[Temp Check] Uniswap Delegate Reward -3 Months-Cycle 1

Requests for Comment
1

Summary

This proposal outlines the Uniswap Delegate Reward Initiative, a compensation program designed to improve participation quality and dedication among Uniswap delegates. The initiative was developed by several members of the Uniswap Delegate Reward Working Group, which conducted extensive research and produced findings supporting the implementation of such a program.

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

The details of the findings were slightly different. However, this conclusion summarized the findings quite nicely:

“There was a general consensus across most categories that a compensation program for delegates could improve participation quality and dedication. However, the enthusiasm varied, with those deeply involved in governance showing the strongest support.”

The Uniswap Delegate Reward Working Group explored several frameworks for implementing rewards, including a Committee structure that allows several non-delegates to get rewarded for helping to contribute to various scopes. However, some non-delegates in the Working Group preferred the Delegate-only model while other non-delegates in the Group suggested other alternatives.

Therefore, we believe that the delegate-focused structure can be launched, but other members can also propose structures that focus on different aspects, ultimately leaving the decision up to governance.

Proposal Details

Application Eligibility

There will be a week-long period for delegate candidates to submit their applications. If there are more than 11 eligible candidates, then the top 11 will be decided based on objective metrics outlined below. Considering past onchain votes, 19-21 delegates have been a consistent contributor amount to the voting, this acts as a mechanism to prevent sybil attack while also ensuring delegates who might have lesser voting power can be rewarded as well.

For the first cycle, the eligibility for the application will be

  1. At least been an Uniswap delegate for 3 months or more (Voted on Snapshot or Onchain vote at least 3 months ago)
  2. Voting Power of 10k $UNI or more OR Authored or co-authored a proposal that at least passed the Snapshot Vote

The reason for the application eligibility was that the first cycle should be focusing on Delegates that have been committed to Uniswap DAO, and ideally, the Initiative can encourage more to participate and thus more delegates will be eligible by Cycle 2.

Metrics for Selection of Top 11 Candidates

In case there are more than 11 eligible applicants, the top 11 will be chosen by the following objective metrics. The highest 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 are crucial to ensure quorums are met and malicious proposals are prevented. The Full point from this category is 5. The onchain part is weighted more heavily due to its usual frictions such as gas cost, as well as its importance that its votes directly can dictate code changes or treasury. The voting rate is based on the past 3 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

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 full point for this category is 4. The onchain part is weighted more heavily as it’s more difficult to have a proposal to pass the onchain vote as well as its importance that its proposals directly can dictate code changes or treasury.

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 : 3
  2. Yes, 1 : 1.5
  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

-In rare cases if there are ties, this will be first decided by how many “likes” one received on the forum. Considering likes would ideally be tied to how many posts one has made and also how liked their posts are. We believe this is a fair way to have them as Tie Breakers.

Delegate Reward Eligibility

Once Delegates have passed the application process, the Delegates need to fulfill the following 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 (only available if the above Requirement of Voting Participation is fulfilled)

  1. Write rationale for the voting on their delegate profile. Achieving this will provide an additional $3,000 USD worth of $UNI

Budget

We are requesting 198,000 [ 6000 *3 * 11] USD worth of UNI for the Uniswap Delegate Reward Initiative, plus an additional 64,000 USD (40 hours * 8 members * 200 USD per hour) worth of UNI as a retroactive reward for the Uniswap Delegate Reward Working Group.

The total amount of 262,000 USD worth of UNI, once approved, will be sent to the Accountability Committee, which will be responsible for the monthly distribution of rewards to eligible delegates and retroactive reward for the Working Group members. In the unlikely scenario that the budget is depleted before the end of the 3-month cycle, Cycle 1 will end early.

9 Likes
2

The snapshot voting itself will be live on late Monday to allow other alternatives to also post to Governance

3

perhaps some tax guidance as to the legal status of the 2-6k. I see professional DAOlegates plus community members so given there’s no employer, some clue as to impact might be useful b4 people get hit with an audit

3 Likes
4

That’s a good point and one of options was to have a Committee to explore such issues including legals. Though it became hard to bridge all participants as

  1. In practice, it’s similar to working groups across DAOs whose contributors manage their own income and tax issues

  2. The system itself would be application based so for those delegates who don’t want such concerns don’t need to apply for delegate rewards.

  3. Scope of legal can be quite broad and difficult to hammer out all the details

2 Likes
5

Recently, many of the onchain voting that passed quorum, they were only able to pass the quorum narrowly within 12 hours of the voting ending. And the current ongoing Onchain voting which has 99% in support is going through the same issue. Considering such, delegate reward is becoming even more important issue.

6

Made few changes

  1. Added application requirement of 100k $UNI voting power OR authored or Co authored a proposal that passed snapshot in response to feedback that there might be “Bot” delegate accounts that might qualify.

  2. Removed “community calls” for additional reward part in response to feedback that community calls are not yet funded nor integrated to the official governance process, and thus would be better to be left out

7

Can we add “follows the Delegate Code of Conduct” as a requirement? The delegates can indicate that they agree with the code of conduct in their delegate profile on Uniswap Agora. Most delegates probably already agree with the CoC; if not, they can suggest revisions that should be incorporated in the CoC. This would allow to stop compensating delegates that break the CoC, for instance, blatantly vote in their own interest.

Another idea would be to ask some additional duties from the delegates who want to receive the full compensation. (More of a longer term suggestion, probably too late to incorporate it in the first iteration.) For instance, we could require delegates to participate in at least one committee, which is then tasked with creating research reports and/or new governance proposals. In addition to the super valuable work done by DAC, there could be a committee for Uniswap v4 related research from governance perspective; for UniswapX; protocol integration; liquidity mining programs; etc. In this way, the whole DAO could benefit from this work, and delegates who want to get involved could get paid for it. (But not more than once, e.g. joining two committees instead of one brings no additional compensation, to ensure decentralization and diverse perspectives.)

1 Like
8

It’s a bit tricky because many of Delegate Code of Conduct at the moment are subjective, and it was believed that objective measurements are better ways to start off.

This was indeed some of ideas but then it brought up question of whether it lead to too many committees getting created with less effectiveness. So mixed opinion but believed that such objectives will be each independent budgets and scopes, rather than connecting with Delegate reward

1 Like
9

After receiving further feedback, we decided to make two following important changes to ensure it’s more competitive and also inline with the experiment ethos.

  1. eligible candidates will be reduced to 11

  2. Instead of cycle 1 being 6 months, it will be reduced to 3 months.

2 Likes
10

I’m Raffi, I’m a contributor to the ecosystem as COO at Uniswap Foundation. It’s been great to see delegates involved, and I appreciate the opportunity to share my views on the forum. These are my views; I’m not speaking on the behalf of the foundation.

I am opposed to this proposal and want to express why. First, participation for participations sake isn’t the goal imo. Instead consider a specific-working groups that has clear deliverables that are helpful to the protocol. Compensation for work at a reasonable market rate for work that has clear outputs is something I’d be supportive of. That idea has been suggested before, but haven’t seen anyone put one together.

Second, fundamentally, proposals that delegates believe will drive value will get participation. It’s not necessary to incentivize participation on issues that delegates don’t feel motivated to vote on.

Third, As a long term contributor I love that anyone can participate in a grant program, contribute to the code base, or take initiative like putting together the ARB grants program, which is community driven. I’d feel demotivated to continue to contribute to an ecosystem that pays people to vote. Voting to pay yourself to vote is misaligned with the purpose and need of delegate participation.

I feel strongly about the ethos behind governance and focusing on proposals that motivate governors to participate, rather than compensation for participation sake. Thank you for the consideration!

2 Likes
11

Hi, that was exactly one of the ideas and in fact inner proposals, but then the question became “How to assess such work and admin work of it”

Another idea was letting the Uniswap Foundation deciding and contributing to it but believed legally it would be risky for them to comment and influence how the governance decisions are made.

Either way, appreciate the idea.

12

We believe it’s important to share the context that various ideas were discussed and also put into document.

We believe various compromises are important but there is no perfect solution

13

Having run the leading professional delegate organization for 2.5 years, I find this comment incredibly out of touch. Being a top delegate involves much more than just voting; it requires a lot of work. There is a general lack of fair compensation for governance-related contributions, and this is a clear example of why.

Comparing the proposed numbers to what other contributors in the Uniswap DAO receive, it’s no where near what others are receiving, on the contrary it’s a small budget to ensure one of the most important things of a well functioning DAO. To say that you would feel demotivated if people who put in the work gets their fair compensation is honestly a bit insulting to all the amazing delegates who spends hours upon hours every week to push the DAO forward.

Additionally, without our recent delegation program none of the current votes would have been able to pass. You can just minus 10 million UNI votes and see if they would pass the quorum.

2 Likes
14

@RaffiSapire raises several valid points.

Expanding the initiative to delegate UNI to active delegates holds merit. However, compensating them may inadvertently solidify the position of active participants, potentially discouraging newer ones. Paying for votes could prove counterproductive.

A more constructive approach to compensating delegates would involve recognizing their contributions. For example, through initiatives such as the Uniswap Treasury Working Group, Accountability Committee, Bridge Assessment Committee, etc.

Delegates should be incentivized to foster innovation and provide tangible deliverables for the Uniswap community, rather than solely prioritizing compensation for a select few entities with significant delegation. It’s worth noting that much of this delegation is not actually owned by the delegates themselves (e.g., A16z, UNI DAO, and other large delegators). A freeloader problem may arise where delegates putting in work feel it’s unfair that those only voting are paid the same.

Additionally, passing this proposal without making any progress on the fee switch-governance staking doesn’t seem appropriate.

1 Like
15

For some background, I say this rather biased, and that I’ve always wanted to get some sort of system out there to pay delegates for their work. A couple years ago, @mhonkasalo, @teemulau and I worked on a draft of a system that would do this. It was deemed too early and not supported by the foundation.

At the time, it felt like this made sense. Not too much was happening in governance at the time, and only a few protocols had set something like this up. Hence, we decided it wasn’t the most pertinent issue and we followed the Foundation’s guidance to revisit this at a later time.

In the last two years, a LOT has changed with respect to protocol governance. In addition to just “more things happening” in the Dao, dozens of ecosystems are now incentivizing and allocating benefits to delegates, as well as many of the largest delegators we’ve talked are in favor of some sort of incentivization.

Therefore, revisiting the conversation seems at the very least to be justified. Thank you @Doo_StableLab for setting up a working group around this for the last couple of months and restarting these discussions. For those that have been keeping track, the ultimate goal of this is how do we create a system that keeps good delegates around, so that we aren’t struggling to meet quorum every vote, in a fair and appropriate manner. It has been stated that the foundation doesn’t want to take this role/decision, and so it’s up to the delegates and community members. That’s exactly what has happened. This proposal isn’t perfect and there are likely things with it everyone wants slightly different, but that’s just how things are with dozens of opinions.

In my opinion, this is just about as good of a system we came down to that combines the most people’s goals and ideas, while also keeping the door open for alternative proposals and situations. @RaffiSapire if you or the foundation have a better idea, I think everyone is all ears. Please join the tg group (dm your username?) and I’m sure we’d love to chat about anything.

Ultimately, I think it just comes down to trying “something” as opposed to the “let’s wait” message we’ve received the last couple of years. We’ve been having discussions around this for a while now and it seems like as finally there is some group consensus around the matter, it’s being halted again. I will say that a few extra days before snapshot just for people to catch up over the weekend is appropriate in my opinion.

3 Likes
16

Having participated in this working group, it’s important for me to chime in. These are my personal views:

Primer

I’d like to point out that seeing so many passionate replies on this topic is encouraging because it signifies that, despite the divergence of opinions, we’ve stumbled upon something that is important for us to clarify as a group.

Eric Alston has some clever axioms about these situations that I won’t try to quote.

Why Support?

If we agree that there are issues with quorum, informed voting, and general delegate activity, this proposal is one small effort worth exploring and discussing to at least spur more delegate activity.

In contrast to the other discussions, which propose hourly rates, oversight committees and subjective measures of impact, I favour @Doo_StableLab’s approach for the following reasons:

  • Short timeline: With the three-month timeline for this program, we can quickly reassess the efficacy on a short interval. This timeline has a precedent of working in AAVE’s orbit program, which operates every quarter.

  • Objective: No hourly rate computation or impact analysis is required. Eligibility is based on easily provable voting information, with impartiality toward more subjective measurements.

  • Lightweight: We are not required to instantiate a new committee or leverage existing committees for oversight. Without reliance on a committee, we can easily dismantle this after the three month mark. It’s important to note that paid committees with voting power are incentivized to avoid disbanding.

Caveats

To the credit of some of the previous points raised against this incentive program, there may be two credible oppositions to a delegate reward program. I’ve tried to coalesce them below in my own terms:

  1. It would be a more efficient allocation of capital to have incentives tied directly to impact measurement and/or specific outcomes.

  2. The incentives for professional delegates and organizations are already inherent to their participation in the protocol’s governance.

To the first point, this is true at scale or over time, but it’s not worth the overhead as a pilot program with a short timeline and a small budget. If this fruits the inkling of being an effective program, we should consider improving and expanding the reward program to include this component. I’m comfortable deferring.

I wholeheartedly agree with the second point. This is the future, but we’re not there yet. I’d also like to note that in other ecosystems, I’ve seen the other extreme where professionals use proposals to extract value without regard for the protocol. With imagination, KPIs and hourly rates aren’t immune to abuse. If we agree there’s extraction at both ends of the spectrum, this program could turn out to be an essential test in optimizing incentives.

Note: I purposely leave out “self-dealing.” This point has been brought up, but considering the amount of individual rewards, the magnitude of possible self-dealing seems like a negligible concern at this point. Candidly, and in my personal opinion, the delegate who proposes this has little financial gain for the social cost it incurs.

Suggested Changes

  • The voting on delegates (by delegates) to choose awards seems plutocratic. I’d recommend amending this to scrape top voting performance and involvement alone, especially if that is what we are trying to encourage.

  • Not a dealbreaker, but I worry that 3k doesn’t really move the needle. The amount seems diluted. I would rather seen an even small number of delegates and a lower voting power threshold to increase competition on measured activity.

TL;DR.

Would support with the above changes to selection. This is an interesting three-month experiment. We should be flexible to changes and dropping this if it does not improve participation quality.

With this being a less than straightforward topic to introduce and a long road to get here, I thank @Doo_StableLab for putting it forward, the time spent on the initial research from the working group members and the engagement from other on the forum.

6 Likes
17

Proposals like this are messy–there’s not really a way for a delegate to propose paying themselves without sounding extractive to some extent. It’s even more amusing when people consider proper delegate work to bo conducted out of the kindness of one’s heart…

This is simply wishful thinking.

The lack of a financial incentive begs the question–why be a delegate? This answer is more clear if you’re a large token holder. Here, you actually have a financial stake in the protocol. But numerous delegates have little to no financial stake. Therefore this isn’t exactly a plutocratic system.

So why are these delegates here? There is no clear or objective reward for a delegate to participate in governance in the long-run. If the DAO’s pitch to delegates is purely something fuzzy like do it “for the sake of decentralization” or “to democratize finance”…good luck attracting serious long-term contributors.

Sure, you could argue that it builds you a reputation in the crypto space or enables you to attain experience with DAOs–but those are all a means to an end. They’re resume builders and credibility establishers. We need delegates who contribute to the development and sustainability of the protocol in the long-term. We should be optimizing for governance work not simply to be a means but as the pursuit itself.

And as any rational actor would devise, a system without financial incentive alignment that merely acts as a temporary means for folks to attain “experience” is not conducive to Uniswap DAO’s success.

–

The above would be the case in a perfect world–but anecdotally, there are very few things people actually seem to care about. Notably for Uniswap, it’s the fee switch. When it comes to other forms of proposals, like those that pertain to governance operations or deployment incentive programs, the effect those proposals have may seem negligible to many delegates and token holders–enough to cause voter apathy. This apathy is persistent even amongst some of the largest delegates. For example, the latest treasury working group onchain vote only reached quorum a couple of hours before its deadline on a Saturday night. And we had to nudge multiple delegates over the course of a couple of days to make sure they voted. Plus, those who voted last minute likely just skimmed parts of the proposal without giving the details much heed, let a lone reading through the forum post.

I’d change the verbiage here since “pays people to vote” makes this system sound corrosive and fickle. The goal is to “incentivizes people to make informed decisions”. In other words, how do we make sure that an informed cohort of individuals are reliably and continuously involved in sustaining the protocol/DAO?

The concept of high quality pro bono work is quite frankly fanciful. Sooner or later, you’ll likely see attrition from delegates who decide that their opportunity cost for partaking in active Uniswap governance is too high. And competent people have no shortage of opportunity cost. There are numerous other ventures that they could be working on.

Plus, by paying delegates, you’re more likely to motivate those delegates to put in the time and effort to create initiatives that further the protocol. The idea to “give the DAO things to decide” ultimately comes from the delegates themselves. And to incentivize them to come up with things to do, they should to be paid. Catch-22.

As Doo mentioned, the above suggestions could be an approach, but it begs the question of double compensation. Working groups are composed of both delegates and non-delegates, and they tend to have an hourly rate already associated with their respective list of duties. You could argue that a delegate in a WG is more value-add than one who isn’t–but I don’t think they should be compensated beyond their WG rate. Where WG participation could help is in the screening for delegates. Like if we go with 11 total delegates for this program, and there are 15 that technically qualify, then the factor for deciding who gets included is if that delegate went above and beyond by partaking in a WG. In other words, a delegate with WG experience may deserve priority in being admitted to the cohort of compensated delegates–but not paid more beyond a base rate given to all delegates.

If a delegate has considerable voting power, that’s usually–but not always–for a reason. It can either be based on the general merits of a group/individual or in relation to their experience and history with the protocol. So, voting power is not a metric that should be gleaned over, and yet, it should be taken with a grain of salt. There should be room for “upward mobility”, where smaller delegates can demonstrate their contributions through sustained participation. The “Delegation to Active but Underrepresented Delegates” proposal helped in this area. Plus, the following criterion also helps wrt this proposal:

–
A final concern that we’ve been trying to decide on is how comprehensive this program should be. The more details and oversight of compensation criteria, the better…maybe. Ideally, we have a situation where a small group of auditors, perhaps a mix of the foundation, delegates, and neutral third-parties like Butter, could more intricately monitor delegates’ impact. For example, the mere fact that you vote and comment on a proposal doesn’t mean as much if you didn’t put time and effort into that decision. There is such thing as a good and bad comment. The auditing group would read through the delegate’s response and give it a quality score. More quality means higher compensation. Same goes for proposals. If a delegate helps author and pass high impact votes, then they should be paid more. You could also argue that a delegate that’s been around for a longer period of time is more valuable than one who’s been around for a couple of months. A lot of governance is based on the people you know and how involved you’ve been in the development of a DAO. A new delegate has to invariably play catch up and thus may make less informed decisions. Therefore, the value of a long-term delegate, as mentioned above, increases.

As you can see, the minutiae here is taxing–and quite subjective. How does one actually determine the quality of a response, for example? There would need to be a dispute and resolution structure in place for appeals and disagreements. Plus, the auditing group would also be required to conduct a decent amount of work. This would entail another WG. And even here, we would have to decide what portion of that group should be delegates vs non-delegates.

I mention the above points to illustrate much of what @Doo_StableLab and the rest of this WG have been discussing. Although the forums may miss some points and arguments from our video calls and telegram chats, we’d like to highlight that the best course of action in the present moment seems to be moving forward with a simpler framework that prioritizes:

6 Likes
18

The three-month timeframe for testing makes sense. If this short-term funding model for delegates proves successful, it would need to become the norm. Otherwise, we risk seeing “professional” delegates who rely on these payments opting to leave entirely if the funding ceases, essentially creating a welfare program for delegates without any financial stake or specific objectives other than being “active.”

Regarding reputational risk, should it be mandatory for delegates who own no UNI directly but have other UNI delegators and operate as a group to disclose their identities? Otherwise, the only reputational risk lies in a well-orchestrated delegate brand and vote history.

Data on the success of similar programs is mentioned in several responses here, but there’s no detailed presentation of those metrics. How was success determined for these other DAO delegate programs?

Concerning value alignment: Is a delegate who personally owns x amount of UNI more financially aligned with success than a delegate who has 100k delegated to them? Is there a criterion for individual delegates with personal UNI at stake in decision-making? If a delegate holds significant voting power, lacks personal financial stake, and is a professional “active” delegate with involvement in multiple DAOs, where do their values align? And how much time do they have to make optimal decisions for those with financial stakes? Should there be lower eligibility criteria for individuals who personally own and vote?

1 Like
19

@Juanbug @AbdullahUmar @coltron.eth @Userisky as well as many others. Thank you for your comments, and we believe that such conversations are crucial.

After reading various comments, another change will be in case if there are more than 11 eligible delegates, instead of deciding top 11 delegates via voting. This will be decided by objective metrits such as voting participation, number of proposals authored, and the number of comments.

In addition, “80% onchain and offchain voting participation for the past 3 months” application requirement will be removed. Therefore, those with below such voting rates can also apply. However, high voting participation in the past 3 months will still translate to high score. In practice, this could mean some delegates who are on 60-70% voting participation able to at least claim a month or two months as ideally, their voting participation rate improves as the experiment progresses.

The details will be shared tomorrow.

6 Likes
20

So rather than paying delegates for their work(attracting UNI holders to governance, regularly voting and communicating their votes), delegates are expected to use their position to acquire favors and reputation that they can cash in for other compensated work?

That sounds highly undesirable to me. Delegates should be fairly independent and free to vote in ways the majority doesn’t agree with, which might lead to them getting passed over for those roles.