[RFC] Governance Logistics Improvements

Requests for Comment
17

GLI 1 Interim Assessment and Next Steps: Quorum (Part 1)

Background:

Beginning in June, the UAC internally recognized votable supply, which at the time stood at ~41M UNI (relative to the 40M UNI quorum), as a potentially imminent and systemic risk to the DAO. In response, and in efforts to protect the DAO, the UAC proactively began the first Governance Logistics Improvement research report and RFC. The report sought to identify the greatest issues Uniswap governance faces, with particular emphasis on votable supply as it pertains to quorum.

Notably, the report emphasized that “the DAO operates under an unspoken dependency: that nearly all of its top delegates will participate in every vote, without exception. Put plainly, the exit of even a single large voter could bring governance to a standstill. Further, the risk of delegate removal from the voter body is not hypothetical; we’ve already seen this dynamic unfold as several institutional actors have scaled back participation in response to regulatory pressures.”

Incidentally, during the initial weeks of research, that dependency risk became a material reality as changes in the token custody process led to A16Z’s removal of ~20M UNI from delegation. As it stands today, the consistently active votable supply stands at just 21M UNI. This is just 52.5% of the required 40M UNI quorum, or approximately a $209 million vote deficit. While the UAC strongly believes that, for now, critical proposals will pass through the direct support of large, less active voters, such as A16Z, broader community governance risks grinding to a complete halt.

To address this mounting issue, the UAC invoked an open call for community-sourced solutions. This call resulted in five potential pathways, which were then aggregated and presented to the community. Of those five proposed solutions, two have emerged with majority support within the forum discussions: Treasury Delegations and Incentivized Delegation Vaults. (Governance Logistics Improvement)

This proposal will expand upon the community-preferred solutions, providing context around the specific configuration variables of each in an effort to pass a single, holistic quorum resolution bill.

Next Steps Summary:

UAC: The UAC has reviewed and endorsed the above research and RFC, as well as the conceptual solutions which the community generally agreed upon (Treasury Delegations + Incentivized Delegation Vaults). Given there is no counterparty to do so, the UAC will directly champion the push forward of the Treasury Delegations proposal and its implementation should it pass. With regards to IDVs, the UAC will serve under the DAO’s guidance as the program manager of the Incentivized Delegation Vault initiative, should it pass (detailed below).

Temperature Checks: Following the posting of this proposal draft, the UAC will publish the TD temperature. Event Horizon will publish the IDV forum draft shortly, and eventually, the temperature check.

On-Chain Vote: Should TD pass, the UAC will publish the on-chain vote. Should IDVs pass, Event Horizon will publish the on-chain vote.

Proposal Summary (Treasury Delegations):

Treasury delegations have received nearly universal support, given their direct method of addressing the votable supply shortfall and proven historical precedent and track record. In fact, today, half of the remaining votable supply is directly sourced by the previous treasury delegation round (Governance Logistics Improvement) . The UAC recommends the following configuration:

  • Delegation Amount: 10M UNI
    This proposal will instantiate an additional 10M UNI in delegations from the treasury to community delegates. This will bring the resulting votable supply to ~31M UNI, or just ~25% below the required quorum.

  • Relationship to Treasury Delegation Round 1: Additive
    This round will not revoke, supersede, change, or otherwise impact the continuation of the 10M UNI previously delegated during the last treasury delegation round. As a result, the cumulative treasury delegated UNI will stand at 20M UNI.

  • Delegation Cap: 2.5M
    To avoid excessive consolidation of voting power, no round 2 applicant may accrue greater than 2.5M UNI in total voting power (be it from the treasury or otherwise) as a result of this round.

Ex. if an applicant holds 1M UNI in delegations, the most they stand to receive from this program is an additional 1.5M UNI in delegations. The remainder will waterfall to the next most eligible candidate.

  • Eligibility:

    • Application-based: Delegates will submit an application demonstrating their interest in being included in the treasury delegation round. The UAC will submit a forum post soliciting applications from eligible entities.
    • Look Back Window: 3 Months
    • On-chain Voting Participation: 75% minimum
    • Off-chain Voting Participation: 75% minimum

  • Selection Process: Election
    The DAO will vote for its preferred delegates from the pool of eligible candidates.

  • Technical Implementation: Franchiser
    An identical approach to round one. A full review by Chainsecurity on the Franchiser contracts can be found here.

  • Distribution Model: Waterfall
    Each eligible candidate will be listed on the election snapshot vote. The DAO will allocate voting power to each candidate as it sees fit. At the end of the voting period, all delegates will be ranked in order from the most to the least votes received. Sequentially from the top of the list to the bottom, each delegate will receive delegated voting power up to the point at which they individually hold 2.5M total VP. Then, the process repeats for the next delegate, and the next, until all VP has been allocated.

  • Self-Voting:
    Because this election is not for a finite number of seats, and it is best to encourage broader distribution of votes, self-voting will not leverage the max-matching model seen during committee elections. Instead, each voter will be eligible to commit a maximum of 25% to himself or herself and distribute the remainder as they see fit.

  • Selected Delegates’ Responsibilities:
    Each delegate elected by the DAO, who will receive the treasury delegation, should maintain the following requirements:

    • Maintain a minimum 80% voting participation rate over the past 3 months.
      • Includes: both Snapshot and on-chain proposals
      • Excludes: cancelled proposals
      • Measured from the date of Snapshot approval

  • Program Management:
    The UAC will post a report every 3 months detailing the participation record of each delegation recipient, along with other relevant program information. Delegates who fail to meet the minimum participation requirements will have their delegations revoked via an on-chain voting. In the event of a revocation, the removed delegation will then be distributed in the same fashion as the initial waterfall design. The next highest scoring candidate will receive an increase in delegation up to the point at which they reach the 2.5M cap. If there is still voting power to distribute, it will then go to the next candidate. If all candidates have already met their 2.5M cap, the UAC will contact the first runner-up from the original election for inclusion into the program. If the first runner-up declines, cannot be contacted, or meets their 2.5M cap before the redelegated amount has been exhausted, the process continues sequentially through the following runner-ups.

  • Delegate Principles: All delegation recipients will be expected to review and uphold the delegate principles as ratified here: https://www.tally.xyz/gov/uniswap/proposal/78

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