[RFC] Uniswap Delegate Reward Initiative - Cycle 2

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Uniswap Delegate Reward Initiative - Cycle 2

Authors: @Doo_StableLab @PGov @AranaDigital

Summary

This proposal outlines the Uniswap Delegate Reward Initiative - Cycle 2, a compensation program designed to improve participation quality and dedication among Uniswap delegates following the conclusion of Cycle 1.

Background

In late February 2024, StableLab proposed the Uniswap Delegate Reward Initiative. After the GovSwap event in Denver, further research to plan and implement the Delegate Reward Initiative was highlighted, leading to the formation of the Uniswap Delegate Reward Working Group, composed of 8 members from different organizations. After extensive research for more than a month, the Working Group produced several findings, which can be found here: https://gov.uniswap.org/t/findings-from-uniswap-delegate-reward-working-group/23702

Incorporating these findings, the Uniswap Delegate Reward Initiative–Cycle 1 was proposed and launched in June 2024.

Success of Cycle 1

The 12 delegates that were selected under Cycle 1 maintained 100% voting participation rate for both offchain and onchain votes during this period. In addition, the Delegate Reward Initiative discussion attracted several new delegates.

New Delegate Name Delegate Join Date
SEEDGov May 2024
Curia June 2024
Tané June 2024
Bobbay July 2024
Whetstone July 2024

Learnings from Cycle 1

While Cycle 1 was simple and effective, there were several suggestions to have a tier system to incorporate different participation levels of delegates. In addition, various suggestions were shared on how to make a points system to determine the top delegate applicants more fair and objective.

Cycle 2 Proposal Details

Application Eligibility

  • There will be a week-long period for delegate candidates to submit their applications. Top 15 delegates will be determined based on points.
  • Delegates from Cycle 1 must apply again for Cycle 2–they will not be automatically included.
  • Delegates that have joined less than 3 months can also apply for the Initiative.

Delegate Reward Eligibility

Once delegates have passed the application process, they must fulfill the following requirements to be eligible for up to $6,000 USD worth of $UNI reward per month.

Requirements

  1. Maintain 80% onchain and offchain voting participation for the past 3 months. Achieving this will provide $3,000 USD worth of $UNI

Additional Rewards (the below are only available if the above Requirement of Voting Participation is fulfilled)

2a. Write rationale for the voting on their delegate profile.

2b. Attend Uniswap Community Calls.

Achieving these above will provide an additional up $3,000 USD worth of $UNI.For 2a and 2b, it allows proportional payment. For example, if there were 4 votings and 1 community call, and a delegate missed to write a rationale of 2 of the votings. The delegate would be eligible to receive $1800 [3/5 * $3000].

Uniswap Delegate Reward Cycle 2 Metrics

In case there are more than 15 eligible applicants, the top 15 will be chosen by the following objective metrics. The highest number of available point would be 10.

1. Voting Participation

-Considering one of the primary roles of the delegate is to receive voting power from their delegators to vote on behalf for the best of Uniswap, voting participation is crucial to ensure quorums are met and malicious proposals are prevented. The total point amount from this category is 6. The onchain part is weighted more heavily due to its usual frictions such as gas cost, as well as its ability to dictate governance contract alterations and movement of treasury funds. The voting rate is based on the past 6 months.

1. Offchain Voting (Snapshot)

  1. 80% and above : 2
  2. 70% till 80% : 1.5
  3. 60% till 70%: 1
  4. 50% or below but above 0%: 0.5
  5. 0% : 0

2. Onchain Voting

  1. 80% and above : 3
  2. 70% till 80% : 2.25
  3. 60% till 70%: 1.5
  4. 50% or below but above 0%: 0.75
  5. 0% : 0

3. The date of the first on chain vote is 3 months or more (this is to counterbalance very new applicants who have few votes and able to get full points on the voting)

  1. Yes : 1
  2. No : 0

2. Proposal Authorship

-Helping to write proposals for Uniswap DAO is important. However, we also want to prevent low-quality or malicious proposals. Therefore, only passed votes would count. The total points for this category is 3. The onchain part is weighted more heavily once again.

In case of non-binary proposals, if the choice equivalent to “No” was present, and the end voting result was another choice than “No”, then it would be considered as valid for below. For example, Uniswap Treasury Working Group (UTWG) Election wouldn’t be valid for the points as there’s no “No” vote . But [Temp] Uni Onboarding Package - BSC would be valid for the points as there was a choice of “Against”. And the voting result was “$1m”.

1. Authored or Co authored a proposal that passed offchain (snapshot) vote before.

  1. Yes, 2 or more : 1
  2. Yes, 1 : 0.5
  3. No: 0

2.Authored or Co authored a proposal that passed onchain vote before

  1. Yes, 2 or more : 2
  2. Yes, 1 : 1
  3. No: 0

3. Other Governance Participation

-The full point for this category is 1. This category is to recognize other ways one could contribute to discussion regarding Uniswap Governance. This can be achieved by either

1. Joined Uniswap Gov Workshop Before

  1. Yes: 1
  2. No: 0

Or

2. Joined Uniswap Community Call Before

  1. Yes: 1
  2. No: 0

Tie Breaker

-Ties will be decided by the date of the first on chain vote these applicants casted in order to reward those delegates that have been contributing to Uniswap governance for an extended period.

Budget

We are requesting 540,000 [6000 USD *6 Months *15 Delegates ] USD worth of UNI for the Uniswap Delegate Reward Initiative.

The total amount, once approved, will be sent to the Accountability Committee, which will be responsible for the monthly distribution of rewards to eligible delegates and the proposal authors. Since the total budget of the now disbanded Delegate Reward WG has not been fully used, administration of this reward program–including the creation of this proposal and the admin work behind verifying monthly delegate participation–will be paid for using the current balance of $41.6k. The monthly admin consumption will be communicated each month to the DAO.

Next Steps

On August 20th , the snapshot vote will go live as well as well as the Delegate Reward Delegate application process. The application process will end on 27th.

On August 25th, assuming the snapshot vote passed, will proceed to Onchain vote.

Edits

The points between 50-60% will be 0.75 and 1.125, for offchain and onchain votes respectively.

11 Likes
2

Hello everyone,

We are Argonaut, and we’ve been closely following the developments of the Delegate Reward Initiative with great interest. After witnessing the success of Cycle 1, we began participating in voting activities, starting with Snapshot and Tally ( this is our address: 0x21b3b193b71680e2fafe40768c03a0fd305efa75) on Jun 27. Although we haven’t formally introduced ourselves on the forum yet —due to finalizing our brand— we are eager to engage more deeply with the Uniswap community.

We are planning to post our Delegate Platform in the forum in the coming days, and we would like to inquire whether we might still be eligible to participate in Cycle 2. Participating in this cycle would be an excellent opportunity for us to contribute meaningfully to the community.

Thank you for leading this initiative! We look forward to contributing to the discussions and adding value wherever possible.

1 Like
3

Hi–nice to see your participation in the DAO. Yes, your team is able to partake in the application process for Cycle 2. Whether or not you’d qualify for the rewards depends on how many points you have relative to other applicants. We are proposing that the top 15 applicants should be entered into the program. Your voting-based points will be based on your total participation over the last 6 months–both onchain and offchain.

2 Likes
4

Hey guys,

We noticed that the minimum VP of 10k UNI requirement from Cycle 1 has been removed for Cycle 2. Was this intentional?

We quite liked the previous cycle requirement of having a minimum VP requirement or co-authoring a successful proposal as you’re either rewarded for contributing to quorum or contributing to governance efficiency

2 Likes
5

Welcome! and as Abdullah shared, the team will be eligible for this round to apply. But as it will be based on points whether you will make it into top 15

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Yes, it was intentional based on various feedback we have received. Also note that 3 months requirement also have been waived. For Cycle 2, it allows newer and smaller delegates to apply as well. Based on points, it still favor those who actively participated in governance of course

7

Rewarding delegates currently has a “nothing at stake” problem. Over 75% of delegate entities own no UNI (based on UNI held in delegate addresses).

If delegates have nothing at stake, where is the incentive alignment? Voting 100% of the time does not equate to voting in the best interest of the protocol. It also does not mean that the delegates took the time to thoroughly consider each proposal.

I propose that delegates should own at least 5k UNI that is not delegated. This would ensure they are economically aligned with the users/entities who are delegating to them.

With $6k per month being distributed, having a proportional economic stake in UNI would address some of the surface issues this program currently faces.

8

So delegate work itself creates positive externality and the stake comes from delegates’ own reputation and also delegators’ stake. If delegates behave in a way that’s negative for the protocol, then the delegators can choose to not delegate.

Now of course, delegators might not pay attention to delegates’ work in practice as much as we hope they do care about their works (as evidenced by re delegation being very rare in DAO space). But that’s also the choice the delegators are making despite their economic interest.

9

Unfortunately, most of the current delegates have one or two large delegators (VCs, etc.). As we saw with the large Compound allocation proposal a few weeks ago, these VC’s are not always aware of what is being voting on.

Reputation is not really at stake; delegates can simply vote for what is most popular and hide behind the majority, avoiding accountability. Additionally, programs like this can be subject to Sybil attacks. A group of related individuals could set up different delegates with perfect track records and attendance in order to stack rewards, especially now with no required delegation amount. There are also “Know Your Delegate” (KYD) issues, including the collateral damage of eliminating anonymous delegates in a program where identity, trust, and transparency are important.

Moreover, the current framework entrenches early delegates, making it difficult for new delegates to compete against those with long track records.

  1. A better approach would be to reward proposers who are actually doing the work—i.e., paying successful proposals and their proposers. This would be more effective than rewarding a group of people where perhaps only one or two do any actual work beyond just voting.

  2. The real issue is voter apathy. Most non-VC/non-entity delegators have not redelegated since the initial airdrop. This is a serious concern and opens up significant risks for protocol governance, including regulatory and predatory coordinated extractions. If the delegates who apply for this program have no incentive to hold UNI, then no one else will either. Users and delegates should be aligned. Currently, the alignment is with delegates who run separate businesses that may or may not use Uniswap directly, yet are able to receive benefits for those businesses now or in the future (e.g., Wintermute, Gauntlet, Oku, Forse, etc.).

On a final note: A program like this is easy to start but difficult to stop, as the delegates are incentivized to keep voting for it for the monthly $. I am surprised the large VCs allowed it to go through the first time, as the current structure is essentially a cartelized dividend to a very select group of people at the behest and delegation of one or two delegators. @Porter

1 Like
10

Thank you both for the warm welcome and the response.

We wanted to provide some feedback on this proposal. It might be worth considering in future initiatives to set a minimum UNI holding requirement to register for the program. This could help prevent Sybil delegates and spam delegates from trying to secure a spot. While a KYC process could also be an option, but we understand it’s not very anon-friendly.

We also have another suggestion, but with the disclaimer that it could benefit us personally if implemented, as we might be out of the top 15 delegates. However, we’re suggesting this because we believe it would be a positive addition overall. As you mentioned, five new delegates were attracted due to this program, and we include ourselves in that count. However, with only 3 new spots available and 12 incumbents from Cycle 1, it’s challenging for new delegates to get a spot since incumbents will likely continue voting to retain their spots.

That said, we understand the budget is limited, and not all delegates can be included in the program. After studying similar programs, we think they could benefit from rewarding a larger number of delegates with a small amount, enough to cover gas fees and part of the time needed to monitor and understand proposals for proper voting. We propose that if not all 15 delegates receive the full $6,000, any leftover budget from the total ($540,000 / 6 months) could be used to reward delegates ranked 16 and below with $1,000 worth of UNI until the budget is exhausted. This approach would incentivize newcomers to keep participating and could help bring new people into Uniswap, who may later contribute to different programs.

We’d love to hear your thoughts on this proposal. Thanks again for leading this initiative!

1 Like
11

Ironically, that would make it more difficult for new delegates to apply. In previous cycle, it was either by voting power or proposal authorship, which none of the new delegates would qualify under such.

I think there’s misunderstanding from both of you because the current structure gives an advantage to the new delegates not the traditional delegates compared to the previous cycle. The voting record is examining past 6 months , which means that it’s much easier for newer delegates with the mindset of competing for delegate reward to have a high voting rate. They had to maintain good record for a month or so while for traditional delegates, they had to maintain it for past 6 months. Another thing to note is it’s not by voting that the applicants are getting chosen, it’s by points.

2 Likes
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Hello everyone,

I’m glad to see Uniswap DAO working towards more inclusive participation with incentivised delegation.

I’m also glad to see that Cycle 2 has no minimum VP requirement which can attract newer delegates like me.

I do plan to apply and actively participate in the DAO. I believe the current state of most DAOs is abysmal: voter apathy leading to governance attack is a major concern.

I would actually love to see even more slots for delegates as even 15 sounds too few for the top DeFi protocol like Uniswap.

In any case, thanks to StableLab for the initiative and hope to start working towards strengthening of the DAO with you all soon.

4 Likes
13

Thanks for the clarification. I realize now that I wasn’t understanding it correctly. So, if a delegate started voting in June and voted in every poll after their first one, they would be considered to have voted in 100% of the polls, and the previous months would be ignored since the delegate hadn’t joined the DAO yet?
Thank you, Doo!

1 Like
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Yes, at least that’s the plan.

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https://gov.uniswap.org/t/uniswap-delegate-reward-initiative-cycle-2-application/24434?u=doo_stablelab The snapshot itself will be live tomorrow

1 Like
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The snapshot vote is live https://snapshot.org/#/uniswapgovernance.eth/proposal/0xff05f8e61540a8ad3ca98b9a65a4b135d7834bdb0cf286a1346dcd6fcda85df0

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We support this proposal because experience shows that the establishment of a delegate system by itself does not achieve the desired results of promoting high quality participation and good governance practices, since governance has become very complex and it is not expected that a group of people will voluntarily dedicate enough time and effort required for active and quality participation in governance, or at least it is not expected that this will happen to a large scale. Thus, the incentivized or compensated professional delegate system is being imposed in the most important DAOs, achieving the desired results of further increasing informed, responsible and quality participation in governance, by having paid individuals and groups of individuals who can devote time and effort to this task, training, research, and thus increase the quality of their participation.

It’s also great to see that off-chain participation factors are being considered, as we believe the policy-making process is just as crucial as the actual voting itself.

In Arbitrum we are the Program Managers for the Delegates Incentive Program, which started 6 months ago and has generated a very positive impact, ratifying the above mentioned. And coincidentally, Cycle 1 of the Uniswap Delegate Reward has been a success, with the 12 delegates included in the program maintaining a 100% participation rate in onchain and offchain voting, as well as incorporating new delegates with high participation rates, all of which strengthens the governance of the DAO.

We look forward to being part of this program!

2 Likes
18

Blockworks Research supports this proposal, especially as it goes above and beyond in establishing a delegate system that incentivizes quality participation elsewhere. That said, we just want to say that for Other Governance Participation we might want to take some points from other delegate incentive structures. More specifically, it might be beneficial to include “impactful responses” to a proposal. This could be feedback that changes the trajectory of a proposal significantly. Of course there’s some subjectivity in there, which may make that impossible to execute on.

2 Likes
19

Thanks for your opinion but as the team noticed, that is a difficult metric to track as well as subject to game it. There’s also question of giving responses in private vs public and giving one response vs multiple responses.

20

While we voted in favor of a second cycle of this program, GFX will be hesitant to support this program for a third cycle unless we see reforms. We initially voted for the first cycle, admitting it was a far from perfect program, but in light of no other real options, we decided it was better than nothing. However, this sort of thinking can’t go on forever.

During the early voting process of cycle one, we tried to bring in the folks at Gov Score and Karma to develop a more robust program. While the timing didn’t work out, we should revisit bringing in one of these programs or perhaps seeding our own if one is not presented so we can work toward refining this program.

High-quality delegate participation is critical to the success of the DAO. We should strive to improve this program with each new cycle to drive the outcomes we all want to see in Uniswap.

While @Userisky’s suggestion of delegates holding 5K UNI might have some sub-optimal short-term side effects, we can see how something like that could have long-term positive effects for the DAO. As a DAO, we should be encouraging more suggestions like these.

3 Likes