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

Requests for Comment
21

Technically, asking delegates to agree with the Code of Conduct by checking a box is an objective and easily measurable action, verified by looking at a delegate’s profile. In my opinion, we could still use it as a signal and as a Schelling point to indicate the expected behavior, even if there are no mechanisms to enforce any compensation-related penalties in this pilot program.

On a different note, I get the feeling that we’re trying to reinvent some aspects that may have already been resolved and are time-tested in more traditional settings. Don’t get me wrong, I’m all for improving traditional politics (and finance), but thinking about improvements might be better approached from a starting point familiar with existing best practices. For example, democratic parliaments have clear rules on:

  • what the expectations are,
  • how to disclose financial and other interests,
  • compensation for committee work,
  • the types and limits of allowances,
  • maximum costs for support staff members.

It’s also notable what they don’t do. For instance, they do not tie the compensation to any quality measurements, likely because such measurements can become political very quickly.

Again, please don’t see this as a recommendation to copy any EU rules verbatim :see_no_evil:. It’s the underlying ideas that are relevant.

2 Likes
22

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.

1 Like
23

The application requirements have been changed to :

  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
1 Like
24

The Uniswap snapshot for delegate reward cycle 1 is now live https://snapshot.org/#/uniswapgovernance.eth/proposal/0xfe8cb4e08138df2f0d136480e85edadf22679cca73b68f3f376d12f322dd2565 thanks everyone for the inputs!

25

Strongly support the overall principle of compensating delegates for voting. 3 month timeline/pilot is reasonable. Wondering if we should consider conflicts of interest, esp. if delegates receive compensation from other protocols?

1 Like
26

Hi there, I think that people should be paid for their work - my job is structuring grants at scale to do so ;). Just like in grant structuring, I find its part art part science. It takes time for sure, but ultimately it will lead to the outcomes I believe you are looking for, which is hard working people, engaging and contributing, and feeling appreciated and motivated for the time they are putting in. And, thank you very much for your contributions. That said the way this is structured to be tied to quantitative metrics doesn’t best achieve the goal to motivate delegates to be engaged while also being capital efficient with the treasury. You mentioned above you are open to suggestions. Here’s a couple of ways you could structure engagements that gets at the spirit of what you are trying to achieve. These views are my own, I’m not speaking on the behalf of the Uniswap Foundation.

Ecosystem Working Group

  • BD. Approach external teams about potential ways they can partner with Uniswap governance and suggest proposal structures.
  • Inbound. Be a resource for inbound teams for non-deployment proposals who want to partner w/ Uniswap governance in some way, help to vet and guide them through the governance process. From my understanding, Rika at 404 DAO has been a great thought partner to DapDap in this vein.
  • Set some quantitative and qualitative requirements, an election process, and a time commitment.

Active Diligence Delegates Role

  • Proposals are complicated, and understanding implications of some votes take time. For proposals that are in the process, delegates do the diligence and participate in the conversation to clearly define risk/reward of proposal being executed, suggest modifications, push for the most advantageous outcome for Uniswap governance.
  • Rather than rubber stamping yes or no via vote, structure this tied to engagement. Delegates engage in different ways.
  • Working group. Doo recently organized something like this which was a lot of work, and it went well. At a high level, this consists of required calls for delegates, members take responsibilities around research, with documented recommendations.
  • Another example is how Atis has recently engaged, reading proposals, asking questions, and makes suggestions to make proposals better.

In my opinion, what is important to avoid is something that ties a quantitative number, like word count or voting, to compensation. In making it part qualitative, it’s important to think though what that might look like. In the proposal it should hammer out what the selection process is for delegates both now and in the next cohort. An element of qualitative assessment should be included to ensure that the spirit of this encourages active people to continue to do so while also being efficient with treasury capital. Even though this is a small amount relatively, the quantitative way this is structured is not the right way to compensate engagement, it doesn’t align the spirit of what you’re trying to achieve. Taking the time to set it up to do so is important, and I’m happy to be a sounding board if helpful.

1 Like
27

Qualitative evaluations are important, but they should be performed by UNI holders who signal their views by how they decide to delegate their tokens.

They should not be done by paid contributors as that will bias delegate decision-making.

1 Like
28

Thank you the comments. As you might be aware, the proposal itself was shared in February, and it went through months of discussion and researches via Uniswap Delegate Reward Working Group and events such as Uniswap Govswap. Qualitative assessment was of course in the discussion, but it was largely decided that quantitative and simple method is preferred. As also adopted by various DAOs including MakerDAO to AAVE. Another Delegate Reward Working Group member @coltron.eth noted,

Which is also echoed by another Delegate Reward Working Group member @AbdullahUmar

Now of course, the point of not just Working Group but Governance in general is to incorporate various feedback, which the proposal has indeed adopted, including changing to objective assessment for selecting top 11 delegates, lowering the barrier to apply, and shortening the trial period to 3 months.

Fundamentally, the issue actually comes down to different opinion about this, which I personally can understand because I used to work for Maker Foundation, which did not reward delegates at first.

If one believes being a delegate is not a work, then as you mentioned, it’s rational to try to give more “tasks” and “assignments” to delegates that you would consider as works. But the delegates spending their time and resources (literally in gas fee as well) to vote and thus helping to reach the quorum and prevent malicious votes from passing, as well as helping to making and commenting on proposals is crucial for governance.

But there are few ways the proposal is helping to reward delegates who are giving priority to more than voting. The details are here: https://gov.uniswap.org/t/temp-check-uniswap-delegate-reward-3-months-cycle-1/23837?u=doo_stablelab But for example, we do recognize the importance of proposal writing, and proposals that were well received by the community. And therefore, a big part of the points come from such.

3 Likes
29

Conflict of Interest is a topic that’s quite complex. For example, many of large delegates at Uniswap are service providers that received or receiving grants from the Uniswap Foundation program, then should they be prevented from voting to prolong or funding the Uniswap Foundation because the Foundation is your client and also source of funding?

Or if you are a Service Provider such as in risk analysis or security, should they be punished or considered as of lower priority to Uniswap because they offer their service to others? Probably not. In fact, usually that works as an experience booster for applications for many of these service Providers. Then if delegates are providing their services to multiple DAOs, should they be penalized or boosted for such?

As you can imagine, those are quite complex questions, and similar to how the current systems whether that’s in grants or operations or others have areas that are not black and white. We wanted to implement parts that are objective as much as possible.

30

From my participation in the working group, I was involved in the working group where we interviewed stakeholders (Uni delegates, LP, service providers, investors etc.) In my opinion, it is clear that delegates deserve compensation, but the eligibility should be strict and shouldn’t heavily reward passive delegates.

If we break delegates down:

  • Inactive delegate - does nothing
  • Passive delegate - only votes
  • Active delegate - votes and contributes to the DAO via committee, council, proposals etc.

Inactive delegates get nothing.
Passive delegates should receive minimal rewards for their contributions. Staying up to date with Uniswap DAO and its activities is no easy task, and therefore, they should be fairly, but minimally, paid.
Active delegates are spearheading the DAO and making it a better place, and therefore, they deserve a multiplier from which a large amount of the compensation is coming.

The end goal should be to encourage inactive and passive delegates to become active delegates. Not everyone has the bandwidth to be active, but even rewarding and retaining passive delegates is a large win. Other DAOs are starting to reward delegates, and it would be a shame to lose talent to other DAOs.

I don’t think this delegate reward program is perfect by any means, and there are some flaws. However, Uniswap DAO delegates have gone unpaid for the past few years, while other DAOs, such as Maker, Aave, Optimism, and others, have rewarded delegates for their contributions. There has to be a conscious agreement to revisit this delegate program after this cycle and try incorporating other solutions such as Karma which can enhance the program.

I do think $6k/month is a lot for what I would consider a “passive delegate” and would prefer to see this role lowered to something like $2-3k/month for a passive delegate and instead we spend a larger focus on converting those passive delegates to active delegates.

2 Likes
31

This is a separate comment, but I’m raising this as a point that most things in governance aren’t and require a lot of iteration.

Uniswaps staking delegation encourages people to delegate UNI but there is a clear loophole that stakers/delegators share in success but delegates do not.

Stake and Delegate UNI to receive staking rewards - this is optimistically assuming that delegators delegate to active delegates. AND in return stakers receive rewards.

Stake and Delegate to inactive or active delegates → earn UNI
UNI price goes up → stakers and happy (they have earned more UNI) and have rode the win
Delegates (who mainly receive delegation) who helped guide the Uniswap DAO to success have no skin in the game and won’t share in that success since they haven’t earned in UNI.

Seems unfair to me to solely support delegation but not delegates.

Once again, I believe $6k is too high for what I would consider is a “passive delegate” and would prefer to see this role lowered to something like $2-3k/month for a passive delegate and instead we spend a larger focus on converting those passive delegates to active delegates.

1 Like
32

Speaking for myself and not the UF, and with the recognition that I am in the privileged place of being paid for my governance activities.

Also, want to mention that I’ve been (largely an observer) in the Telegram channel where the Delegate Comp Working Group has been coordinating this proposal. I’m appreciative to all of the delegates and non-delegates who’ve spent time thinking about the topic and advocating for their positions to be represented (even if in the end they haven’t been included in the final product).

With that said, I do think if the proposal is implemented as it is currently structured, we are missing an opportunity to actually address the hard problems of delegate compensation. In my mind those problems are “How do we incentivize delegate activity that is maximally valuable to Uniswap” and “How do we mitigate delegate conflicts of interest”. In my opinion, this proposal and the conversation around it:

  • acknowledges those questions, but
  • suggests that they’re too hard to solve, and
  • ignores them and suggests doing things the way they’ve always been done is the way we should move forward. (Side note that I think Maker actually serves as an example of why we should NOT move forward with this as it stands).

Objective measurements of delegate activity are potentially a good starting point to determine eligibility for a compensation program, but certainly we will hit a point where the program generates a declining marginal return if they are the only criteria. Determining eligibility solely via such objective measurements also presents an opportunity for governance capture via delegates gaming the system (or writing the rules as they go to benefit themselves rather than the DAO). In my opinion, if we don’t try to address how to measure the positive impact of a delegate’s activity, we’ll have failed here.

I believe that the perfect delegate compensation system would align the interests of delegates with those of Uniswap Governance such that the work delegates do is guaranteed (or at least very very likely) to benefit Uniswap. That system does not exist, but I don’t think that this proposal is a step in that direction. Instead, I think it guarantees that delegates will do some work, but leaves open the question of who that work will benefit.

2 Likes
33

Completely agree with you Erin – the goal of compensation should be to maximize Uniswap’s EV as an ecosystem. To me, disclosing conflicts of interest is a key part of this.

I agree that it can be complicated to evaluate if these are positive/negative signals - on the one hand, you have experiential factors + economies of scale that you can have things to be more efficient. But on the other, you may have vested interests to propel interests that are not necessarily maximally beneficial to Uniswap as an ecosystem.

I would suggest a mandatory and periodic system of disclosure of other protocol involvement, as well as if there’s paid compensation in these other protocols. Whether these are net positive or negative can be subject to deliberation. But there should be a higher bar of transparency for compensated delegates.

2 Likes
34

I also participated in the working group and contributed to the stakeholder interviews alongside Gab from @she256, @Bobbay, and @jun. Thanks to @Doo_StableLab and the rest of the working group for all the work that’s gone into this proposal so far.

At Butter, we spend a lot of time on problems like this, so I’d like to share some thoughts.

First, I’d like to explain why I predict the proposal will pass and the problem this exposes, why the root cause is poor governance design, and finally propose an alternative.

This proposal to reward delegates will pass because the power to make the decision is held by delegates. Delegates play both buyers and sellers in the market for governance labor and are incentivized to pass proposals that make them better off. This should not be surprising; it’s true for any stakeholder group.

The only group capable of constraining delegate power in a representative token voting system is the tokenholders who do not engage in governance work. These happen to be those who also prefer to outsource the work to delegates or free-ride on the governance work of others, so they aren’t the most reliable check.

But the problem isn’t delegates. Nor is it the proposal. It is the design of our protocol governance systems. Representative Token Voting doesn’t provide rules that guarantee a random person who votes on a proposal is aligned with the organization’s overall goals or is just farming for airdrops.

Without this proof, it is expensive for someone to prove they are aligned with the organization’s goals. Collaboration relies on only the most basic assumption that all people are self-interested.

Regardless of whether this proposal passes, I’d like to propose an experiment that implements these rules and runs alongside the existing program or independently to provide performance-based rewards for delegates.

The basic design is:

Objective

  • Maximize delegate output while minimizing the total treasury spent (both in terms of labor and payments)

Constraints

  • We have a fixed pool of rewards
  • The DAO needs a minimum level of delegate labour to achieve its operational goals, e.g., to meet quorum

Incentives

  • UNI Holders: Want to maximize labor output and minimize payment to increase profitability
  • Delegates: Want to maximize their payment for the least amount of labor

Mechanism

  • Performance-based Pay: Payment is linked to performance that reflects both efficiency and productivity
  • Randomized Peer Evaluation System:
    • Instead of relying on a single evaluator, we rely on a system that randomly allocates evaluations to the population through a permissionless set of Evaluators
    • Evaluators put some capital at stake to submit an evaluation and be rewarded by auditors
    • Auditors, in turn, are also selected from a group of peers, must put capital at stake to participate, and are rewarded for providing audits of Evaluations that represent the consensus of the majority of auditors

With this mechanism, we intend to reward work that is considered most valuable by a broad category of Uniswap stakeholders. We will provide more details in a separate post.

7 Likes
35

We look forward to it. And it could make an interesting experiment for cycle 2 so we can see the difference, as long as the new model’s administrative details are hammered out by then.

1 Like
36

The following reflects the views of L2BEAT’s governance team, composed of @kaereste and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

We appreciate the time spent on this proposal, and we’ll be voting in its favor, with the hope of seeing it positively impact participation in governance.

We were part of the Delegate Incentives Working Group and followed the conversation after the proposal was submitted to the forum, both here and in the working group’s Telegram group.

Creating a delegate incentives program is a very nuanced thing as there are many factors to take into account and challenges that are inherent to the governance structure as a whole, as we’ve learned from our experience in other DAOs. We understand the feedback the proposal has received, but as @Doo_StableLab suggests, it’s very hard to come up with a design that leaves everyone happy.

The proposal is a good starting point to help move things forward in a way that recognizes the value active delegates bring to the DAO. At the same time, it can also be a stepping stone to allocate more time towards not only researching the problems with delegate incentives programs but also workshopping potential solutions.

1 Like
37

This proposal will pass because it’s the first real program presented for the delegates to be compensated after +3 years of no compensation. We believe most delegates voting to support the proposal want a better implementation but decided that getting something temporary going is better than the status quo.

At Optimism, the DAO has normalized “seasons” as ways to update their governance systems and reflect on their performance. Perhaps Uniswap doesn’t need seasons, but it would be great to see a new model of delegate compensation attempted every three months utilizing our prior learnings.

We would be delighted to see Butter, and other organizations present the DAO with options.

4 Likes
38

Hello everybody! We are the SEEDGov team from SEEDOrg.

We would like to give you an insider’s vision from our experience as proposal creators and program administrators of the Arbitrum DAO’s Delegate Incentive Program.

We’ve been following the discussion over the past weeks and we think it’s already time to jump on and give our vision about a topic we’ve been working on for almost a year. Let’s take a step-by-step approach:

Why It’s a Good Idea to Have a Delegates Incentive Program

Governance is an important sector of the industry that needs to be empowered, and to this end, we need to professionalize the work of the delegates.

One of the current challenges in DAOs is to promote the active participation of community members in governance. For this, a community member must invest time and resources, which strengthens governance and prevents possible attacks by malicious actors both on-chain and off-chain. Such attacks could be directed at the general protocol, governance resources, or decisions contrary to the community’s interests.

Not only is participation and its quality crucial, but also diversity in terms of the number of voices present in governance. A frequent and known problem in most governance is the challenge of maintaining these characteristics.

Our Arbitrum Experience

In our experience on Arbitrum, we dedicated ourselves to creating a Delegate incentive program based on the following principles:

  • Transparency: The most important thing is to have transparency and be open to all delegates. The selection criteria, rules, and rewards must clearly and effectively communicated. In our case, we have a special section of the forum for communications addressing our Incentives Program.
  • Fairness: Incentive systems like this one must treat all delegates fairly and equitably, with participation, meaningful contributions, and compliance with ethical and conduct rules as the main criteria for allocating incentives.
  • Long-term sustainability: The economic incentives must be sustainable and viable in the long term for the organization. Monitoring and evaluation mechanisms become a must at the time of ensuring that the incentives are really promoting commitment, participation, and community growth.
  • Adaptability: It’s common that new things that didn’t even exist when the program was created appear. Some decisions need to be taken in short periods of time. It’s important to consider the necessity of an active administrator to address this kind of situations.

Also, it’s important to consider the following subjects when developing and running the program:

  • Avoid Gameability: When incentives are on the table, there will always be players who will try to catch some of them. A great way to avoid gameability is using incentives that reward good governance practices and penalize the bad ones. Also, believe us when we tell you that there’s a clear difference between good delegates and the farmer ones.
  • Continuous Feedback for DAO members: The mission of the program should become strong and with the best performance possible. To achieve that the DAO should have a space to give feedback about the program to improve it over time.
  • Avoid Becoming a Burden: Is not a great idea to make delegates make much more extra steps to be rewarded for their contributions. The program has to run parallel to the daily governance process and not to become a big charge for delegates that should be focusing on more important things.
  • Avoid unnecessary noise: It’s important that the parameters don’t lead to delegates publishing unnecessary comments on the forum only to farm program incentives.

Proposal Feedback

The proposal have some strong point that we’d like to mention:

  • Good initial eligibility criteria: We believe that to the first iteration is good, to begin with, the rules proposed, having more than 10k of voting power and the requirement to be a delegate for at least 3 months ago will reduce the farming possibility from large delegates with a lot of voting power that can be distributed to create multi accounts.
  • Program adaptability: The proposal seeks to make changes to improve the participation from members once the first iteration will be completed.

Also, there are some things that we consider can be improved:

  • Scoring Parameters: all actions that a delegate must complete to receive a good score are based on ‘passives’ metrics. Considering the natural dynamism of a DAO, scoring parameters should be found.
  • Scoring System: Scoring parameters are counted in integers. Sharpening the math and using more sophisticated formulas could help to differentiate good delegates from great delegates. Also, it would improve the Tie Breaker system, since the ‘forum likes’ solutions seems easy to farm.
  • Lack of Forum participation incentives: Proposal doesn’t have incentives for forum participation, such as comments or communication besides the rationales. Forum is the place where discussions are made. It’s important to enhance it by rewarding good contributions.
  • Lack of tests: A program of this magnitude should do tests with the data of previous months, this will give an idea of how good the scoring system works and which hidden challenges might appear.

Also, we believe it’s important to mention that an expansion of this program should be considered in the short/mid term. Having only 11 seats for 22 active contributors might discourage delegates to keep participating. A delegate program not only should increase the quality of discussions but should also increase the number of voices participating in debates to make better proposals.

Relevant Links

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39

Thanks for your feedback and all of these are indeed great foundations to build for future cycles

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40

Thanks for this proposal @Doo_StableLab and good points from all sides. Continuously iterating on this model will be crucial, as it allows for experimenting and testing new processes, reward systems, and incentive structures to find what works best.

Without compensation, only those with ample free time or financial resources can participate effectively, which would undermine the DAO’s inclusivity and diversity. Proper compensation levels the playing field, allowing for a wider range of voices and perspectives to be heard.

We’ve encountered this ourselves with limited resources to operate a delegate, as well as with many student clubs.

Thus we believe compensation for delegates is important. It takes significant time and effort to thoroughly review, research, discuss, and vote. With proper compensation, delegates can also commit more time to publishing their thoughts about the reasons behind their votes, leading to more governance discussions and informed decision-making.

There are good points that paying people to vote can be problematic, as it might lead to voting for voting sake. This could be remedied by requiring compensated delegates to contribute in other ways beyond just voting, and taking active roles in educating and onboarding more delegates.

3 Likes