Introduction
Lido DAO’s new delegate program, incentivizing select public delegates, is set to launch soon. It follows the first delegate rally, which is ending.
While we acknowledge this has been great progress for Lido DAO, where around 12M LDO is being delegated to public delegates on-chain, we see a lot of room to improve to make Lido governance smooth and robust.
Here, we outlined a proposal draft to improve this incentive program. We’d love to present the idea to adjust the first incentive program if we see good feedback and support from other delegates/contributors in the DAO.
TL;DR
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The current program doesn’t fully meet the original objectives.
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We propose a new 30-point scoring system for selecting incentivized delegates to meet the updated objectives below.
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increase active voting participation
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improve the quality of discussions and feedback
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We propose to remove the objective of “allow the community to unite and increase protocol safety by activating new token-holders in governance via Delegation.” from the delegate program at this stage because we believe this requires different approaches in addition to financially incentivizing delegates.
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Scoring criteria: 10 points each for voting participation, forum engagement, and authoring a proposal that passes voting.
Objectives
As written in the “Motivation” section of the original proposal, this is the original objective for the program.
increase active voting participation,
improve the quality of discussions and feedback,
allow the community to unite and increase protocol safety by activating new tokenholders in governance via Delegation.
We propose the objective below, removing “allow the community to unite and increase protocol safety by activating new token-holders in governance via Delegation” for the updated incentive program as this is an objective that needs to be handled with different approaches. The details will follow in the issues section.
increase active voting participation,
improve the quality of discussions and feedback
Current Situation
While Lido DAO has been making huge progress with the current program, it doesn’t seem to meet the objectives provided.
Here is the evaluation of the progress on each objective.
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increase active voting participation
⇨NOT SO GOOD. We can speculate that a larger amount of LDO tokens will be utilized in the upcoming voting process due to the recent delegation activities. However, in terms of the number of governance contributors, it gained only three parties that are directly incentivized to vote.
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improve the quality of discussions and feedback
⇨ BAD. With a few exceptions, activity in the forum has barely increased. Most of the delegates just published their profiles and haven’t updated since. While receiving rewards might prompt some to start participating in the governance, this program has not functioned effectively as an incentive for delegates to participate actively in the forum discussion.
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allows the community to unite and increase protocol safety by activating new tokenholders in governance via Delegation
⇨ NOT SO GOOD. We have around 12M LDO delegated on-chain, and some of them will be utilized for voting in the next quarter. However, it’s possible that rather than public delegation, the majority of cases may be closer to self-delegation, while the exact details are not fully understood.
Issues
Unmatched criteria
As seen above, the three objectives and the criteria for incentives are unmatched. The current requirement of having a 2M LDO delegation didn’t incentivize public delegates to actively participate in voting or giving meaningful comments/proposals on the forum.
Especially for the first two objectives, they require their own criteria.
Lack of motivation for delegation from potential delegators
Despite various efforts to encourage delegation, as mentioned above, we believe the current situation has not yielded the desired results. Enabling an onchain delegation supports Lido’s smooth and robust governance, but it seems it is not understood properly by large LDO holders or the community. It doesn’t have any direct economic incentives for delegators, either. Thus, we believe the objective of “allows the community to unite and increase protocol safety by activating new tokenholders in governance via Delegation” needs to be handled in different approaches, but not with this delegate incentive program.
Case Studies in other DAOs
The cases shared below include token delegation programs while Lido’s scope is the delegate incentive program.
However, we believe they are very insightful as they have the same aims that Lido DAO’s delegation incentive program has; choosing the right delegates that make contributions to DAOs.
In summary, both of these programs incorporate these 3 key evaluation aspects.
- Voting Participation
- Making Proposals
- Other Activities (Call attendance or so)
Thus, we decided to utilize these aspects except for “Other Activities” as any activity such as delegate calls in Lido DAO is yet to be established.
Compound Delegate Race
This Compound Delegate Race is to choose delegates who receive COMP token delegations rather than to introduce a delegate incentivization program.
Compound solely focuses on-chain voting, and rarely utilizes off-chain voting, so off-chain voting is excluded from the evaluation criteria.
This scoring method has 10 points at maximum and here is the breakdown;
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On-chain Voting: 6 points
Voting participation is crucial to ensure quorums are met and malicious proposals are prevented. Compound tries to attract delegates by encouraging delegates to diligently participate in voting.
- Greater than or equal to 90%: 6
- 80% to 90%: 5
- 70% to 80%: 4
- 60% to 70%: 3
- 50% to 60%: 2
- greater than 0% to 50%: 1
- 0% : 0
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Proposal Authorship: 2 points
Writing proposals will help DAO, but at the same time, low-quality or malicious ones need to be excluded from scoring. Thus, only passed proposals are counted.
As Compound DAO requires 25,000 COMP to initiate the on-chain voting, initiation/sponsoring of proposals is also counted in a different method.
Therefore, there are two options to get points in this section.
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Posted an RFC that passed an on-chain vote before (only the sole author or co-authors explicitly mentioned on the proposal who posted on the forum will get this point)
- Yes: 2 points
- No: 0 pointsor
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Initiated/Sponsored an on-chain vote that passed on-chain vote before
- 3+ Votes: 2 points
- 1-2 Votes: 0 points
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Other Governance Participation: 2 points
Joined Compound Dev Call Before?
- Yes and presented: 2 points
- Yes: 1 point
- No: 0 points
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Tie Breaker
Ties will be decided by the date of the first on-chain vote these applicants cast in order to reward those delegates that have been contributing to Compound governance for an extended period.
Uniswap Delegate Reward Initiative
Uniswap Delegate Reward Initiative is an initiative to reward delegates who contribute to Uniswap governance.
Uniswap has both on-chain and off-chain voting, so both of them are included in the scoring method, while on-chain has a larger weight.
(Co)authoring a proposal is also included in this method. A proposal that passed an on-chain vote gives more points than the one that passed an off-chain vote.
Here is the breakdown of the scoring metrics, with the highest points being 10 points.
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Voting Participation: 6 points
Voting participation is crucial to ensure quorums are met and malicious proposals are prevented. Uniswap also tries to attract delegates by encouraging delegates to diligently participate in voting.
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Offchain Voting (Snapshot)
- 80% and above: 2
- 70% till 80%: 1.5
- 60% till 70%: 1
- 50% or below but above 0%: 0.5
- 0% : 0
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Onchain Voting
- 80% and above : 3
- 70% till 80%: 2.25
- 60% till 70%: 1.5
- 50% or below but above 0%: 0.75
- 0% : 0
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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 are able to get full points on the voting)
- Yes: 1
- No: 0
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Proposal Authorship
Writing proposals will help DAO, but at the same time, low-quality or malicious ones need to be excluded from scoring. Thus, only passed proposals are counted.
In the 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.
- Authored or Co-authored a proposal that passed off-chain (snapshot) vote before.
- Yes, 2 or more: 1
- Yes, 1: 0.5
- No: 0
- Authored or Co-authored a proposal that passed on-chain vote before
- Yes, 2 or more: 2
- Yes, 1: 1
- No: 0
- Authored or Co-authored a proposal that passed off-chain (snapshot) vote before.
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Other Governance Participation
The full point for this category is 1. This category is to recognize other ways one could contribute to the discussion regarding Uniswap Governance. This can be achieved by either
- Joined Uniswap Gov Workshop Before
- Yes: 1
- No: 0
Or
- Joined Uniswap Community Call Before
- Yes: 1
- No: 0
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Tie Breaker
Ties will be decided by the date of the first on-chain vote these applicants cast in order to reward those delegates that have been contributing to Uniswap governance for an extended period.
Proposing Solution
After researching similar cases in other DAOs such as those listed above, we propose updated criteria for choosing incentivized delegates.
This is a scoring system with 30 points being the possible highest score.
We allocated 10 points to each of the area
- Active Voting Participation: 10 points
- Rationale Clarification: 10 points
- Making a Proposal: 10 points
While the above two examples don’t include rationale clarification in the main scoring criteria, we see the need for this aspect as this is also one of the key responsibilities of public delegates.
Eventually, we could add scoring criteria such as Other Governance Participation, similar to what we have seen in other DAOs’ cases shared above. This could be discussed when we start to have routine calls around Lido governance for instance.
This evaluation will assess the efforts made during the past three months when determining the delegate. We anticipate that the exact dates of the target period will be established upon the announcement of the incentivized delegate selection.
We are considering choosing top X delegates as incentivized delegates.
This X will be determined based on the budget and the desired amount of incentive for each delegate, which is currently $5000 per month.
Here are the detailed criteria.
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Active Voting Participation: max 10 points
- on-chain vote: 6 points
- above 90%: 4 points
- 80% - 90%: 3 points
- 60% - 80%: 2 points
- 40% - 60%: 1 point
- below 40%: 0 point
- off-chain vote: 4 points
- above 90%: 3 points
- 70% - 90%: 2 points
- 50% - 70%: 1 points
- below 50%: 0 point
- on-chain vote: 6 points
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Rationale Clarification: 10 points
The amount of votes with rationale shared in the delegate thread. This will be calculated on a monthly basis.
Every first week of a month, the rationale shared in the forum in the previous month counted for every vote made.
- above 90%: 10 points
- 80% - 90%: 8 points
- 70%- 80%: 6 points
- 60% - 70%: 4 points
- 50% - 60%: 2 points
- below 50%: 0 point
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Making a proposal: max 10 points
- proposal passed off-chain (Snapshot): 5 points
- proposal passed on-chain: 5 points
Conclusion
The proposed adjustments to the Lido Delegate Incentivization Program introduce a comprehensive 30-point scoring system aligned with the objectives. By rewarding active participation and quality contributions, this new system aims to enhance Lido’s governance structure. If implemented, it has the potential to foster more engaged and productive governance participation, ultimately benefiting the Lido protocol and its community.
Let us know if you have any feedback or comments. Alongside other active delegates and contributors, we are looking forward to improving the Lido governance further and providing more inclusive structures where delegates can engage with the governance.
