For those that don’t know me, my name is LongForWisdom, and I’m one of the Governance Facilitators at MakerDAO. Today, I’m more formally introducing how delegation will operate within MakerDAO.
For those with limited time, I’ve started with an executive summary.
- Delegation is important to reduce the collective cost of governance and increase the effectiveness and efficiency of the governance process.
- MakerDAO will have two varieties of delegates.
- Recognised Delegates are whitelisted, and must meet certain requirements in exchange for more visibility and prestige.
- Shadow Delegates are permissionless, with no requirements or responsibilities beyond that which they have agreed directly with those who delegate to them.
- Recognised Delegates act as a bridge between vote outcomes and other actors by actively and transparently communicating with the MakerDAO community.
- Delegation in Maker will soft launch on August 2nd, 2021. Hard launch will be accompanied by a community marketing push and will occur once additional criteria are met. These criteria are outlined toward the end of the post.
- Delegation will launch with multiple delegates drawn from active members of the MakerDAO community for MKR holders to choose from.
- MKR holders will continue to be able to vote on proposals directly if they do not wish to delegate their tokens.
Delegation brings many advantages. I’ll highlight some of the most important benefits of delegation here.
Recently, it’s been harder to ensure that there are sufficient MKR tokens within the Maker governance contract in comparison to the MKR tokens accessible within the rest of DeFi.
This has implications for governance security; to keep the Maker protocol secure, attackers should not be able to borrow more MKR than is present on the current executive proposal.
Delegation gives us a low-cost method to involve currently idle MKR tokens in the governance process, which may help to mitigate the issues that arise from a lack of vote-weight participation.
Reduces the Collective Cost of Governance
By virtue of allowing users to pool their MKR we reduce the collective cost of governance that MKR holders (some more than others!) currently bear. This is true in two ways:
- Fewer individual wallets voting for the same vote-weight means less gas is paid per voting token per vote.
- Fewer individuals need to actively track and keep up with governance of the Maker Protocol which results in less human-hours spent per voting token per vote.
Critically, delegation allows us to reduce these costs without significantly reducing the effectiveness of decision making.
Improved Efficiency and Direction
Finally, delegation helps to reduce the communication and direction issues that arise in the governance of a large, decentralized protocol. Having known delegates with a known vote-weight means Core Units will be able to much more effectively coordinate with governance to achieve goals - both long-term and short-term.
This should help to streamline operations and allow MakerDAO to respond more effectively to the ever-changing landscape of DeFi.
Unlike other implementations of delegation in the ecosystem, the Governance Facilitators of MakerDAO have introduced a distinct split between two types of delegate. These two types of delegate are known as Recognised Delegates and Shadow Delegates.
This split is being implemented for a number of reasons.
First, it’s become fairly clear from other implementations of vote delegation that it is not guaranteed to result in an improvement to the governance process of a given protocol. In some cases, it has resulted in less transparency and more contention around governance decisions.
Second, delegate quality has been extremely inconsistent in the wider ecosystem. One can argue that the market will resolve this issue and good delegates will receive more voting power, however the market is not perfectly efficient and the existence of a very small number of quality delegates will introduce further centralization of control of the given protocol.
It is important to note that the delegation contract itself is entirely permissionless. Delegation within the Maker Protocol is not whitelisted, rather an additional status as ‘Recognised Delegate’ is whitelisted, and comes with certain responsibilities and advantages.
Recognised Delegates are our attempt to resolve some of the issues above. Recognised Delegates must adhere to a list of requirements managed by the Governance Facilitators of MakerDAO. In exchange for adhering to these requirements, they are integrated directly into the official voting interface, discourse forum, and chat platform and highlighted to MKR holders that may want to delegate.
Note that Recognised Delegates can be pseudonymous (but not anonymous), so long as they meet the requirements below. These requirements are not a terribly high bar, and consist of the following:
- Sharing contact details
- Publishing a delegate platform post.
- Appearing on a live call to speak to MKR holders and community members to answer questions about their platform.
- Publicly agreeing to follow a Code of Conduct.
In addition, the Governance Facilitators will track participation and communication metrics for each recognised delegate.These metrics will be displayed on the official voting UI, resulting in a soft requirement for Recognised Delegates to participate in as many votes as possible, and communicate their reasons for voting to the MakerDAO community.
These requirements and metrics may be adjusted in the future depending on the number of Recognised Delegates, the resources available to the Governance Facilitators, and feedback from the delegates themselves.
Shadow Delegates are the natural consequence of having Recognised Delegates and a permissionless delegation smart contract. Any delegate that is not a Recognised Delegate is defined as a Shadow Delegate.
That said, there are several advantages to having Shadow Delegates in addition to recognised delegates.
- Shadow Delegates can be publicly anonymous (note that anonymous is different from pseudonymous.) This gives them an additional layer of defence against real-world interference.
- Shadow Delegates can make private arrangements with individual MKR holders.
- Shadow delegation can be used ‘in-house’ by larger MKR holders to manage voting with custodied assets.
The mainnet and Kovan delegation contract factories are already live on-chain.
Anyone can use the factory contract to create a delegate contract or integrate with delegation in Maker. Note that you only need to interact with this factory contract if you want to become a delegate, not if you want to delegate your MKR to a delegate.
The delegation contracts have been audited by ABDK. The audit report from ABDK can be found here. No major issues were found and minor issues have been addressed where appropriate.
The MVP delegation UI will launch on August 2nd (soft launch), and will include:
- A list of Recognised Delegates with avatar, name, and links to their platform.
- MKR Delegated to each delegate (in total and by the connected wallet.)
- Participation Metrics (Poll & Executive)
- A list of Shadow Delegates.
- Delegate + Undelegate user flows.
- A Create delegate contract user flow.
Several community members have volunteered to be Recognised Delegates at the launch of delegation. Platforms for some of these delegates are publicly available within the MakerDAO official forum and more will follow over the next few weeks.
‘Meet Your Delegate’ meetings will be organised in the weeks leading up to the launch of the MVP UI, and will be a chance for MKR holders - large and small - to meet the initial set of delegates and ask any questions they may have.
Hard launch of delegation will take place once the following criteria are met, and will be accompanied by a marketing push from the community with the goal of attracting additional MKR holders to delegate their MKR.
Hard Launch Criteria
- Integration of delegation with leading custody providers, allowing larger MKR holders to delegate securely.
- V1 of the Maker delegation UI, including Recognised Delegate profiles.
- Multiple Recognised Delegates active and engaging with the Maker community.
If you’re interested in being a Recognised Delegate, the list of requirements (including contact details) can be found here. Feel free to get in touch.
Our first ‘Meet Your Delegate’ meeting is scheduled for July 28th - 18:00 UTC. Join us and ask our first few delegates about their vision of MakerDAO’s future. Check out the agenda here.