We think smaller active delegates should definitely be considered, while of course larger delegates that are equally as active should be as well. It makes sense to cap out a total budget at a start as opposed to an uncapped budget we think especially for the first trial run and then increase numbers over time if it fits well. Additionally, in the future, a second iteration of underrepresented delegations makes sense to us.
4 Likes
Thanks to the StableLab team for putting this proposal together!
These are important conversations at a critical time in Compoundās growth and development. As things stand, Compound has been losing market share to competitors in the Lending markets. Many DeFi lending markets have rebounded significantly since bear market lows (Aave, Morpho, Kamino); in contrast, Compound has drastically lagged behind the competition, seeing largely immaterial and inconsistent growth since 2022.
While delegates are not completely to blame for this situation, no novel innovation, active development, or substantial adjustments to Compoundās core business model have been made over the past 18 months. In this context, we believe that if Compound is to begin incentivizing delegates, itās worth re-evaluating what has and has not worked within the DAO and whether increased participation or more drastic change is needed.
Pros:
- Delegate engagement was a concern following the Humpy proposals; this at least ensures delegates are motivated to participate.
Cons:
- Cost: While the monthly amount is comparable, our understanding is that the annualized budget is more than some of the comparable DeFi DAOs (excluding Uniswap). A $600,000 annualized budget for delegates puts us significantly above Lidoās budget ($300,000) and 1inchās budget ($100,000).
- Inclusion: Weāve seen this before and above in the thread, where smaller delegates, understandably, can push back against proposals that do not include compensation for all delegates. As an active delegate in several DAOs, Gauntlet can relate to both positions. However, if the DAO is to contain the budget, more delegates participating at this high-level of compensation would inherently mean a significantly larger budget will need to be allocated, thus something will have to be given.
- Governance Voting should decrease, not increase: Since June, ~85% of the total governance proposals have concerned parameter changes (Incentives, collateral assets, supply caps, etc.). Many of these concern Gauntletās operations as a risk manager. We expect delegate involvement in routine voting to significantly decrease once the Alternate Governance Track is released (currently testing on OP).
A couple of alternatives to proceeding with the proposal as-is:
- Review Post-Alternative Governance Track Effect
The DAO can continue to review and debate compensation packages while waiting for the delegate lift after deploying the alternative governance track. While delegate involvement should be encouraged regardless, it may arise that less compensation is required to drive engagement than proposed here.
- Performance-based Compensation
As such, rather than risk bloating delegate engagement with a significant incentive budget, what if we created DAO-level KPIs for engagement to align the DAO with long-term goals, such as winning back total market share, increasing revenue, expanding TVL, etc.? A long-term benchmark might help align and encourage more active contributors, rather than just participation.
Regardless, we look forward to discussing the merits of compensation in more detail.
3 Likes
Does paying delegates actually increase activity? I donāt know how this would help smaller delegates join but would gatekeep them.
1 Like
Building on the recent feedback and discussions, weād like to share a few thoughts from our perspective.
First, as @PGov mentioned, conducting a pilot phase to gather data and assess the programās effectiveness before considering the next steps is reasonable. This approach ensures that future decisions are informed by concrete outcomes and insights.
Additionally, promoting delegate diversity is vital for enhancing the long-term quality of governance. A broader range of delegates brings diverse perspectives and ideas, enabling more balanced and inclusive decision-making.
With this in mind, initiating a second Delegate Race could be a valuable step. Such an initiative would not only support active but underrepresented delegates, but also foster greater diversity within the ecosystem.
Also, weād like to expand on a point raised in our previous comment regarding Community Participation. The proposal states: āMetrics considered will likely be COMP delegated, voting participation, and community participation piggybacking off of the Compound Dashboardās delegate metrics here.ā
However, Compound Delegate Analytics Dashboard primarily focuses on Participation Score, Voting Impact Score, and Voting Before/After Threshold.
Do you have any ideas on how the community participation could be incorporated into the scoring system? If so, weād love to hear them.
Weāre looking forward to hearing your thoughts and continuing this constructive discussion. Thank you!
1 Like
Here are a few comments on the program
Good things:
- The Franchichasier contract has proven to be helpful in moving votes across the finish line which had failed in the past.
- Itās good to pay members for the time they are spending and the value they are adding. Therefore, definitely, the active delegates should be rewarded. Below, we share some ideas on how āactiveā should be considered.
Things to Improve:
- The delegates donāt have enough skin in the game. We feel that for critical decisions, which determine the future of the DAO, there needs to be full long-term alignment.
- The number of votes per delegate should be reduced so that they can help move the vote across the finish line but not decide on the outcome of the vote. With 400K as the proposal passing votes, we should limit the total franchise votes to a maximum of 120K or so.
- A delegate evaluating and sharing detailed feedback on a couple of proposals is much more valuable than delegates just doing on-chain voting without detailed feedback.
Suggestion:
- We have a few key areas in the DAO, and itās crucial to ensure we have subject matter experts in these areas to provide feedback. Therefore, we should consider integrating detailed feedback into the evaluation process or creating a separate role for it.
- Some of the areas we might consider include:
- New Tech initiatives and smart contract security
- New Market proposals and Collateral proposals
- Governance Updates
- New Partnerships and Reward Distribution
- Growing TVL and Treasury both
- We should encourage delegates to critically assess any proposals presented on the forums, request additional information, and provide suggestions on how the proposals can be modified to move forward.
- The intent should be to reach a concrete decision on the forums, ensuring that contributors receive actionable feedback promptly, ideally coming to a conclusion within a maximum timeframe of 2-3 weeks.
Giving detailed, objective, and accurate feedback, and coming to a conclusion in a timely manner is the most critical part of the governance; we should adjust the program to accommodate this necessity. Moreover, providing this feedback demands considerable time, so itās essential to ensure that delegates (or SMEs) are adequately rewarded for their efforts.
2 Likes
I agreed with a lott of your points but, uhhh, no on this? Votes are votes, delegations are delegations. This seems to go against the idea of delegation based voting governance system (open, transparent, token holder decision based). Why would anyone support this?
if you want more votes buy more COMP or provide a reason for people to delegate to you
respectfully
2 Likes
Maybe we didnāt explain well. Delegated votes should remain the same, and each vote delegated should be considered.
We are talking about the new votes that are granted via the franchiser contract. These should be limited in amount so that the total of those votes can help a proposal reach the finish line in case of low participation but donāt influence the decision.
Please refer to - Compound Delegate Race Application - #25 by AranaDigital
1 Like
If you paid me Iād check the forum more often (not a delegate but I assume the thinking is the same), that being said I think itās a crazy idea. Let delegates be the same as board members of companies, there because they own a lot of the stock not because they are there for the money. I admit some of the positions are paid but I think COMP going up plus the staking rewards is good enough.
1 Like
This proposal appears to be specifically designed for a select group of delegates who were granted COMP tokens from the treasury under the premise of incentivizing governance participation. However, this arrangement creates a situation where only these delegates (benefiting from a subsidized allocation of COMP) would receive compensation for voting using tokens they did not acquire through standard means.
When StableLabs initially proposed the Delegate Race Application, there was no disclosure of fees or compensation tied to voting activity. The current proposal would effectively allow delegates awarded COMP tokens at no cost to monetize their voting power derived from this subsidy. This dynamic raises ethical concerns, as it could be construed as a misappropriation of the DAOās resources for personal gain.
3 Likes
delegated*
I found it here. Also mentioned: āWe encourage the community to engage in this process, as any rewarded initiatives must be approved in a future proposal following further researchā¦ā
So, it appears he is following the process.
2 Likes
Man if we start paying delegates Iāll run for delegate on a platform of not selling any COMP token paid to me and voting against any raise in delegate pay/compensation. Whose with me?
3 Likes
Thank you to all those who helped contribute to this discussion over the past few weeks. After garnering feedback from DAO members, we have outlined some additional details regarding the compensation program. If there are no major oppositions to the below setup, we will move forward with an onchain vote early next week. If the onchain vote is successful, then we will begin administering the application process immediately, hoping to get the delegate rewards up and running between March - August.
The criteria in question will differ for being admitted to the delegate compensation pilot program vs the compensation attained while partaking in the program.
General Program Details
Overall Budget: $288k
Duration of Pilot Program: 6 Months
Total Delegates Selected: 16 (divided into 2 tiers, with 8 per tier)
Part A: Selection Criteria
For admittance into the pilot program, the below delegate score will be utilized:
You may view the up-to-date delegate rankings here.
One of the predominant pieces of feedback we received was to not heavily bias the score towards delegates with large amounts of voting power. This can act as a double-edged sword, where large delegates in theory should be rewarded for their proportional contribution to meeting quorum and thereby prompting the further increase of protocol TVL, for example. To address this concern, the voting impact score, which is a function of a delegateās voting power, remains capped at 20% of the total delegate score.
We also decided to keep the voting impact score present in the calculation since tangible influence on protocol metrics like collateral TVL was an additional concern posed by delegates, where voters should be rewarded for increasing protocol growth in a more objective manner. For the pilot program, we will solely use delegatesā impact on TVL for new markets/collaterals as the primary metricāthis may change in future iterations of the program. Impact-weighted scores are scarcely used by DAOs today for paying delegates, and they inherently contain a bias towards those with more voting power since more VP means higher impact on the passing of a proposal. KPI-driven compensation is something that DAOs should start trending towards, at least to a degree, hence why we are including this metric.
In accordance with compensation programs instituted by other DAOs, weāve kept the primary weight on the delegateās participation scoreāretaining that at 60% of the total score. We strongly believe that this weight should account for at least 50% of any compensation program since high rates of participation directly dictate how well a governance system is working.
Delegates for this pilot will be selected solely based on their delegate score and will be divided into two tiers. The top 8 entities with the highest scoreāthat apply to the programāwill fall under Tier 1, and the following 8 will fall under Tier 2. Relative to other protocol DAOs, this program is indexing on not only rewarding larger, active delegates but also attracting a new cohort of voters.
If the proposal to pursue this program passes, we will be releasing a forum post thatāll act as the place to submit your application. Just because a delegate has a high score does not mean they will be automatically inducted into the program; everyone must apply. A 7-day period will be granted for everyone to submit their applications, which will ask for basic details about the applicant and prompt them to set up a delegate communication page to articulate their voting rationales. To reiterate, admittance into the compensation program will be solely based on your delegate score, and the top 16 applicants will be eligible for this program.
Part B: Compensation Breakdown
Monthly compensation will be divided into two payment types: base and bonus rate. Base rate is the amount a delegate admitted into the program will receive for voting on onchain votes. The bonus rate is the amount a delegate will receive for posting rationales regarding their voting decision on their respective delegate platform.
Tier 1
-
Monthly Base Rate: $3000
-
Monthly Bonus Rate: $1500
TOTAL = $4.5k*8 delegates = $36k/month
Tier 2
-
Monthly Base Rate: $1000
-
Monthly Bonus Rate: $500
TOTAL = $1.5k*8 delegates= $12k/month
Monthly payments will be delivered by the Governance Working Group after the conclusion of each month. The base and bonus rates will adjust in proportion to monthly voting %. In other words, if a month has 5 onchain votes, and a delegates votes on 4 proposals, then the base rate compensation will be (4/5)*Base Rate.
The same principle applies to the bonus rate, however, in order to attain the bonus fee, delegates must have voted on the proposal associated with the corresponding rationale. For example, if a delegate does not vote on āProposal Aā but issues a rationale for it, the delegate will not attain the bonus rate since the bonus is contingent on having voted for that proposal. Finally, to attain bonus rate points, a delegate must post their rationale behind a given proposal within a week of that proposal concluding. In other words, if a proposalās voting period ends on February 12, then a delegate has until February 19 to post a rationale.
To remove subjectivity from the bonus fee process, we will be requiring that all delegates admitted into the program provide a rationale for ALL onchain votes, including the customary market updates recommended by teams like Gauntlet. There isnāt an expectation for delegates to express their rationales with verbosity. For basic votes, itās okay if delegates express why they voted in a particular manner with just a sentence or two. However, for the introduction of important markets, organizational changes, alterations to governance contracts, selection of service providers, or the movement of treasury funds, we do expect delegates to provide more comprehensive rationales. Although there isnāt an overt criteria for judging the quality of rationales for determining the pilot programās compensation, there is a social expectation that paid delegates engage actively during important proposals. It may also be the case that a rationale-based scoring system is implemented in the futureāso delegates keen on partaking in future iterations of compensation initiatives should do their best to engage in active forum discussions.
We hope that the expansion of the delegate pool to 16 members helps attract new participants. The onchain vote to fund this program will be live early next week, given no major issues arise in the meantime.
5 Likes
This is a great delegate program! Weāre glad to hear that the number of delegates to be admitted has increased, we believe this will also help attract new talent to the DAO.
One question about the rankings:
Youāre considering the 6-month ranking, correct?
Thank you!
I actually like Gauntletās view here a lot! I agree that paying people to vote focuses them in on the voting, not the participating part of governance. And participation means talking on forums, talking on twitter, building tools to support the ecosystem, actively finding new actors to bring into the eco.
I think something like delegate grants could be interesting - if you continue voting + if you complete grants, you get paid!
Blockchain at Berkeley, for example, has plans to build cool tech and dashboards for Compound, but it has internally been deprioritized because of paid projects with other protocols. This, I admit, is an internal issue, but if we were to be compensated to take initiative, we would happily oblige.
Correct, the rankings will be based on the trailing 6 months.
Various types of participation are important to considerāthe rudimentary aspect of governance though boils down to proposals and voting. Standardization in programs is important, so weighting general voting participation rate to 60% we think is quite fair. Things get muddled quickly when there are too many variablesāgrant programs themselves require their own initiatives. Of course the other 40% of the delegate score weight also relates to voting but applies a higher degree of sophistication to quantifying voting impact. This should help make this program more robust than some other DAO compensation initiatives.
As far as adjacent activities like grants go, there are other media through which groups can make an impact. For the stated grant example, Iād encourage the team to check out CGP, which has been running for some time:
1 Like
Sorry, we intended to ask whether we should refer to the Delegate score (the last 6 months) or the Delegate score table to know our score.
From your answer, we assume youāre using the latter. Is it correct?
We believe using the second table may not be ideal if the goal is to include relatively new delegates. For instance, we started participating in August after this post, specifically we got motivated by your message:
The second table suggests we hadnāt voted between February and August, when in reality, we hadnāt even started. This effect would be significantly reduced if the 6-month table were used instead.
Thank you for your quick response!
Apoligiesāitās the first table, so trailing 6 months is the one weāll use. We do agree that recent contributions are more indicative of active participation than total participation.
1 Like
I still dont undertsand the basis of this program.
Paying delegates seems odd when the treasury isnt growing much.
Can someone outline explicitly why this is needed? Im not getting it
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The first step in understanding the need for this type of program is recognizing the risks of not having it. If delegates arenāt compensated, they have to bear the full cost of being effective, which includes:
- Paying gas fees
- Staying up to date with everything happening in the DAO
- Keeping track of developments in the broader ecosystem
- Learning and studying the protocol
- Providing constructive feedback on proposals
- Flagging proposals that could harm the DAO while benefiting their authors
- Conducting deep analysis and voting on all proposals
Without compensation, delegates are left with two choices:
- Reduce effort to save costs ā This leads to voting on only a fraction of proposals, often with little research or context.
- Find alternative ways to cover costs ā Some methods are legit, like offering services to the DAO that align with the delegate role, but others are bad for the DAO, such as accepting bribes to vote on harmful proposals or approving initiatives that extract value from the DAO.
Ensuring delegates are properly compensated allows them to do their job effectively, cover their costs, and stay incentivized to improve. But even more critically, crypto is a hostile and decentralized environment where well-funded, organized groups actively seek to exploit weak protocols. Without dedicated, well-supported delegates voting on time, DAOs are vulnerable to governance attacks designed to drain funds. Ironically, this discussion is happening here, as Compound was a clear example of such an attack last year:
https://research.despread.io/compound-finance-governance-attack/
In the end, the choice is simple: compensate delegates to do their job well or force them to find their own funding, which may ultimately put the DAO at risk
3 Likes
Incentivizing delegates is essential for an efficient DAO structure, but I believe the first step should be minimizing their tasks. To create a decentralized delegate set, their responsibilities need to be simplified. Itās similar to validators who validate from homeāit has to be easy. Delegates should have only one job: allocating responsibilities and tasks to centralized/specialized groups while ensuring the DAOās budget is distributed correctly.