Establish the Compound Governance Support Working Group (GSWG)

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Establish the Compound Governance Support Working Group (GSWG)

Co-authors: StableLab @Doo_StableLab, Arana Digital @AranaDigital, & PGov @PGov

Overview

Strong and resilient governance is crucial to Compound’s growth and security. After examining the Compound governance starting last week, in response to recent governance challenges and the evolving needs of the Compound governance system, this proposal establishes a working group tasked with:

  • Strengthening the governance framework by enhancing the quality and quantity of participation;
  • Improving efficiency (e.g. recent quorum challenges); and,
  • Safeguarding against malicious proposals.

Additionally, this proposal will outline prospective measures of accountability, inter-DAO collaboration, and robust growth tracking. The GSWG will substantiate on the details of these initiatives and run them by the rest of the DAO before their actual implementation; hence, one of the group’s mandates is ideating and overseeing potential projects to achieve the above stated tasks.

We believe that these initiatives are imperative for the longevity of the DAO, and by extension the protocol itself, especially when competitors like Aave have captured a large amount of the borrow/lend market. The sector has also seen the emergence of multiple new entrants, like Ajna and Morpho, testing out the isolated money market structure. Unlike these new primitives, Compound’s architecture makes the DAO central to the success of the protocol–it should therefore be reinvigorated and effectively cultivated. This proposal, in concert with recent initiatives like Alpha Growth’s Compound Growth Program proposal, are a step in the right direction.

Mandates

The Compound GSWG will execute the following mandates:

Review Governance Status

  • Initial: Prepare Governance Status Reports (GSR); gather feedback from community and governance stakeholders.
  • Ongoing: Quarterly GSR updates incorporating new data and feedback; recommend new strategies based on findings.

Increase Governance Participation

  • Initial: Develop and launch a campaign to encourage delegation and increase participation for current and new delegates.
  • Ongoing: Updates, incentives, and metrics-based strategy adjustments to maintain and grow active governance participants.

Enhance Quality of Governance Participation

  • Initial: Identify methods to increase high-quality participation in Compound governance such as encouraging delegates to provide constructive feedback on proposals.
  • Ongoing: Provide recommendations for fine-tuning toward efficacy and inclusivity.

Ensure Quorum Achievement

  • Initial: Identify barriers to achieving quorum and develop strategies to ensure sufficient participation to prevent reruns.
  • Ongoing: Dynamically engage delegates to improve consistent voting activity.

Protect Against Malicious Proposals

  • Initial: Ensure delegates review proposals to prevent malicious proposals from passing and maintain a quorum level that helps secure the DAO.
  • Ongoing: Identify new threats and vulnerabilities while providing recommendations on improving the efficiency, resilience, and scalability of the Compound governance system.

Composition

The GSWG will consist of three members to ensure a diversity of perspectives while maintaining operational efficiency. The GSWG will be renewed on a 6-month basis. To cover funding and operational expenses, a base stipend of $4,000/month/member ($72,000/6 months) will be provided along with $1,500/mo ($9,000/6 months) to a multisig held by the working group. In addition, $50,000 will be allocated to be used for research and data tools and services if needed. In total, the proposal seeks $131,000 in USDC.

Members

StableLab

  • About: StableLab is a governance firm focused on professional delegation, DAO framework design, and product development. StableLab works with various projects, from the ones just starting their journey to decentralization to the most prominent DeFi protocols. They are the leading professional delegate team with a track record across major DeFi protocols, including MakerDAO, Optimism, Aave, 1inch, Balancer, and more.
  • Contributions to Compound: StableLab has been contributing to the Compound Grants Program since 2022, overseeing the Multichain & Cross-Chain Domain and Dev Tooling Domain.

Arana Digital

  • About: AD is a professional governance group. The team is deeply steeped in the crypto space and has multiple years of participation in protocol governance. With delegation history for DEXs, money markets, L2s, liquid staking protocols, and stablecoins. AD brings a diversity of experience to DAOs–its members have consulted for companies like Immutable and dYdX, worked at crypto investment and trading firms, set up various validator nodes, and run educational events for university students.
  • Contributions to Compound: Arana’s team has historically contributed to Compound DAO as a delegate for two years. They have been active in assessing risk recommendations from teams like Gauntlet (examples here and here). Their team aided in initializing markets for new deployment like Scroll. Arana has also helped sponsor proposals like adding rETH as Collateral to WETHv3 on Mainnet & one of the Compound V2 Deprecation phases.

PGov

  • PGov is a professional governance group focused on providing professional delegation services across various different defi protocols. They have been involved in the governance space for over three years and have experience across various blue chip L1 and L2 projects and chains. They have been active in Compound for over a year as a delegate and two years prior as a delegate, helping submit various votes and proposals over the months.
  • Contributions to Compound: PGov’s team has been around in Compound for almost three years now. They have helped submit and propose various deployment proposals as well as community initiatives. Most recently, they’ve helped submit the deployment of initializing cUSDCv3 on Optimism and the current live Alphagrowth engagement initiative.

Relevant Previous Initiatives by Members Across Other DAOs

  • RRC-13: Delegation Incentives Program by StableLab (in progress):
  • Findings from Uniswap Delegate Reward Working Group:

Example GWSG Initiatives

The GWSG seeks to engage with the Compound community on potential reward-based initiatives to increase meaningful governance participation.

Examples:

  • Reward the delegate(s) attracting the most new voting power via delegation each month
  • Balanced scorecard approach to rewarding delegates, ensuring transparency (e.g. voting, proposition, discussion participation, service positions)
  • Delegate Race to encourage delegations and sign up of new delegates
  • Prize pools for active voters (e.g. 1-vote=1-entry or voting power weighted entry; automatic/monthly via PoolTogether lottery)

We encourage the community to engage in this process, as any rewarded initiatives must be approved in a future proposal following further research and stakeholder interviews.

Success Criteria

The below KPIs are meant to be assessed on a year-long time horizon. They will ensure that the group’s goals are measurable, aligned with Compound, and consistently enhance the overall governance framework. We enthusiastically welcome community feedback toward effective metrics.

Quorum Achievement Rate: Ensure that >95% of proposals achieve quorum to prevent reruns.

Delegate Participation Rate: Increase the average participation rate for each proposal by 50%.

Delegate Diversity: Increase the number of new delegates over 1,000 COMP by 25%.

Delegate and Delegator Satisfaction Rates: Increase the relative satisfaction levels among both Compound delegates and delegators of voting power increased by at least 25% via surveys. This will be benchmarked against a survey that we initially run at the start of the program.

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Thanks for posting this initiative. The CGP protocol ideas and dapps domain has funded a small number of governance-focused proposals over the past year which a future GSWG may find useful starting points for gathering data and identifying gaps in available data about governance activity:

SignalCorps

DeepDAO

KarmaHQ

Switching hats from CGP domain allocator to my engagement as a governance delegate, I think this is an interesting idea, but I also have some reservations:

  • Lack of community input into GSWG membership. The selection of domain allocators for the Compound Grants Program occurred through a public discussion on the forum during proposal development. In contrast, this proposal pre-selects orgs to serve on the GSWG. In lieu of an open call for members, I will just encourage the community to speak up with any reservations about the proposed membership (I don’t have any myself) or, if they like, to make the case for themselves as a candidate member of the GSWG.

  • Budget justification. Regardless of opinions on whether the proposed funding level is low/high/just right, it lacks justification as currently proposed. Roughly how many hours – of what kinds of labor – are GSWG members performing to deliver on the mandate?

  • Community input on GSWG initiatives. It isn’t clear from the proposal how much input the community will have into delegate engagement initiatives developed by the GSWG. The proposed structure gives the group operating COMP to conduct incentivization programs without further input from the community. Will there be informal input-gathering fromt the community on any such programs prior to launch, e.g. forum polling, or is the team requesting full discretion to deploy the operational COMP for incentivization as it sees fit?

These questions are more about due diligence on the proposal than about any outright objection, but I would appreciate the team’s take on these questions.

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Thanks for your comment and questions.

We are happy to hear any feedback and reservations if there’s any. We have contributed to Compound for many years and also have experience working in working groups to support governance across different domains.

We will be conducting both interviews, researches, as well as prepare governance activation programs and launch them and track them. You can find more details in “Mandate” and “Example GWSG initiaves” session.

For incentive programs, they will be seperate governance proposals that will of course have input from the community from proposal drafting to implementation

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Appreciate the initiative taken by the community members. I support the GSWG and believe it will strengthen our DAO’s operations. Successful implementation can enhance community participation in governance. Observing Uniswap’s governance initiatives, I’ve seen positive impacts.

Enhance Quality of Governance Participation

  • Initial: Identify methods to increase high-quality participation in Compound governance such as encouraging delegates to provide constructive feedback on proposals.

The Growth Program has proposed various new markets and assets. We aim to bring more opportunities to the community through forum posts. Early-stage feedback is crucial but sometimes challenging to achieve. Successful initiatives in this direction would benefit the community.

Delegate Diversity: Increase the number of new delegates over 1,000 COMP by 25%.

Many proposals require extensive DeFi knowledge to be decided upon. Providing a path for known DeFi experts from outside the community through delegation can help shape decisions more holistically.

Look forward to the initiatives suggested by the CSWG in this direction

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StableLab has been part of many DAOs, so they bring a lot of value, and @PGov has been the second most active delegate.

Here, I have outlined how delegates can be paid:

I also recommend providing some retroactive funding to the delegates who were most active in the last year.

I would love to be a part of the group or collaborate to increase participation.

I have been working on rubrics which can be used for giving feedback on various proposal types. I can share those in a couple of weeks from now.

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Hey! Msg’d on Telegram and would love to chat about this

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Have not yet had a chance to work with Arana but have been impressed in our (Reserve protocol) explorations with Stable Lab and PGOV.

Big supporter of initiaves like these to activate and unlock the full potential of the Compound ecosystem.

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We plan to move forward to an onchain vote this Friday. Thanks everyone for their feedback!

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We appreciate all the feedback and comments so far. If there are any additional comments or questions, feel free to either reach out via DM or post on the forum. We will plan for the onchain vote this Friday.

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Gauntlet supports this proposal. These initiatives should help the Compound DAO continue to grow and mature, and our experience with the co-authors, both on Compound and elsewhere, has been positive.

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We are supportive of this proposal. The scope is well defined and conscious of certain problems within the DAO and the deliverables look sufficient.

One pushback we have is the length of the program. We would prefer an initial 6-month trial period followed by a DAO-approved renewal, illustrating to the DAO any findings, achievements, and progress. The DAO can then decide whether or not to continue with the program.

We also echo @allthecolors’ request about budget justification. The current numbers seem okay, but some further clarity behind the numbers is important for expectations.

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Thank you for the suggestion. We will change to 6 month trial period indeed.

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Echoing @allthecolors questions and find these answers woefully underwhelming.

The goals and success criteria seem reasonable but there is no information the direction that will be taken to accomplish this. Could that be expounded upon?

Additionally, there is a strong precedent for DAO contributors to be paid in comp. Why does this proposal grant usdc?

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Thanks for your questions. Some of potential intitiaves that can be activated are shared in “GWSG Initiatives” in the proposal. However, in order to ensure they can be effective, we would

  1. Assess the current governance status at Compound

  2. Engage with various stakeholders to find optimal solutions

  3. Research and Apply relevant case studies

We have been effective in recently improving governance situation in Uniswap such as quorum issues. And believe the Compound Governance can be improved as well.

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Is the initial goal of the working group to produce something similar to this? Findings from Uniswap Delegate Reward Working Group - Governance-Meta - Uniswap Governance

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It will be part of it but for Uniswap, this was just for Uniswap Delegate Reward program preparation.

For this WG, it will explore others such as empowering active delegates and other intitiaves as well but will indeed require research and outlines like such

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As OpenZeppelin’s Security Adviser to the DAO, I’d like to emphasize the importance of two mandates in this proposal.

Increase Governance Participation

  • Initial: Develop and launch a campaign to encourage delegation and increase participation for current and new delegates.
  • Ongoing: Updates, incentives, and metrics-based strategy adjustments to maintain and grow active governance participants.

It’s absolutely crucial that Compound maintain an active delegate community that regularly votes, participates in forum discussions, attends community calls and provides regular feedback to vendors such as OpenZeppelin, Gauntlet and Alpha Growth. OpenZeppelin has already experienced at least one of our payment proposals failing to hit quorum due to participation issues. We should ensure that protocol operations don’t suffer similar disruptions at critical moments when passing proposals to address potential security and financial risks.

Protect Against Malicious Proposals

  • Initial: Ensure delegates review proposals to prevent malicious proposals from passing and maintain a quorum level that helps secure the DAO.
  • Ongoing: Identify new threats and vulnerabilities while providing recommendations on improving the efficiency, resilience, and scalability of the Compound governance system.

The dangers of malicious proposals is an ever-present risk for DAOs which was made more apparent for Compound in light of the goldCOMP proposal and a large mystery delegate that OpenZeppelin has recently identified. It’s incredibly important that we have an active number of delegates that scrutinize proposals, even if OpenZeppelin has already reviewed them, to ensure that they align with the expectations of community stakeholders that have the protocol’s best long-term interests in mind.

Overall, OpenZeppelin prefers to remain neutral on the question of how these programs are funded and defers to other community members such as @arr00 and @allthecolors on any budgetary critiques. We would just emphasize that these governance challenges be addressed in a timely manner and that one early deliverable for the program be a framework to define the metrics of success for achieving long-term governance sustainability and that it receive community feedback and acceptance before any future programs are approved or additional funding is allocated.

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Recently another proposal by @Gauntlet failed to meet the quorum and now going via voting again despite getting majority in support.

We believe there are more and more reasons to help support governance in the ecosystem

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Thanks everyone for the support. We will proceed to the research and follow up proposals for the governance as soon as possible

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