Request for Comments (RFC): Delegate Compensation Program
Co-Authors: @AranaDigital, @PGov, @Doo_StableLab, @Mel_StableLab
Summary Motivation
This proposal introduces a Delegate Compensation Program to incentivize active participation, enhance accountability, and support sustainable governance. Delegates are essential to Compound’s governance, but lack of compensation impacts participation and retention. We propose a structured program to ensure fairness, transparency, and high-quality contributions. If this proposal passes, we will work together and incorporate community feedback to create an application to select the first cohort of compensated delegates.
Background
Governance in Compound has been live since 2020, and the protocol has grown considerably over the past couple of years, now reaching a TVL of over $4B. There have been 375 proposals so far, and as the protocol grows, there are more proposals per month than before.
However, the number of voters has been decreasing, despite their importance, likely due to the absence of a financial incentive.
Delegate Compensation Programs Across DAOs
DAO | Compensation | Participation Requirements | Unique Features |
---|---|---|---|
Aave DAO | $5,000/month in GHO + gas refunds. | Min 20k delegation (Orbit program), 70% participation. | Administrators/Service Providers excluded. |
Arbitrum DAO | Up to $7k/month | 25% participation, 50k ARB delegation. | Points system; forum participation required. |
Lido DAO | Max $5k/month per delegate. | 70% participation, >2M LDO delegation. | Code of conduct adherence required. |
SKY/MakerDAO | Max $4k/month in USDS. | Top 6 compensated, SKY delegated. | Comp tied to participation and delegated SKY |
Uniswap DAO | $6k/month per delegate | Top 16; participation system. | UniswapDAO is a delegator, supporting quorum. |
1Inch DAO | $4,000/month if KPIs are met. | Min 500k 1Inch delegation, KPIs. | Pilot, focus on KPI-based performance. |
The program we are proposing aligns Compound with high-performing DAOs while allowing the CGWG to adapt incentives to meet the protocol’s unique needs.
Detailed Specification
Compensation Philosophy
The foundation of this program is to align delegate incentives with Compound’s overarching goals, ensuring that their contributions directly advance the protocol’s long-term success. By rewarding behaviors such as thorough proposal evaluation, consistent voting participation, and meaningful engagement with the community, the program fosters a culture of diligence and responsibility.
At the same time, equity and transparency are integral to its design. Clear criteria and measurable performance metrics are established to ensure fairness in the allocation of rewards. This approach not only promotes trust within the community but also encourages a sense of accountability among delegates, reinforcing a governance ecosystem that operates with integrity and mutual respect.
Additionally, community feedback will play a central role in shaping these incentives, ensuring they resonate with the DAO’s values and priorities. This phased approach ensures the program is both effective in the short term and scalable for future implementation.
Performance Evaluation
The program will employ transparent metrics to evaluate delegate performance, relying on quantifiable and objective criteria such as participation rates and existence of rationale for the voting decisions; these metrics ensure that delegate contributions are measurable and aligned with the program’s objectives. To maintain accountability, performance will be assessed through monthly reviews, with detailed data and insights made publicly available. This regular evaluation process not only fosters trust within the community but also provides a clear framework for continuous improvement and informed decision-making.
After the first pilot 6 months, for the next Delegate Compensation program, other metrics might be considered as well based on the feedback received and the results.
Governance and Oversight
The CGWG will oversee program implementation and performance reviews. We will monitor community feedback mechanisms to allow stakeholders to continuously provide input on delegate performance and program effectiveness. In the future, to ensure compensation structures discourage behavior contrary to community interests, COI statements might be required from delegates and reviewed by the CGWG.
Implementation Plan
The Pilot Program will run over the six months. With a budget at $300,000, the pilot will be allocating $50,000/month, which will allow Compound DAO to evaluate key metrics, including delegate engagement, governance outcomes, and community feedback. These insights will be critical in assessing the program’s effectiveness and identifying areas for improvement.
If this budget passes, we will incorporate community feedback and suggestions to structure an application process and template for delegates interested in applying for compensation. For this first pilot, there will be a two weeks application process for the interested delegates, where up to ten delegates will be selected. As mentioned we will incorporate feedback to structure this application but metrics considered will likely be COMP delegated, voting participation, and community participation piggybacking off of the Compound Dashboard’s delegate metrics here. The goal will be to cover most of the current active and engaged delegates.
Once the application process selects up to ten delegates, delegates need to pass eligibility requirements to receive the rewards, which will be decided upon in a future post if this budget passes along with the application.
Proposed Next Steps
We will wait for community feedback, launch the Pilot proposal, and once passed, start on the application process to start the Pilot program. If launched, the Working Group will review metrics, conduct monthly payouts, and receive constant feedback for next iterations.