Delegate Compensation [informal poll]

Good point. I updated Delegate reward proposal - Google Sheets to include a parameter for the minimum number of delegates. This caps the compensation of delegates, even if they receive overwhelming support in terms of delegated MKR. I also switched the exponent to 0.5 because I think GovAlpha can probably do a good job preventing a sybil attack of small MKR weight delegates.

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I like the points made in the rest of your post. As for this point, I’d say that other Maker employees have a primary job of doing something besides communicate on the forums and vote. So I don’t feel the contradiction.

For example, we want SourceCred to incentivize a member of the Oracle team to communicate on the forums. However, if a delegate is already getting rewarded for communicating on the forums and voting through a separate mechanism then it seems to me that SourceCred earnings would be redundant. We’d be paying a delegate twice for the same work.

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My point is that you (and every other voter, delegate or otherwise) should be able to cast informed votes without being informed of everything at that depth level. I do not think this has ever been necessary in the past, nor should it be in the future.

Delegates need a good high level overview of the moving parts of Maker but that is not what is being suggested here.

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I think part of a delegate’s job is to offer a strategic vision and direction for Maker, too. Maker badly needs focus, and having a menu of options to travel between for that is a large part of what delegates are for.

I cannot speak for others, but I am not pitching my personal judgement as the reason to delegate MKR to me. I am pitching a vision of Maker integrating with the real world economy as a means of scaling to profitability and delivering upon its social mission.

That doesn’t mean passively waiting for @prose11 to nudge us that there is an executive that needs to pass (which the most recent passed within hours of significant MKR delegation). Any VC can read an executive or poll and vote on it 5 minutes later.

Delegates should be active thought leaders in the MakerDAO community. And MKR holders should judge them upon both the direction and the results. Otherwise, we’re all just running around like chickens with our heads cut off.

We don’t have full-time legal, marketing, or compliance professionals working directly for the DAO. Think about that for a moment.

Tiny startups have former SEC chairs or CFTC commissioners and law firms on retainer and marketing/lobbying budgets. We are the emperor that has no clothes and we don’t have a lot of time to correct that before someone notices.

We need high-level partnerships or we’re not going to make it. Our window of opportunity is closing, and if we aren’t working our delegates like dogs to get us where we won’t be picked apart by some government agency or stablecoin competitor, we have made a huge mistake.

We’re whistling past the graveyard here. Delegates aren’t just here to make sure it doesn’t take 3 weeks to distribute CU budgets. If all they did was click “vote” on vote.makerdao.com then they shouldn’t be paid. Delegates aren’t supposed to be executives. But they are supposed to make sure the protocol doesn’t just sit in place and wait to be outcompeted.

Perhaps that’s my own read, and naturally my view will be biased on this topic. Delegates are supposed to do much more than just mash a “vote” button to pass an executive.

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This :point_up_2:t4: being a Delegate is no country for Old Men :wink: on a Sunday when I would prefer to be at the Beach sipping on piña coladas–I choose to review a new MIP6 Application on what folks are pitching as the “next big thing” to the Maker Community. Indeed–personal preference–but it is what I do.

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I think delegates have taken on a bunch of extra hats to wear that are beyond their mandate.

What I would personally expect from a delegate is to be well-informed on major issues, vote punctually to prevent governance attacks and vote in line with their stated long term vision for Maker. That’s it and this is very much in line with the posts introducing delegation in Maker.

If you feel we need strategic vision and leadership, that’s fine but there should be dedicated CU-based roles for that. If you feel we need to work on our compliance, legal or marketing side, that’s a CU that either exists or needs to exist. Partnerships come from the growth CU and so on. If you want to take up one of these other challenges, then I don’t see why this isn’t going through the usual steps of proposing a CU, securing funding and then working on it.

Delegates are free to offer their thoughts and guide the community if they wish to but that’s not part of their role. And with tens of delegates expected in the future according to GovAlpha, I doubt very much if there will be renewed focus as a result of that many thought leaders in our DAO.

Finally, I also want to point out that there is also a big range between just “mashing the vote button” and spending 40+ hours a week on Maker. It is a false dichotomy to say we have to choose between these two.

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Probably true.

I pretty much agree as well.

I think with your viewpoint the community would miss out on the contributions to vision, long term strategy, and basically feedback required from voting DAO to CUs to direct activities. I think delegates could be ideally suited to this.

Honestly though I see these as pretty complex issues and while I could see a kind of delegate CU forming to address and distribute some of this. Based on my own first look at the ‘state of MKR’ and you will see my comments on this in the future when I look at distribution of MKR both in holder wallets and within govenrance the real issues stand out dramatically.

This whole delegate thing while will bring about some change isn’t really going to address the core issues revoloving around MKR distribution gini being pretty bloody horrible.

Case in point because I have this now.

Top 100 wallets (excluding AAVE, and 84K MKR) have 80% all MKR
next 400 wallets 15.6%
last 39,500 < 5%

Really think about this when considering governance.

Also if you look at beta.mcdgov.info at voting wallets and start doing some cross checking. The top 100 wallets there have over 80% (almost 90 but I am eyeing the numbers) vote on something in the past 4 weeks. The top 17 wallets there hold over 90% the total voting MKR.

We are flopping around on compensation. I ask a basic question. If we governance goes for compensation what exactly are we getting in exchange?

I am still waiting for a forum post on some suggested changes to delegation (key points). Maker makes formal delegate positions (slots) and delegate candidates run and are elected to these slots by ranked choice voting. A candidate must achieve a minimum MKR voting for them to get a slot (which matches what is required for them to be considered as a candidate). Also governance should define a minimum elected delegate performance metric. And finally no delegate should be allowed to vote more than some maximum amount of MKR defined by governance.

Say minimum MKR delegated
minimum vote/executive participation.

You all will eventually see that forum post pop up. But I am still digesting @Spidomo post regarding potential issues with compensating delegates.

https://forum.makerdao.com/t/informal-poll-potential-issue-with-protocol-paid-delegates

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We may have passed each other by. I thought delegates would only be paid through Sourcecred from a separate delegate compensation fund. Only public speech pays, private background speech doesn’t and delegates compete with each other for the more valuable public communication.

I respect your positive attitude, but in this case I’d like to be the grumpy cat: seeing the salaries, I don’t think that a prominent Oracle or Smart Contract programmer would be particularly motivated by a few hundred, maybe even a thousand dollars for his contributions via Sourcecred. If I were them, I would value my free time more, but that’s just me.

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I think we should definitely revisit this idea in the future. I think it got shot down due to lack of voter delegation.

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I’ve settled in on “No” for “Should delegates be compensated for their time?” although I’d rather have had an Abstain choice (partly because the question doesn’t specify who provides the compensation).

I’m a bit troubled by the idea of Recognized Delegate becoming a paid position with the DAO like Smart Contract Engineer or Technical Documentation Writer or Protocol Integration Specialist. Those kind of roles do things the DAO needs done, generally under a Core Unit funded as determined by MKR holder executive votes. There is something weird about Professional Voter as a paid position.

I appreciate the view that delegates (at least those who have earned recognition) could become sages, protocol visionaries guiding us through the darkness. Some may genuinely be that and attract delegated MKR as a result.

I guess I just have a simpler view of all this: If someone respects you enough to delegate their MKR voting power to you, then you get more MKR voting power.

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Sorry if this has been covered (its a long thread now!) … but what’s stopping me from just delegating to myself and yield farming my MKR without really doing anything? This seems gameable.

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It is gameable, but the game is not very worth playing,

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I wanted to comment to explain my current thinking about delegate compensation. I’m still thinking about this in general, so please don’t take the following points as unchanging.


Recognised Delegates should be compensated

As a few of the delegates have mentioned, a lot of hours go into making informed decisions. While I agree that in an ideal world informed voting within Maker would be accessible to all MKR Holders minimized time-costs, I think that where we are now, this is not something we can guarantee.

As some have mentioned, delegates will be offered misaligned incentives at some point from external actors. Drawing regular compensation from the protocol increases the risk of accepting bribes from external actors, because if discovered, delegates would forfeit the regular and sanctioned income from their position as recognised delegates.


Compensation should come from the Maker Protocol rather than delegating MKR Holders

Paying delegates from the protocol allows us to tax the non-governing majority of MKR tokens and compel them to share the cost of effective governance. However, doing this does also mean that individually voting MKR Holders are subsidizing delegates. On balance though, there is more inactive MKR than there is active MKR.

Having the protocol pay the cost also incentivises delegation to a greater extent than if MKR Holders had to pay their delegate directly. This is perhaps reasonable for large MKR Holders, but is less ideal for smaller holders.


Amounts should be more on the level of ‘stipend’ than fulltime employment

I’d initially imagined 1-2k DAI per month for delegate compensation, perhaps 3k at the outside. Combined with Sourcecred, this should effectively subsidize the time spent by the Recognised Delegates to keep up with the happenings at Maker.

While the DAO may at some point want to employ delegates explicitly as an ‘executive team’ complete with executive level salaries, I don’t believe we are currently at the point where that is advisable. I would much rather give it a year or two to allow us to explore how delegates evolve without huge incentives.


We should wait at least a few months to see how delegation and MKR distribution settles out

It’s almost certainly premature to make binding decisions at this stage. By all means, the delegates and GovAlpha will be thinking about the problem, but it definitely feels early to be making explicit proposals when we’re not sure where the setup will be in the near future.


Self-election is a feature, not a bug
A couple of people have called out the self-election of delegates as an issue. Primarily in the case where a large MKR Holder fulfils the requirements of a Recognised Delegate in order to receive the delegate compensation.

Although it may seem strange, this is actually a great trade-off for the DAO. The Recognised Delegate requirements are written such that the delegates are required to participate and communicate consistently (and will be modified to ensure this remains the case if delegates attempt to work around the requirements). If 200k total MKR becomes consistently active and communicative and offers smaller MKR Holders multiple new delegate platforms, then this increases the security and decentralization of the protocol in meaningful ways which are absolutely worth paying for.


Total cost should be limited

Naturally, because there is no effective limit to the number of recognised delegates, compensation should be limited to a specific amount which is distributed among the delegates relatively according to some formula, threshold or metric.

This is the part that becomes quite complex, and is where most of the effort behind putting together an effective proposal will fall.


Delegates voting their own compensation

A couple of people have brought up the conflict of interest here, and yes there is obviously room for abuse. However, the balance to the delegates power is the Core Units themselves, in this case primarily GovAlpha (and any other future Governance Core Units.)

GovAlpha has open lines of communication with many larger MKR Holders that either have delegated, or are planning to delegate. In the event of the delegates proposing abusive compensation for themselves, one of a few things can happen:

  • GovAlpha can prevent or delay the proposal from going to a vote.
  • The Protocol Engineering Core Unit can refuse to implement the change in compensation.
  • GovAlpha can reach out to the known larger MKR Holders and encourage them to reconsider where they are delegating their MKR.
  • Core Units and other community members can make sure that the wider crypto community is aware of the abusive proposal.

I’m confident that we’ll not have to resort to measures such as these for the majority of the time. The fact that these checks-on-power exist encourages delegates to approach the topic with care and with the goal of consensus building.

A more stable solution here is to create a MIP that specifically prohibits delegates from proposing changes to their own compensation, instead requiring changes be proposed by Core Unit Facilitators or other community members.

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This seems fair and a good place to start experimenting with delegate comp.

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Should any thought be given to an oversight or an ethics committee for Delegates? It’s starting to look more like Representative democracy at Maker, and the crowd may not have their “ear to the ground” on all goings on. Someone should have allotted time to bring improprieties to the forefront.

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I suspect you mean the opposite?

The idea is that Delegates drop SourceCred. The two don’t really mix. The level of compensation was proposed as aboutish 7k per month so that people with professional jobs (and income to match) will be able to justify the time and effort. You need to be able to at least convince your wife that you are doing something useful. Not everyone is a whale.

There are two choices here. Either we push Delegation actively, set compensation reasonably high and expect both regular voting and half-decent delegates.
or

as you propose we could also push Delegation inactively. Set compensation to stipend level, wait a year or two and see how it develops. Delegates can do delegation as a hobby.

Both these approaches could in theory work. The issue I have with the wait-and-see approach is that II do not think we can get the results we want this way. What we want is enough MKR delegated to be able to pass Executives like clockwork, not sit and hope and beg enough whales will bother to vote. Second we want Delegates to have sufficient time to read and discuss proposals, not just skim through and vote whatever.

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I mean it increases the risk to the delegate of accepting external bribes, rather than it increases the risk to the protocol of delegates accepting external bribes.

I’m not sure this is true? It might be, but I’m definitely not convinced of it. It rewards delegates who put additional time into communicating on the forum, which seems like a positive.

There are a lot of assumptions in here. Individuals outside of Europe and the U.S make much less than that. Not everyone has dependents. My view was that a stipend does justify the time and effort. Furthermore, it will be possible to see the impact it has on delegation and adjust compensation upwards if the DAO is unsatisfied with delegate performance. It’ll be much harder to reduce it given that delegates would need to actively vote away their own compensation.

This is not a choice between two options, there is a whole range of possibilities with respect to incentivising delegates.

At the current time, we appear to have (at least temporarily) achieved both of these goals, which is part of why I feel that it’s premature to make extreme changes. Also, as far as I’m aware, custody platforms have still not integrated with the delegation contracts, so there is still a fair chunk of MKR on the sidelines that wants to delegate.

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I am not really feeling this. I feel this is more an either-or type of thing compared to a sliding scale. We want a Delegate to spend a minimum 10-20 hours per week reading proposals, participating in discussions and listening in on meetings. You could well argue that checking out whatever else is going on in crypto is also a part of this.

A delegate is either consistently spending this amount of hours or he/she is not.
When there is competition for the Delegates waking hours - either from dayjob, wife, kids whatever - the Delegate must have both incentive and excuse to say “Sorry, but being a Delegate is my priority” and then act accordingly.

I must admit I feel the Maker-Governance-as-a-hobby has already been stretched as far as it goes. If the Community feels Delegation is the way to go and that Maker should professionalize further, then rewarding Delegates so they can justify the time spent is the way forward.

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Ooof this :point_up_2:t4: is so true. This beautiful tech is a never-ending quest/adventure. If you’re not tuned-in, you’ll get left behind IMO. Focus, involvement in All–is key.

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Thanks @twblack88 for the post !

I am in agreement that delegates should be compensated. This should not be seen as a hobby or a past-time, but a dedicated occupation at Maker which require adequate incentives. As @PaperImperium mentioned, how is one supposed to justify putting many hours a week in a venture without compensation of any type.

However, Maker remains a startup, and crypto remains an uncertain realm. Maybe it does make sense to offer ~100k USD/year when the market is alive and booming, but trust me it will not if/when the market dumps and brings Maker with it.

I am also opposed to the idea that this should replace Source Cred for delegates. The forum is an amazing place to learn, discuss and these incentives should be in place for everyone no matter their position.

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