Earlier this month, @Cattin0xwrote a Request-for-Comment (RFC) re: an Incentive System to Compensate @arbitrumDelegates. https://forum.arbitrum.foundation/t/rfc-2-delegate-incentive-system-for-arbitrumdao/15720… This is a very important topic so I want to use this tweet to pull on some threads.
First things first, why do we even need to compensate delegates? Well, the reality is that people who spend time and energy on governance work need to be rewarded .. with money. Organizations who pay professionals to do governance work already exist — (e.g,@labsGFX@StableNode@Blockworks_@flipsidecrypto).
Unsurprisingly, these orgs are the most active in the forums and on @tallyxyz when it comes time to voting on-chain. In the grand scheme of things, however, governance participation is still very low. So, what do we do?
We create a system that incentivizes quality participation & pays delegates! As Cattin writes in the RFC:
“it is crucial to discuss establishing an incentive system that provides delegates with constant, attractive, and predictable rewards. To scale governance, it is essential to maintain delegate activity, who, through their voting power, guide and define the course of governance.”
@MakerDAO is an interesting case study for how to compensate delegates. The DAO uses (1) a compensation formula + (2) a group of elected facilitators.
(1) The formula is C*min(1,MKR^q/T^q). https://mips.makerdao.com/mips/details/MIP61… The table below breaks down parameters.
(2) GovAlpha is a governance core unit of elected facilitators. They track delegate participation in polls and assign delegates a score based on the quality of their vote e.g, whether the delegate provided reasoning. https://mips.makerdao.com/mips/details/MIP39c2SP3… More parameters:
