Delegate Compensation [informal poll]

Agree to disagree, but a well-reasoned argument

I really think you should be looking into what is the appropriate compensation channel for this time spent along with appropriate oversight to ensure that this time is being spent in the most useful way. This pretty much sounds like a Growth CU role to me.

The fact that you were already doing many or all of these tasks long before delegation was even a thing at MakerDAO should be enough to see that there are separate issues here. To be clear, I think I’m not the only one who can see and appreciate the enormous effort you put into all things Maker. I just don’t think it is necessarily connected to your position as a delegate.

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@prose11 @psychonaut man the CRV community is really into this bribing game, eh?

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I was actually thinking (game theory) what if Delegate wallets get airdropped say like a Collateral Type Token that’s in the Governance cycle, right–I mean–this game is crazy. Personally I would send them to the Token Contract, or a burner address–or donate them to a charity, etc. But ya, DeFi is starting to take a page out of the Wall Street playbook – which is no bueno IMO

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Growth CU, or actually any core unit, employs people over the long-term. There is an implicit promise that the job is secure conditional on adequate performance. Recognized delegates are “hired” by a different mechanism, delegation. If there is overlap in responsibility between the Growth CU and Recognized Delegates, why should delegates stand down? Why shouldn’t the Growth CU cede some of its responsibility to delegates?

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There’s a CU designed and already approved by MKR holders to be responsible for certain aspects of MakerDAO. There’s also established oversight mechanisms within the CU to see what kind of value people are bringing. A good CU also internally coordinates the efforts of their employees and contributors. None of those things are true for delegates.

The ask here is absurd - you want delegates to simply take over existing CU responsibilities with less coordination and less oversight and be paid for it? What next, delegates also take over parts of GovAlpha’s job and the technically inclined ones start dabbling with Protocol Engineering? It’s just a whole lot of people getting in each other’s way.

You can be a contributor and work for as long or as short a period as you need to. Also, I’d hope that recognized delegates are also in it for the long haul. And yes, performance oversight is important for any role in the DAO!

The role of delegate never involved any of these added responsibilities when it was proposed. It is only in this thread that some delegates have assumed that they’d be wearing every hat there is to be worn in the DAO.

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Perhaps you are correct. I am actively winding down many of my activities and plan to be more reactive to others’ proposals. I’ll think more about exactly what scale is correct over the long weekend and will circle back mid-week.

Given the potential for personal liability and the significant work required for Maker to raise revenues in the face of sharply rising costs, it may be appropriate for me to just let things run their natural course without attempting to interfere.

I’ve voted for the current executive, so will take the next few days to evaluate the situation with fresh eyes. If anyone has anything urgent — not likely — email me (it’s on the delegate platform).

Have a great weekend, everyone.

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@PaperImperium, I think work you’ve done for MakerDAO, like the speaker series, has been really valuable and I’d like to see you get paid to continue doing it. I could see that happen in various ways:

  • Employee of an existing Core Unit
  • Contractor with an existing Core Unit
  • Start up your own core unit
  • SPF

Working through such entities might also reduce any potential personal liability.

Maybe MakerDAO needs something like a lobbyist Core Unit. Your track record of engaging with government officials suggests you might be interested in and well qualified to lead it.

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Going to try to keep this short. Lets see how well I do.

I believe people doing work for a profitable enterprise deserve equitable compensation. How enterprise profitability relates to ‘equitable compensation’ is itself a whole other issue but related when considered from a sustainability standpoint.

The real issue here is governance goals, and more importantly what are the proper mechanics to align interests of MKR holder not just with delegates, but with governance needs generally.

I posted elsewhere the idea that delegates should be elected positions, with compensation packages.

https://forum.makerdao.com/t/suggested-changes-to-maker-delegation-system

I probably spent a good day not just talking to some former politicians and political science folks on this but then had to write it up and post it.

After more careful consideration and feedback from GovAlpha and a few other parties I realized the above may not be what Maker needs. Though when I think about this from @PaperImperium and myself point of view of doing CU work I do wonder whether a few actual elected delegate positions with compensation packages might be appropriate or whether CUs might have budget lines to compensate delegates who they feel have contributed materially to the achievement of their responsibilities. Point here is we want some reasonably clean delineation between governance and CUs. This has to be cooperative, but it also has to have some sort of recognition of effort (compensation).

I keep coming back to goal(s).

I have a request into GovAlpha for data from beta.mcdgov.info to provide a governance report and hope to suggest some governance wallet performance metrics that should be useful to governance generally. In effect I am taking on GovAlpha work that I could have just thrown at them but when I look at the resources GovAlpha has to take on such a project I concluded what I wanted to see probably wouldn’t be done in a reasonable time if at all. I am still waiting on the data btw to conduct this analysis. The prime reason for it was to analyze wallet governance performance, cost, and reactivity metrics that I have already constructed to apply them to a reward model I want to present to settle multiple issues at once:

Construction of Appropriate/equitable wallet compensation (for all wallets not just delegates)

The simple upshot here is that all of MKR is benefiting from the activities of a few governance participants. In the past compensation for the work of the governance participants was proposed and turned down via @prose11 MIP49.

https://forum.makerdao.com/t/mip49-staking-rewards

I believe we need to revist MIP49 due to this discussion regarding delegate compensation.

It is simpler if I give an example that illustrates the thinking here.

1 If MakerDAO governance believes governance participation (particularly executive support, but polling as well) is AS critical to the functioning of Maker as particular CUs then it is appropriate to compensate this governance participation in direct relation to the importance of the participation (hence why a wallet participation metric is required).
2 If participating is important and should be rewarded, then shouldn’t non-participation be punished?

  • Fortunately there is a reward model which is fair from the point of view of how governance currently works that satisfies both 1 & 2 above.

1 Mint .1% MKR/yr to be distributed according to a reward model to all wallets based on a wallet governance performance metric that is linear both to MKR being voted and % vote participation with some division E:P for executive and poll (this can be 1:1 or 2:1 or whatever ratio governance or GovAlpha suggests/chooses)

.1% MKR/yr currently would be approximately 998MKR/yr currently valued around 3.6M USD. Distribute this MKR based on the above wallet performance metric.

Governace currently has approximately 170K MKR in governance.

Lets say
delegates are bots and vote 100% on everything
28K votes on everything
25K votes on everything
7K votes on everything
17K votes on 1/2
5K votes on 1/2 of everything 50% vote participation
and
30K votes maybe 25% of the time.

Calculate the total wallet importance metrics.

(25K+28K+7K)1 + (17K+5K).5 + 30K*.25 = 78.5K MKR*vote is the performance metric for this example.

These voters would share 998MKR or for each 1K MKR*vote they would earn 998/75 = 12.7133MKR

Hence the voters would earn
25K = 317.83MKR
28K = 355.97MKR
7K = 90MKR
[email protected] = 108.06MKR
[email protected] = 31.78MKR
[email protected] = 95.35MKR

Now me with my lowly 8.7MKR (even if I have 100% participation) approximately .110MKR (or 360US).

Lets put this in perspective btw. One reason why I wanted network costs. Even this kind of compensation is NOT going to compensate me for Ethereum network tx fees. But this will give more than appropriate compensation for the top delegates. It is also fair because it is relative to the amount of MKR they bring to the table (as a delegate or not).

One can run numbers if 20-30-40% of MKR were to participate in governance but lets be realistic here we probably need a minimum of 10% and probably will never get more than 50%.

Now whether delegates should get all of the pie or say 1/2 of the ‘rewards’ is a whole different matter but I think if we want to inspire delegation and maintain delegate compensation to be appropriate based on the most important metric MKR being voted, participating in governance this should be both on the amount of MKR and their voter participation. We can ask whether 17K MKR voting 50% of the time is worse or better than 7K MKR. We can also divy up this .1% MKR/yr equivalent (in MKR, DAI, USD or whatever cost) into different slots.

say 75% goes in the 1:1 model I suggest above. 15% basically goes as the sqrt of this participation during the period, and say 10% as bonus compensation to be portioned out by a vote of delegates for execptional reconition of any effort in governance. What-EVER.

The biggest issues here are:

  1. Compensation being in proportion to MKR and voting participation - this is to eliminate sybils - people breaking up wallets to earn more.
  2. Rewarding participation with an amount that makes sense for people to participate.
  3. Effectively solves the delegation problem. Basically to make a decent ‘salary’ a delegate only needs to get about 25-30MKR/yr of compensation and in the above model this would approximate 2-3K MKR delegated to them (double this if the rewards are split between the delegate and delegee)

No matter how we turn this. Maker can continue to try to get free work, free participation hoping that parties will make due diligence, and pay the ever growing costs to transact on chain, or it can decide there is a real value here. I believe we need to take something on the order of the .1% MKR dilution cost value hit to re-distribute the compensation to those who are spending time and paying to secure this system. If we don’t then we will rapidly be back at having issues passing executives, much less having our 3rd branch of operations (governance) actively participating in the system. Might as well divide up the 84K MKR remaining between CUs and just have them all ‘do governance’ in their CU mandate for the other 916K out there who don’t.

I want to be clear here. The exact details of the model, the amount of effective value via MKR dilution, and the distribution is only relevant as an example. I am convinced a revist to MIP49 after a GovAlpha governance report like I am going to attempt would actually give us some real tangible metrics to focus rewards on and real performance data to work with. I don’t think this is an ‘if’ but more of an appropriate ‘model’ and ‘amount’. I am more convinced doing this via a revisited MIP49 is the best way. I also think a pass through for delegates to the delegatee is appropriate. I’d love to just kick back, pay the big delegation network tx fee to delegate my 8.7 MKR to someone, and collect some chunk of the rewards I via the system pay my delegate to deal with me. :slight_smile: Others who own 1-2K MKR can earn some extra income participating in governance which is what we all want. The whales that delegate earn some passive income and give their delegates excellent pay. I see the above as a win-win-win for ALL parties and fulfills my stakeholder recognition and a fairness core value I should add to my platform.

The only losers here is the MKR that doesn’t participate or delegate which is exactly the correct result given the system constraints and they probably won’t vote anyway on this. If all of this MKR were to delegate or participate then the dilution and governance participation is fair across the board.

The key issue is to convince the whales - which is basically @PaperImperium @Planet_X @ElProgreso and a few other delegates as well as some fraction of remaining governance this is good and get a proposal together with details. We can fine tune this as we go.

As to length. FAIL My apologies. Best I can do on this complicated subject and without spending the rest of my day editing down. I already spent far more time on this one topic than is expected from a delegate for one or two weeks of governance participation.

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But I read it anyway :crying_cat_face:

To summarize, I think you don’t care about the exact amount of compensation: “The exact details of the model, the amount of effective value via MKR dilution, and the distribution is only relevant as an example.” It seems like your main point is,

If this is the crux of it then I want to contrast my view of the purpose of compensation. For me, voting is a no-brainer. It is ill-advised to compensate voting per se because a robot can mindlessly vote; that degree of judgment is worthless. So I’m still essentially against MIP 49 style compensation. To me, what we’re paying for by compensating delegates is all the non-tangible activity. Paper posted a good list earlier in this thread.

Yes, take over existing CU responsibilities where delegates see an opportunity to do so in coordination with a bird’s eye view of the whole project. As for oversight, I’m not sure why you think CUs automatically have more oversight than recognized delegates who have to publically communicate their judgment on all manner of DAO concerns on a regular basis.

Your disparaging attitude is damaging to morale. Instead of welcoming innovative new approaches of contributing to our shared mission, you seem content to witness a temporary declaration of defeat,

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If you want talent you have to pay for it, and to retain it - you need to pay market value. I understand there’s not much of a baseline comparison for what that market value looks like, but if there’s no financial incentive, then why stick around?

Time is money, and money is time. Delegates have the same 24 hours the rest of us do. My opinion - this conversation shouldn’t be focused on if, but how much.

I see the “too many hats” argument, but I think it’s fair to say that delegates should be wearing the “Researcher” hat. Already, how each our delegates go about researching, reporting and contributing is unique to the individual. That’s a strength.

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One quick thing re compensation… We have 84,000 MKR in Treasury… Let’s put that money to use! Doing so gets people paid AND has the added incentive of aligning interests (community members with more MKR have a deeper financial interest in good, sound governance). Hell, if delegates get paid in treasury MKR, they likely will vote their new bags, which is good for voting participation and further decentralization. Happy and well compensated delegates, better MKR distribution and everything is more decentralized. Win-win-win.

And fwiw, we need to ensure that people who make high level impacts like Paper get paid. Otherwise, non-stingy DAOs will start picking them off.

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The proposal is damaging to Maker’s prospects. I will not hesitate to call out bad proposals and processes and make my points against them when I see them.

It is unfortunate that you see criticism as morale damaging or disparaging rather than as beneficial to Maker.

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I will elaborate on this later, but perhaps instead of trying to re-create the compensation wheel here, we can purchase and use a comp metric or contract with a third-party to provide us some market comparables for our DAO-wide consideration. I’m not saying that there are straightforward comps out there; what I’m saying is that we may be able to entice a third party, like E&Y, to engage here, which will further validate where the DAO is now.

It seems that there is confusion between delegates acting as board members and delegates actings as directors. The root of the problem is the board question of decision-making at MakerDAO.

Board members should be a light role. If it gets operational, the judgment is altered. They are usually not so much in the light. In a MakerDAO context, that can be done by providing guidance to CU or what they want to see on the governance poll/executives. I guess it’s close from @AstronautThis view.

I understand @PaperImperium and @psychonaut views are more of a director role with an operational view, authority, and leadership.

It is my understanding that delegates can’t have authority nor leadership as they represent some MKR holders not the DAO. Only the DAO can appoint someone (which it currently doesn’t do formally).

Obviously, there is a political incentive for delegates to use such “leadership and authority” to start negotiating with third part actors in order to get successes and increase their political goodwill. The delegates that bring BlockFi with a 1B vault at MakerDAO will be acclaimed for sure. But do we want 10 delegates contacting/negotiating with BlockFi and undermining the work of Growth?

At the same time, I do understand we might need some kind of director/co-CEO. But then if we have board members and directors, how is a DAO different than a company?

I also have a concern that delegates limit transparency. Currently, we only need to have @PaperImperium and @Planet_X to pass a Gov Poll. Why bother to have an open discussion when we can be more efficient by asking the decision-makers what they want directly? Is it good or is it bad? No clue.

Moreover, currently, >80% of the voting power of the delegates comes from the same person (which has still at least 25k MKR more to use). We are clearly in a better position than last month for sure, but there is still some progress to be made.

In a sense, we have traded decentralization for efficiency.

I understand that this discussion is about compensation, but in my view, it’s the least of the problem (meaning I don’t care if delegates get 0 DAI or 10k).

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Just a small point about this, theoretically whoever delegates their MKR has an incentive to not let their delegate vote after closed-room discussions. Similarly delegates should want to discuss in the open in order to maintain their good standing and attract additional delegators.

I think gov is in a better place than this – decentralization is still very much there as MKR holders can withdraw their delegated votes at any time. Time will tell if undelegation is actually a check on power but in theory governance now has the best of both worlds. And since it’s trivial to undelegate I expect that it will in fact go well.

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Not to single you out Seb, but it seems like commenters keep coming up with potential situations where delegates will misbehave. But why should delegates necessarily be so careless and aggravate anyone? Suppose instead that a delegates coordinates with the Growth CU to help bring in a 1B vault deal with BlockFi. Other delegates, seeing the deal in progress, refrain from interfering because they know that too many cooks can spoil the broth. Maybe I am too optimistic, but

Well said!

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Regarding the misbehaving point, you can have this as well with community members (and nothing prevents all community members to start a negotiation with BlockFi). My point is that if you pay 10 people full-time they will be more active. And MakerDAO should be clear of what authority is delegated to them.

My main point above is really that a board member and director are 2 distinct roles that you can’t do at the same time. You can’t be operating and keeping a remote perspective. Or maybe you can but it would be great to understand how we work. See below for an example of what I understand. You can be in different seats at the same time but those are not the same seats.

Regarding decentralization, I don’t see an increase in the MKR in the governance contract which, in my view, should be the north star here (and I agree we are early). One can even argue that one big whale is now acting more strongly on the decisions (indirectly tho). Nevertheless, I see an increase in efficiency (x10). Overall, that’s a big win.

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Nice Tweet thread by Sahil Bloom on how incentives can go wrong, from the British Cobra incentives in India, the Wells Fargo account opening incentives, to the 5 key pillars of incentives. Super interesting:

https://twitter.com/SahilBloom/status/1434847309976702980

And from the Founder’s Journal podcast—a similar take: How Incentives Can Make or Break Your Business | Founder's Journal

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A little late to the party, but what about a “Paid Delegate” role which is separate from delegation, with a standard compensation across the board? Something parallel to CUs? I’d be pleasantly surprised to see a compensation scheme with rules/threshold/etc for delegates which is not subject to some gaming, but it sounds super hard to design.

Alternatively we could unbundle and say:

  • Receiving some MKRs to vote with is an arrangement between the MKR holder and the delegate. The delegate gains voting power and in exchange most likely is expected to stay on top of most things Maker. Maybe the MKR holder directly pays the delegate, maybe not. There is no a priori judgment from Maker Governance about whether being delegated large amounts of MKR in and of itself deserves monetary compensation. I think it’s reasonable to say that having publically received even large amounts of delegated MKR & following the very light Recognised Delegate requirements should not automatically mean you must be compensated.
  • Governance may pick participants following some agreed upon rules and compensate them. Some delegates will seek compensation by applying to be a Paid Delegate, others not. Since governance is reasonable and knows being a good delegate takes a lot of time and effort, delegates that actively participate on forums & elsewhere will be compensated. Well compensated, I hope. But this is separate from just “having received delegated MKR”, and the compensation is for the work, not the voting power.

With this scheme over time new people pop up, participate, convince some holders to delegate to them, and at some point they apply to be a Paid Delegate. The point is that compensation happens through a separate, case-by-case governance process. I expect that using this scheme would not change anything for the current recognised delegates since they’re all well-known and active community members.

Flaws I see with this scheme:

  • Delegates can of course vote to receive compensation, but that is fair game.
  • More governance overhead compared to a set of rules well-defined enough that they can almost be automated.

Finally, an alternative is to modify the Recognised Delegate status and a) increase its requirements (more active participation) b) make access to the status dependent on a governance vote, c) make compensation part of being a recognised delegate.

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wow :O, i thought that this kind of things only happened in my home country, colombia

So basically a delegate is asking the other delegates if delegates should make more money than they are already making, unsurprisingly the majority voted yes, conflict of interests?? where?? :thinking:

this is really alarming, like, this is not ethic at all, like does any of the delegates really understand how bad this looks??

i havent read all of the comments, but i did see some good ideas on how to give delegates the pay raise that they so much want, but i keep seeing delegates explaining why they deserve a much greater pay raise (someone even said 7k/ month)

i know delegates dont have an official salary, but for what ive read they do receive some kind of remuneration

idk sirs, this doesnt look good

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