Support Event Horizon IDVs

[DonofDAOs]

Proposal: Support Event Horizon IDVs
Authored By: Event Horizon, Jordan Karstadt (DonOfDAOs), CGWC (Arana, PGov, StableLab)

Introductory Context: Event Horizon is a public-access, community governance pool. Through Event Horizon, smaller, retail users vote to decide how the jointly led pool votes on base DAO proposals. In this right, Event Horizon serves as a platform for otherwise unheard voters and an onboarding platform for new voters and governance participants. Event Horizon has been active in the Compound ecosystem since December of 2023. Learn More

IDVs: Through Event Horizon Incentivized Delegation Vaults (IDVs), any $COMP token holder may delegate their tokens to the Event Horizon community pool and begin earning reward emissions.

Community Pool: This community pool is governed by a swarm of ~200 AI agents, each bespoke to the preferences of a human actor.

Agent Creation Process:

1. Template Selection: first the user selects one of three base personas for their agent:

   

2. Fine Tune With Likert Scale Questions: Each template persona is then refined with a unique set of Likert Scale questions such as:
   

   

3. Continued Evolution Through Conversation: Users further customize their agent’s persona through conversation and memory augmentation.
   

   

4. Agent Utility: Once the agent is created, the agent will vote on all future proposals in proxy of the user / human creator. Users may interact with the agent in many ways including to: learn about current proposals, understand existing delegate sentiment found through forum discussions, find suggested proposal improvements, and more. For every proposal, the Agent will provide the user with a detailed rationale explaining its decision.
   

   
   
   
   
   
   
   
   
   
   

Benefits Beyond UX: The current delegation supply within Compound governance is both stagnant and narrowly sourced. To foster broader, more diverse participation, it’s critical for the DAO to begin engaging directly with retail token holders on governance matters. Event Horizon addresses this challenge through IDVs — a simple yet effective mechanism that simultaneously unlocks yield on traditionally idle, non-yield-bearing DAO assets and drives retail involvement in protocol governance. IDVs allow users to contribute to a public delegation pool. Event Horizon tracks contributions and emits airdropped token rewards to participants on a bi-weekly basis. Rewards are distributed proportionally based on each user’s dollar-valued delegation. For example, if 10 users each delegate $10, each receives 10% of the emission.To date, emissions have been funded entirely by Event Horizon via grants and DAO compensations — passed directly to users. Currently, vault participants can earn ~17% APR on select DAO assets, transforming passive token holding into an active, rewarding role in decentralized governance.

Proposal: Event Horizon’s capacity to fund the vaults is the limiting factor on the utility of the vaults driving higher retail participation. However, the dynamic is simple: increased rewards drive increased delegation. By boosting the Compound IDV, the DAO can activate greater retail token participation and governance engagement. IDVs function similarly to LP yield farms: users stake tokens (or in this case delegate tokens) and receive airdropped rewards in return. As one of the only yield-generating opportunities for $COMP holders, IDVs offer a compelling incentive to move tokens off the sidelines and into active governance. By boosting incentives for IDVs, Compound DAO can create a strong economic pull, further encouraging sidelined $COMP tokens to participate in governance. We propose a $30,000 allocation over 3 months to support the Compound IDV. This budget enables up to $4 million in delegated COMP at an estimated 2.5% APR. While the final APR will adjust based on participation, 2.5% is a conservative starting assumption in a landscape where COMP currently offers 0% native yield.

Retention: Following the conclusion of this incentive program, the Event Horizon team will continue funding the IDVs independently. While this may result in a reduced net yield, delegator retention is expected to remain high due to three key dynamics:

1. Low Opportunity Cost: Most DAO tokens today offer little to no native yield. This leaves token holders with limited options for earning on their assets. Even if the IDV APR compresses post-program, it will likely remain the most attractive destination for idle COMP—providing a novel source of yield where none previously existed.
2. General Stickiness: Once users delegate under any context, it tends to be a durable (often set and forget) decision. This is so much the case, that one of the most failed endeavors in DAO governance are redelegation campaigns. In fact, stickiness is so high that even fairly large protocols, such as AAVE, see 93% or more of their top delegates completely inactive, yet their delegations remain. Both the delegators and delegates have moved on, yet absent any compelling reason to adjust delegations, the VP allocation remains frozen in time.
3. Anecdotal Experience: We have run a small test case of incentivizing delegations and to date have received >$27,500 in delegations following $250 in emissions. This establishes a cost-to-value ratio of 110x. In other words, it cost Event Horizon about 0.9% of the delegation amount in rewards. This is well below the 2.5% APR target we’ve set above. Event Horizon has yet to see any notable change in the sum amount of delegated assets as a result of undelegation. The most common mode of attrition is simply users selling the asset itself through trading behaviors. This has generally been seen as low impact. And, it’s a mechanic that can function in both directions: if a user purchases more tokens, we see an increase, and if a wallet sells and then repurchases later on, their delegation repopulates.

Rollout: Event Horizon has already developed a mechanism to track net delegations and automate reward emissions on an epoch basis. To facilitate the $30,000 in $COMP rewards would be divided into two allotments. The first allotment is to be distributed at the inception of the program to the Event Horizon team, and the second will be distributed to the oversight committee for future issuance to EH post mid-program check-in (detailed below).

Assurances:

1. Mid-Expenditure Check-in: The proposed $30,000 emission budget will be divided into two equal tranches. Tranche 1: Immediately distributed to Event Horizon for IDV emissions. Tranche 2: Held in custody by the Oversight Committee (OC) until a mid-program review. Once 90% of Tranche 1 has been emitted, Event Horizon will initiate a check-in with the OC. At this point, the OC will verify that the key KPI of a minimum of 36,000 COMP in delegations has been garnered. If KPIs are confirmed, Tranche 2 will be released for continued emissions. If KPIs are not met, the OC may decide to return the remaining tranche to the Compound treasury.
2. Oversight Committee: Event Horizon has the capacity to push the voting pool into an abstain position or to forgo voting altogether. As an added assurance, Event Horizon will establish an oversight committee composed of four signers: The CGWG members (Arana, PGov, Stable Lab) and DonOfDAOs. Further the OC will be tasked with assessing if KPIs have been met during the mid-expenditure check-in. All decisions will be made on a 3-of-4 basis.
3. APR Cap: Reward emissions are set to be distributed at a maximum rate of 1/12th (~$2,500) per week. However, APR caps are particularly salient during the early periods of the program as there will be an adoption and awareness curve during which participation will need to ramp up. Through this period, we want to ensure that rewards are not overly allocated to a select few early adopters. To prevent this, we will set a cap of 15% APR boost whereby if any given distribution exceeds an annualized APR of 15%, Event Horizon will reduce the emission for that epoch to ensure boosted returns do not exceed the 15% threshold. Further, we propose that this cap reduce overtime accordingly: Months 1 and 2: 15% | Month 3: 7.5% | Month 4 on: 5%

[PGov]

Overall, this should be a pretty interesting experiment to counter some voting issues today and for a relatively low cost. We think that the midpoint check in and oversight veto committee makes sense and gives us some assurance.

The APR cap is also good so we’re not overspending on incentives. From the CGWG side, we think this is a pretty novel approach and something that is certainly worth exploring once. Likely, there will need to be some adjustments but the request and structure are very reasonable.

[AranaDigital]

We are excited to collaborate with Jordan and the EH team to incorporate another medium for increasing the sources of voting power. It’s evident that the present cohort of active voting power is sourced largely from core contributors, VCs, and as of late, 250k COMP is delegated directly from the treasury. Compound DAO would therefore benefit from an additional, diversified source of voting power, namely from smaller groups of token holders and retail investors. Governance resilience is in part measured by how robust the delegator set is—as opposed to simply the set of delegates.

Nonetheless, this proposed structure is experimental, but the tranched nature of the stated incentives makes it a KPI-driven program, so expenses will be adequately controlled based on how successful the first batch of capital is in drawing voting power. This setup can also become more self-sustaining over time as a COMP staker solution develops—delegated tokens to the EH collective could eventually earn protocol-based revenue.

[Avantgarde]

Thank you @DonofDAOs and the @EventHorizonDAO for this proposal. It is an interesting approach to try to engage retail holders and diversify governance participation.

All in all, we view this as a potentially high-reward experiment using an innovative solution with reasonable safeguards and controlled risk. We think having a sustainable, community-governed delegation pool could be a valuable thing for Compound.

As we see it, the pros are that it directly incentivises delegation by potentially activating dormant $COMP tokens, using innovative AI agents that could enhance user experience and engagement. The requested funding is relatively modest, and the inclusion of phased funding, an oversight committee, KPI check-in before committing full amount, as well as the APR cap provides good risk mitigation.

Our primary concern revolve around the long-term sustainability of participation after the initial incentive period concludes. The core value prop from a user perspective is boosted yield, and the “stickiness” argument relies heavily on inertia following the likely reduction in APR post-program, which might not hold if significantly better yield opportunities arise elsewhere (i.e., staked COMP).

Leaving some questions below:

• What are the potential risks around the AI agent models? Manipulation, security vulnerabilities, or unforeseen emergent behaviors in the "swarm” if any? What about the process for governing the agents themselves?
• The OC technically introduces a potential point of centralisation over EV - how can we monitor the OCs actions/will EV communicate when the OC has to interfere?
• The mid-program KPI of 36,000 COMP delegated seems relatively modest compared to the $4M capacity mentioned for the $30k budget. Ambitious enough?