needs to understand how much Stewards are compensated and for what services.

I’ll go out on a limb here and say that it was an oversight not to have obtained explicit buy-in from the DAO on compensation plans via a social proposal. In hindsight, I believe the Working Group should have put forth this issue to a vote.

I have also suggested including this amendment in the forthcoming bylaws, as well as considering other key feedback points that emerged from the Meta-Governance Funding Request discussion. To avoid a conflict of interest, I have proposed that a nonpartisan individual should execute the compensation guidelines defined by the Meta-Governance Working Group.

The Term 4 Meta-Governance Working Group has outlined the full steward compensation, detailing the amount each role receives in USDC. Reading this table, I can discern steward compensation and it is clearly defined.

IMHO, this proposal should only address the governance distribution, and whether or not to apply vesting to the current term. Therefore, I would suggest that the voting options should be as specific as possible:

  • Option 1: Apply vesting to governance distribution for the current term.
  • Option 2: Approve governance distribution as per Term 5 guidance.
  • Option 3: Abstain

Why would you want to put to a vote only part of the package, if anything then the whole compensation package should be put to a vote with appropriate options allowing delegates to strip or modify parts of the package as per discussion