Proposal to form reWARDS Committee

Proposal to form reWARDS Committee

We are renewing our focus on policy & governance at Lido, and are asking the community (we need a name) to discuss and vote on a rewards committee. As we get used to proposing more of these structures, a framework will be needed to standardize the process going forward.

Lido is a DAO. DAOs are by definition supposed to be decentralized. It is paramount the community behind a DAO increasingly make all key decisions. However, as a DAO grows and becomes complex, there will be an increased need to delegate minor or highly specialized tasks to reduce operational burden. This way, we hope to reduce voter fatigue on matters they might lack the time, interest or technical expertise to carefully consider.

All DAOs face this challenge. A balance between direct community involvement and delegating responsibilities.

There will be a snapshot vote 3 days after posting or when community discussion has resolved to an optimal outcome.

Thanks in advance for reading and commenting on the rewards committee proposal.

Summary

Create a governance committee dedicated to managing, deploying, tracking and reporting incentives for Lido assets.

Allow the committee autonomy to deploy allocated rewards budget as they see fit with monthly reporting on the decision-making process and community feedback. There will be broad categories around each of the initiatives as well such as ‘maintain liquidity’, ‘increase usage in DeFi’, ‘facilitate trading volume’ etc. These will come with category breakdowns.

Motivation

Currently Lido is allocating ~$15M(USD) $LDO rewards across a number of different pools each month with more coming online. The current process is cumbersome and lacks proper clarity on the efficacy of the programs.

Sushi, 1inch, Curve, Balancer, Saber, Raydium, Mercuial and Orca. These are only AMMs. There will be additional needs to allocate incentives to lending platforms, aggregators, new DeFi protocols and new ecosystems as we increase our integrations.

The current process requires a community proposal to add new incentives to a pool, snapshot vote to pass, and then on-chain voting to disburse the funds.

This is slow at times while also increasing voter fatigue in governance.

The weekly Omnibus was a great first step of bundling operational expenses into a single vote. After this came LIP-3 Easy Track Motions to streamline routine voting decisions which this proposal will build on top of once fully implemented.

Proposal

I propose a founding committee of current members already working on the rewards distribution and a member from the community to start. Later it might be prudent to have a representative from each protocol Lido is built on added (this might become burdensome).

Proposed starting wards

  • jbeezy from Lido, business development
  • GrStepanov from Lido, has been managing technical integrations
  • kadmil from Lido, has been managing incentives and on-chain omnibus
  • Alex Beckett from community, has been an active and engaged supporter
  • Felix from Chorus One, managing stSOL go to market
  • Kai, currently building stLuna for Terra

Governance

The reWARDS committee should be considered part of the Financial Operations Team along with the LEGO committee. The Financial Team will be proposed at a future date.

Use of Easy Track Rewards Executors to initiate funds. This guarantees rewards are only sent to whitelisted addresses ensuring all funds are accounted for.

All new whitelisted addresses are voted on by the committee before being added. Initial candidates are listed below in breakdown. All whitelisted addresses eligible for rewards are listed along with corresponding amounts in the monthly report.

Rewards distribution will start with 4/6 signatures and move to a higher security threshold with new members within 3 months.

Accountability

At the end of each month, the committee will publish a report on locations, amount and efficacy of incentives for each platform distributed. This report will also request a tentative budget for the following month in $LDO to be allocated as they see fit within that budget and with community feedback taken into consideration on each reporting period.

A reporting period will be 3 days of community feedback followed by a snapshot vote only if feedback is contentious or changes outcomes.

The $LDO will be managed by a public multi-sig controlled by the wards without the need to actually hold them.

With easy track the multi-sig wallet is able to pull funds out as needed and can only send them to approve whitelisted addresses.

Change Management

I propose an initial committee member review within the first 6 months pending proposal approval to discuss change management and/or areas for improvement.

Initial Budget

Due to specifically how easy tracks works there is not a ‘real’ cap on budget but accountability and oversight will ensure the committee is not sending excessive funds to a whitelisted address.

For Solana addresses, there is a slightly different process due to the bridging via Wormhole so the ETH side address will be whitelisted to start.

6,000,000 $LDO is the proposed budget for the first calendar month following a successful vote. This allows for room to grow incentives and flexibility for unknowns.

The additional ~1,800,000 LDO over current spend is earmarked for expansion of rewards on Solana with the addition of new pools and protocols. This will be accounted for and added to the whitelist as they come online pending approval of the whitelist additions.

Breakdown and starting whitelist

LDO Incentives dashboard on Dune

Benefits to Lido

  • Streamline routine voting around the rewards program which is a critical part of Lido strategy
  • Increase transparency about efficiency of the rewards program with reporting
  • Lower the operating overhead for initiating new rewards or continuing existing ones
  • Allow flexibility to try new rewards strategies
  • Increase community feedback
  • Decrease spend on lower utilization pools

Related Threads

5 Likes

This is awesome to see. I think this will be a big step forward in decentralizing the DAO, and in getting more of the decision making process out into the open to draw in more input.

I had a few questions, some of which are probably due to me not being super familiar with Easy Track yet so sorry if that is the case…

Is it right that the only functions of the rewards committee that go through the Easy Track process are the actual movements of funds? And any other decision making (budgeting, changes to committee members, whitelisting, etc) would take place outside of it? And would those transfers be proposed as “Motions” in Easy Track?

Why is it that Easy Track doesn’t allow for a hard budget cap? Is there any hard limit on this proposed committee’s ability to send funds from treasury anywhere in the code (Easy Track or otherwise)? or is it just the ability to object to a payment Motion or pull the emergency brake on Easy Track in an extreme case?

Realizing that most of my questions revolve around whether objecting to a Motion for a given payment in Easy Track is the only enforcement mechanism that the rest of the DAO would have other than revoking privileges through the main governance process.

3 Likes

Is it right that the only functions of the rewards committee that go through the Easy Track process are the actual movements of funds? And any other decision making (budgeting, changes to committee members, whitelisting, etc) would take place outside of it? And would those transfers be proposed as “Motions” in Easy Track?

Transfers of funds and managing of rewards program whitelist will also be through easy track. The list of addresses where the rewards committee can send funds is limited, and managing it is also done through ET motions.

Why is it that Easy Track doesn’t allow for a hard budget cap? Is there any hard limit on this proposed committee’s ability to send funds from treasury anywhere in the code (Easy Track or otherwise)? or is it just the ability to object to a payment Motion or pull the emergency brake on Easy Track in an extreme case?

The reason is we didn’t put it into a v1 release to avoid dragging it further down the road. It’s in the backlog, will be in one of the next upgrades (no timeline on this yet).

The relatively gated structure of easy tracks + the easiness to shut down a malicious notion are together an adequate safeguard IMO, and, from the looks of it, in DAO’s eyes as well.

4 Likes

Thank you @jbeezy for nominating me, I hope I will be able to provide valuable input :v:t5:
I believe the most important thing the Committee can do is streamline reports and proposals for the whole complex of Lido’s incentives. The monthly report+proposal can provide a great vision of how, what, and why we incentivize. It looks very natural to grant the Committee rights to start ET motions related to incentives as well.
On the other hand, adding more DAO votings – even snapshot ones – to decide on proposed incentives doesn’t sound reasonable to me. That is something we were trying to avoid when designing the Easy Track – we tried to remove regular Aragon votings where possible while keeping a clear and easy way to object to anything that doesn’t look good. I propose sticking with this approach and generally using the Committee for two things:

  1. Report and propose: publish monthly analytics on incentives performance and propose changes for the next month.
  2. Maintain rewards-related Easy Track process: manage reward programs whitelist and initiate funds allocations.

I’m all pro using snapshots for the DAO to decide on contentious issues with incentives — that seems like a most suitable mechanics there. If the plan for the next month doesn’t get pushback — reWARDS can just schedule & send motions required to carry the plan on.

3 Likes

Thank you for nominating me, @jbeezy!
I think that: 1) the overall structure on the incentive management is a great thing to have; 2) having dedicated & public team working on those is fully in the spirit of transparency, which seems the most appropriate; 3) having defined & public workflow around incentives seems cool as well.

1 Like

Should we define Terra budget here as well?

I think so, yes, and further stX products as well.

1 Like

I mean, from the get-go — I think it makes total sense to manage all the incentives with one process & team, having “network experts” on board (Felix on Solana and Kai on Terra, per the proposal).

1 Like

@GrStepanov @kadmil I think those are great suggestions to remove the additional snapshot vote except in case of disputes. Before the snapshot vote on this I will update the proposal with that modification.

Regarding additional listings with the additional budget, I had not defined those in this proposal as they are outside the scope imo. This is to stand up and agree on the committee itself due to variable timelines related to the easy track and this proposal passing.

If executed, the first priority would be defining expected use of funds for the first operating month. Across ecosystems.

I am happy to add additional committee members if that is the community feedback. Trying to balance operational overhead to get this moving. If agreed upon I will add that prior to the snapshot as well.

2 Likes

Proposal has been updated with previous suggestions to remove additional snapshot vote unless monthly reports are contentious as well as adding Felix and Kai as wards. The multi-sig threshold was increased to 4/6.

Snapshot vote will be live in 20 minutes.

For: Create the committee
Against: Do not create the committee at this time. Continue the discussion or modification of this proposal.

2 Likes

The snapshot vote is over and passed! Thank you.
One of the next steps will be putting together a 4/6 reWARDS Committee multi-sig, it will be announced publicly as soon as possible.
Another one is the first planning session, the Committee will keep the community posted on the results. We hope to see a live discussion around it soon!

2 Likes

The reWARDS multisig is successfully set up as 4/6 0x87D93d9B2C672bf9c9642d853a8682546a5012B5!

Members are:

jbeezy 0x039bDD285d3eDb1D9B6001d3097067Aa2AF7d826 https://twitter.com/chaingenius/status/1468951124841570304

GrStepanov 0x8D0855047b59a5f11262f095ee724b5A59a89710 https://twitter.com/grstepanov/status/1468933222923116550

kadmil 0x9A3f38AF97b791C85c043D46a64f56f87E0283D4 https://twitter.com/victor_suzdalev/status/1468934248417705987

Alex Beckett 0xbD04aA2eD46Df0c8d547A16E29288A960CaE72f5 https://twitter.com/likebeckett/status/1469132266093772801

Felix 0x7EA5D688f0aaEBce7d094D18f2C570a83A4d76Cc https://twitter.com/FelixLts/status/1468932706797031435

Kai 0xC5bfE99909c982a8F01762632226F34AAf96bA86 https://twitter.com/oldremez/status/1468942529332719616

The multisig would be able to start Easy Track motions to whitelist rewards programms addresses or remove those from the whitelist, as well as sending funds to those addresses.

I am resigning from my position on the rewards committee. I wish the team the best and look forward to seeing the Lido’s continual growth in the future.

2 Likes

Thank you for participation!

Should the Chinese-speaking community also have one member?

We are happy to discuss new member additions in the next 1-2 months once we are a bit more structured. The only requirement is someone who has been active in the community and will be available to meet the demand for workload.

2 Likes

Sorry to hear that! Would love to have you on board in this or other capacity if you’ve got more time to spend.

1 Like