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

[AbdullahUmar]

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.

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@RaffiSapire

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.

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.

@RaffiSapire

I’d feel demotivated to continue to contribute to an ecosystem that pays people to vote.

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.

@NathanVDH

give the DAO real things to decide, compensate the delegates at a similar rate to other DAOs.

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.

@Userisky

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.

@kfx

we could require delegates to participate in at least one committee, which is then tasked with creating research reports and/or new governance proposals.

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.

@Userisky

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.

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:

@Doo_StableLab

Voting Power of 100k $UNI or more OR Authored or co-authored a proposal that at least passed the Snapshot Vote

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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:

@coltron.eth

• 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.