[RFC]: Delegation of UNI to Active but Underrepresented Delegates

Proposal Discussion
1

Summary

Despite being one of the most prominent DeFi protocols, Uniswap’s outstanding voting power does not necessarily translate into active governance participation. In fact, many top delegates with considerable voting power have less than 50% vote participation rate, and some even as low as 10% or 0%. While there have been previous campaigns to encourage delegation by large UNI holders, we have seen that further delegate accountability is needed as many of those who received large delegations barely participated, if at all.

In healthy governance environments, proactive delegates wield significant voting power, ensuring malicious votes are prevented and quorum requirements are met.

Therefore, this proposal requests the Uniswap Foundation delegate 2.5 million UNI to each of 3 active yet underrepresented delegates selected based on the criteria outlined below. To ensure further accountability, each delegate must maintain a 90% participation rate at a minimum (as explained further in Participation Requirements) or is subject to undelegation via the Franchiser contract explained below.

Landscape of Uniswap Governance

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Source: Butter

Despite numerous improvements to Uniswap’s governance, there are still several areas that require further improvement. One prominent area is governance participation, which has witnessed a downward trend compared to late 2022 and early 2023.

Another issue is many large delegates are now inactive, and the delegators who entrusted them with delegation are either unaware about this inactivity or simply do not care. For example, there is currently several delegates with more than 2.5 million UNI delegated who never even voted onchain according to Tally, see the screenshot below.

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Source: Tally

Therefore, further distributing governance power to active but underrepresented delegates is a positive step forward ensuring governance is more active, resilient, and robust.

Participation Requirements

  • Must have voted on 90% (or more) of proposals (minus the proposals that were canceled) over the last 3 months (as of the date when this proposal is passed on Snapshot). This includes both Snapshot and Onchain proposals (Tally or Agora)
  • Must have actively participated in proposal voting for more than 3 months and have a Delegate Platform on Uniswap Forum under Delegation Pitch

Application Criteria

  • Meets the above Participation Requirements
  • Voting Power is less than 2.5 million UNI (as of the date when this proposal is passed on Snapshot).

Next Steps

  • Should this proposal pass on Snapshot, a 5-day period will begin where delegates that meet the above criterias are encouraged to post their application to be considered for delegation. In cases where there are more than three qualified applicants, there will be an additional Snapshot vote to determine the top three. Once three or fewer applicants are selected (in case there are not enough delegates that meet the criteria), it will proceed to an onchain vote.

Other Clarification

-Should the onchain vote be approved but there are two or fewer qualified applicants, there will be a subsequent application period and Snapshot vote one month after the initial vote to fill the remaining available recipients (for example, if there were two qualified in the onchain that passed. The subsequent voting will have one). The criteria then would be 90% of voting (minus the proposals that were canceled) on both Snapshot and onchain (Tally or Agora) for Uniswap votes for the past 3 months as of the date when the new application is live.

-Should the onchain vote be approved and there are three qualified applicants but one or more of them are disqualified in the future due to their low vote participation, there will be a new application and snapshot vote one month after to give the opportunity to another delegate(if out of 3, one is removed, the application and vote will happen to fill one available recipient).

-As mentioned by @eek637 in a previous proposal seeking UNI delegation, there will be deployment of three new Franchiser contracts, each one funded with 2.5M UNI (7.5M UNI total). The owner of these Franchiser instance’s would be the Timelock, while the three delegates chosen through the voting process outlined above can act as the delegatees.

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We’re very much in support of this proposal.

Enabling healthy governance participation in one of the biggest DAOs and recognising the ones that remain consistently active should be a no-brainer.
Those delegations can enable participants to be proactive rather than reactive.

The Uniswap delegation race back in May 2023 was a great enabler of fuelling new & existing participants but there has been a clear drop off.

We believe this proposal is a great reminder for all existing delegates to aim for better participation and compete for this campaign in the future as well.

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Thanks for many feedback so far already. There have been some questions about why three instead of more to encourage participation. So we will keep this forum poll running to see the sentiment.

  • 3 Delegates
  • 4 Delegates
  • 5 Delegates
  • Abstain
0 voters
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This is a great initiative @Doo_StableLab thanks!

This is an awesome opportunity for the DAO to directly empower their community and give existing delegates a goal and reward to work towards, in exchange for improving their participation rate.

We have voted for the program to elect 4 delegates for a total of 10M UNI to be delegated. Looking at the recent on-chain voting turnout, 10M should be credible enough to reach the voting quorum and therefore, require large delegates to vote instead of abstaining; knowing that the quorum will likely not be met.

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Thanks for putting this together! We definitely think that this initiative would be very constructive for Uniswap governance and the broader good of the protocol.

As an active but underrepresented delegate ourselves, we are very interested in participating in this program, as well as assisting with any eligibility review for all prospective candidates.

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I agree that governance participation is unacceptably low, but activity is not a good measure of competence as a delegate.

Instead I’d suggest a much larger voting “airdrop” to users (meaning a contract that allows them to delegate UNI via Franchiser based on usage of the product), so they have meaningful amounts to delegate. As it stands, the voting power required to pass a proposal is controlled by a small number of entities and their chosen delegates.

You could add a small reward for delegating this airdropped voting power within the first X days.

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But in extreme example, having zero activity wouldn’t be an ideal delegate, no? Sure, 100% active delegate is not necessarily better than 90% active delegate but arguely, if delegates don’t participate at all or very rarely then it’s not ideal.

Another aspect is accountability. If one is delegating, then that’s because one believes the delegate is able to represent their interest or at least participate in governance.

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8

It doesn’t mean much because abstaining is equivalent to not voting, so not voting is the easiest way to abstain. And if abstaining did reduce the quorum requirement, not voting would still be a valid choice.

Delegators will move their delegations if they care about it.

I think giving majority voting power to users via voting airdrop so their vote/delegation actually matters is the only way anyone is going to care about voting. If you spread the reward over time (e.g. users have to reaffirm or change their delegation), you incentivize accountability.

There’s the risk that delegates bribe users that receive this voting power airdrop to delegate to them. But this is in practice hard to execute.

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We would just have to agree to disagree because in my mind, at least delegates reviewing the proposal and abstain due to various reasons and ideally give feedbacks to the proposal is in many ways, “better” for the governance ecosystem than delegates that have zero activity. Also active delegates wouldn’t usually just vote abstain for all but vote in support or against as well.

But everyone has different opinions so thank you for your comments.

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We support this initiative and have responded to the poll in favor of including five delegates. If this number of delegates adds difficulty due to the mechanics of delegation and the number of franchiser contracts only being three, a lower amount is okay.

  • @Doo_StableLab Do you have data available that projects which delegates are currently eligible at the 90% participation requirement?

  • @Doo_StableLab May have missed this, but with the stickiness of delegations a common issue, how frequently would these delegations be rebalanced? Every three months?

If the concern is that there are worthy, active delegates who have a lower participation rate, the threshold could be reduced and a ranked choice strategy employed to vote on the final selectees. The trade-off is increased meritocracy, but potentially avoids pitfalls of more rigid eligibility criteria.

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11

As it will be measured over the last 3 months as of the date when this proposal is passed on Snapshot, the date will take place around 11 days from now (if it passes). So there are factors that will influence (as there will be more votes in that 11 days).

But if the 90% participation requirement was taken at current time, from my understanding, at least 10 delegates would qualify.

Stickiness of Delegation is an issue if despite delegation, delegates are not active in governance, therefore, such will help to ensure accountability.

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@Doo_StableLab unsure if you have a dashboard already built to track participation rates, but we launched WinterGov earlier this year which tracks 6-month on-chain participation rate for any address (filters out cancelled proposals).

You will also be able to see their voting power, delegators, voting activity, and overall participation rate from the first time they voted vs. genesis of the DAO’s voting.

Feel free to fork/change!

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Thanks @Doo_StableLab for this proposal. I’m supportive in principle and have been thinking about how we might be able to do something along these lines since @Kydo mentioned it in passing a few months ago.

There are several details that I think are important to consider that haven’t really been fleshed out here. I don’t have particularly strong feelings one way or the other, but think it’s worth discussing:

  • how many votes should be delegated to each recipient? You’ve suggested 2.5m, which make sense because it’s the minimum required to post an on-chain proposal. That said, I would think that’s the upper bound, and it’s potentially worth experimenting with lower numbers first to get this figured out operationally.
  • how long are those votes delegated for and what’s the process by which they’re taken away, either because a term has expired or for cause?
  • are there any standards for accountability?

It could just be the answers to these are:

  • 2.5m
  • indefinitely, votes taken away by gov vote
  • no

Which is potentially fine, and I am biased towards simplicity. But I do think that it’s worth discussing the trade offs of this approach so that everyone’s on the same page.

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Thank you for the thoughtful feedback @eek637 . Really appreciate them.

I think that’s a fair point, but at the same time, there are 37 addresses (not all are delegates of course) that have or more than 2.5 mil UNI. So 3 or 4 more with such would be around 10% increase.

And operationally it is possible to delegate 2.5 mil UNI as saw details regarding Ekubo Protocol. If the governance is willing to experiment with 2.5 mil UNI to an entity that hasn’t participated in Uniswap governance before, I find it fair that the governance should be willing to experiment with 2.5 mil UNI to entities that actively participated in Uniswap governance.

That’s also a fair point but considering the current large delegators are not re delegating despite their delegates not being active, it ironically creates a situation where delegates who are active and get the this initiative’s delegation will have their delegations removed after a certain time despite being active while those with no activeness can have their delegations almost indefinitely.

Once delegators are actively re delegating and have a policy regarding such then initiatives like this won’t be needed, but till then, this initiative seem sensible.

Accountability as shared above would be requirement to vote on 90% or more for past 3 months. So for example, even if a received delegate has 90% now, if one falls below that next month, then one will be removed and a month later, there will be a voting to replace one. It’s possible to add additional requirements but the important thing is unlike usual delegators, Uniswap community would be able to ask for accountability and actually withdraw support if they don’t meet the requirement. Indeed giving more choice and decision making power compared to the current structure.

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Upcoming changes to the proposal before going to Snapshot

  1. In terms of the number of delegates for this initiative, though “5 delegates” won the most vote, do understand the desire to keep it simple. But “3 delegates” got zero vote. So will change to 4 Delegates to include both feedback

Before: 3 Delegates
After: 4 Delegates

  1. In terms of 90% participation rate, there were various feedback. Initially, the proposal meant 90% of onchain and offchain voting. Several have pointed out that onchain voting is not as frequent. Sometimes even less than 10 votes per 3 months. This means that if a delegate literally miss a vote or two onchain, such delegate will be removed. We believe this is a positive step as it will encourage delegates to be vigilant and also enforce accountability, but we also heard feedback that some delegates are less active on voting but more active on forum, which is also contributing to governance. Therefore, We are lowering the requirement to 80%, which will also give more chance for interested delegates to apply.

Before: vote participation rate of 90% for onchain, 90% for offchain for past 3 months
After: vote participation rate of 80% for onchain, 80% for offchain for past 3 months

Also adding

The term will be 1 year from when 2.5 M UNI is delegated. However, If a received delegate is removed without fulling this 1 year term, the role won’t be filled.

But happy to hear further feedback. Thank you. And for proposals that are very different from this idea such as airdropping to holders, such seems more fitting for their own proposals and posts as the structure and planning will be very different.

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Thanks Doo. I do just want to push back on a couple of your arguments:

^^ operationally we could delegate the entire treasury balance (but we shouldn’t). The Ekubo proposal has passed a Snapshot but has not yet been successful onchain, so I’m not sure it’s a valid reference to what we’re trying to do here.

^^ this is also unrelated, in my opinion. What token holders choose to do with their voting rights is up to them. We are making decisions about what to do with the Treasury’s voting rights, which is a different animal altogether.

^^ missed this above, my bad. I do have some concerns about incentivizing quantity rather than quality, as well as concerns about adding a meta governance burden to delegates whose participation, as you point out, is already dwindling (who wants to vote on who gets to vote?).

Think it’s fine to move to a Snapshot but I’d encourage the community to think about these questions both in voting there and then in the run up to any onchain proposals.

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Thanks for the feedback again.

I agree with you actually, which is the intent of this proposal. We can’t force token holders to for example re delegate. But for this initiative, the governance can re delegate or withdraw delegation thus providing accountability to delegates.

Terms like 1 year can make the meta governance more burden because that would mean we would have to keep track of each one based on their term and have to host re election every time one is removed due to their terms. But will explain some changes in the below:

That’s a fair concern many leading DeFi DAOs face and the reason for quantity is of course because quality is very difficult to measure. For example, at least for voting participation rate, it’s more easily can be checked objectively. Either one has voted or not. Imagine if it’s based on subjective factors, it would actually increase meta governance burden significantly. This is why for protocols such as MakerDAO and AAVE, or even recent Optimism delegate reward, the common criteria was based on voting participation rate for delegates. So for simple way (which seems to be the sentiment of the community), this will be a better path.

But,

is very fair. So to be inclusive of both experiment, term and also point about overburdening the meta of the governance, suggesting following changes:

The term will be 1 year from when 2.5 M UNI is delegated. However, If a received delegate is removed without fulling this 1 year term, the role won’t be filled.

I believe after a year, we can revisit for improvements and lessons learned.

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Thanks. Comprehensive disquisition. :innocent:

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Fully supportive of this initiative to not only empower active but underrepresented delegates. It’s clear from the community responses that there’s a shared vision for a more engaged and diverse governance structure. This proposal not only addresses current participation issues but also sets a new standard for accountability and involvement. While there are different opinions on the exact approach, the underlying commitment to enhance the effectiveness of Uniswap’s governance is commendable. Looking forward to seeing how this innovative step shapes our future decision-making and strengthens the protocol’s resilience.

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