Governance and Delegation

I assume it is possible to be your own delegate if you are planning to go solo?

5 Likes

The governance rewards (as currently defined) will be accessible to those with MKR locked in the Chief contract. This was just to confirm that they’ll also be accessible to those who delegate using this contract.

6 Likes

I’m very happy about this. Just more automation to further reduce the number of onchain votes and we are in very good shape.

3 Likes

Checking in from Pantera Capital here (and x-posting from chat).

This is really exciting news. As MKR holders, we’ve been waiting for Vote Delegation for a while now - as we consider it a pre-requisite to our ability to participate actively in governance. Because of this, we’ve been highly active on Compound and Aave governance (for example), but not on Maker despite our desire to do so.

On the sample metrics laid out in the OP (Alignment, Attention, Communication), I believe we’d rate highly on all 3 once this is implemented. Happy to state here publicly @LongForWisdom that we would be interested in being a delegate, even if only to support ourselves.

Also noting here that custodial requirements for larger / institutional investors may present a challenge for them to participate more actively. Once the initial work of enabling delegated voting is done, there’s another layer of work still required for major custodians / exchanges (ex. Coinbase Custody, BitGo, etc.) to integrate the process. Happy to push on that front as well.

24 Likes

As a small fish, very excited to be able to actually put my MKR to work without bleeding disproportionate gas fees every week!

5 Likes

I think this can bring vitality to the community and make more people interested in governance. I hope it can be realized as soon as possible.

I couldn’t agree more.
Happy to see so much engagement in general.

The one thing that would worry me if I did not trust the current Governance Alpha is:

How do you measure Alignment?

Let’s say a group wants to bring Maker to some blockchain. Another group wants to focus on onboarding more collateral types.

Which one is more “aligned to the Protocol”? Or maybe I got it completely wrong?

I just want to avoid groupthink.

2 Likes

Don’t want to speak for LFW, but from my perspective I’d want to know who the Delegates are/what role they play in the Maker ecosystem. So, for example, if there are two delegates, one of which represents a Core Unit and the other of which represents (say) Aave, I’d consider the first to be more aligned and would be more inclined to delegate my MKR to them.

Hey @franklin glad to hear from you. I was curious as to why you guys were waiting for delegation specifically, is that something you can speak to? I understand the desire for delegation from the point of view of someone who has less time to participate, and wants to delegate to someone else. I’m not sure I understand the lack of participation pending delegation from the point of view of a potential delegate.

Good to know, thank you.

Good question. This isn’t really around groupthink, but more around alignment to the long-term success of the protocol. This can come in several forms. The table below represents some of our current thinking, though I don’t consider it an exhaustive list.

Alignment Source + Type
Holds MKR Extrinsic - Financial
Holds vested MKR Extrinsic - Financial
Paid percentage of revenue Extrinsic - Financial
Maker Protocol is primary employment Extrinsic - Financial
Being a delegate delivers status + prestige Extrinsic - Reputational
Enjoys delegate work Intrinsic
Maker Protocol benefits society Intrinsic

We have been considering how stable these incentives are over a longer time period as well. For example holding MKR shows alignment at the time a delegate is observed to hold MKR. Owning vested MKR would show a longer term alignment.

3 Likes

Thanks, @Cassius.

I’m not sure if Core Unit Facilitators would be good Delegates, as there might be conflicts of interest.
We should probably discuss this, as well as Delegate Compensation.


OK, so it’s a bit like badges.
And negative points if you retweet Stani. Gotcha. ; )

My initial thought is that we should have an easy way of showing intentions/ideas, historical voting, and a way for the delegate to justify those votes.
Happy to entertain this list too, but I have my doubts. As an example, someone for which Maker is not the primary source of revenue might make better long-term decisions, as they are less concerned by the immediate results. Probably not the best example, but you know where I’m getting.

Really looking forward to the “Enjoys delegate work” award (i.e.: yes, we believe she was smiling as she downvoted that MIP).

3 Likes

As someone interested in delegating, I’ll chime in and say it’s not just transaction costs. I also want to throw whatever marginal influence I have behind someone who both prioritizes the long- run health/profitability over the short, and who will also be a bulldog about ongoing governance.

My experience in more centralized companies is that those who get approved to start new programs tend to be high quality and followed by those who increasingly add little value for the cost, but who are then entrenched and able to extract resources from the organization. We have a fresh start here and I want “decentralized” to mean not beholden to non-MKR holder interests, as opposed to a capture by management or employees.

Anyway, I might have higher wishes than will be delivered upon, but a few AMA posts by would-be delegates would definitely attract interaction from me. Delegation isn’t just a tool to save on gas/time. It’s a tool for groups of MKR holders to form voting blocs to push in the direction they feel is best

5 Likes

Thanks @franklin, awesome to know you are happy to join governance and voting!

I am also interested in:

I think it would be very useful for us (but also other DAOs) if you could explain what difference delegation makes (legally, perhaps?) given what you say:

6 Likes

As one who owns MKR (yes a small stake), and has significant capital in the protocol I would be interested to see if there are any holders interested in me representing their views in the protocol as a delegate.

I check in on votes/polls weekly, have the capability to vote regularly (for the most part).

As a delegate my intention would be simply to make direction choices, occasionally offer suggestions for change, and to secure the protocol generally for both vault users and DAI holders.

Happy to put up my reasoning and positions on votes before I vote, and discussion positions, etc. Perhaps a format for a Delegate Platform that has Q/A that might be a useful way for Delegates seeking to distinguish themselves to inform the MKR holders seeking to delegate their MKR. I may noodle on this and offer up a forum post on the subject. If someone beats me to it, all the better.

Time and detail involved would probably be directly related to potential compensation or lack there-of.

9 Likes

Are we incentivizing delegation by considering (but not necessarily committing to) possible retrospective governance rewards for those who delegate now?

1 Like

No, at this point we’re not planning any incentivisation for delegates (retroactive or otherwise). If the number / quality of delegates ends up lacking, we may want to consider incentivising delegates explicitly.

I volunteer to be a delegate. On incentive alignment,

  • I hold a small amount of MKR relative to many, but it is the largest investment in my portfolio by far.
  • I am not otherwise working for Maker. I’ve never been employed by Maker or MakerDAO, although I did receive some compensation for the work I did trying to compensate vaults who lost everything during BT.

On attention,

  • I read pretty much all forum posts. I often read Rocket chat.
  • I voted frequently, until gas prices went crazy.
  • I’ve studied finance as a hobby for years. I was an early investor in MKR; I was accumulating MKR before SAI was a thing.

On communication,

11 Likes

Yes! Thanks for asking this, happy to expand on it.

First a caveat - for Pantera, it’s a multi-dimensional decision on whether we participate actively in governance. The ability to delegate is important, but not the only factor. We also consider whether the scope of a protocol’s governance is actually impactful, whether we can have a significant impact, how much operational overhead it would take, any risks or opportunity cost involved, etc.

Delegation offers three key things for us:

  1. Security: It’s important that we maintain a consistent security / custody model around our assets. Any voting mechanism that requires us to stretch outside of the base model by moving assets from our provider to a self-custody solution is a risk-reward decision. Not impossible for us to do (though impossible for some funds that have stricter policies), but we’d need to weigh the benefit of casting a vote against the potential risks and it’s rare that a vote is important or controversial enough for us to make that call. As mentioned previously, the optimal state is where our existing custody model enables governance participation natively on their platform. We (Pantera) can manage to make it work without that, but many others can’t.

  2. Privacy: For all of our positions, it’s important that we not reveal too much information about our strategy. At the same time, we’d like our voice to be heard and publicly identifiable. Being able to delegate provides us with more flexibility in how and when we reveal our MKR position. There’s also a minor downside / trade-off to this, which is that we tend to lose our on-chain voting record when we re-delegate to a new address. For example, we’ve voted on 30+ proposals on Compound - the most of any large funds, despite us not being an early-stage investor - but the Compound leaderboard currently shows us as having 7 votes because of a re-delegation.

  3. Convenience: This is a minor one, but just an operational nice-to-have. It’s useful to be able to assign or un-assign voting duties across different team members without shifting our security / wallet management procedures. While I take on the majority of those duties today, I could foresee this being needed as we scale up our governance-related activity.

I realize that much of the above may be unique to us or to professional investors more generally and somewhat strange (or lame) in the context of a decentralized, open protocol. Ultimately, it all extends from the responsibility we take on when we manage others’ assets, which we take as seriously as we can. Hope that all helps!

Guilty as charged.

7 Likes

I very much appreciate you sharing this. I imagined it was something along those lines, but it’s good to have it confirmed.

Would you plan to operating as a delegate for other MKR Holders, or to use the contract as a convenience / privacy tool to allow you to vote reliably with Pantera’s MKR? Both of these would be great, just wanted to clarify :slight_smile:

4 Likes

We’re expecting to operate under the assumption that we may have votes delegated to us from other MKR holders. We’re unlikely to go into full “protocol politician” mode, in the sense of surveying a broad swath of constituents and aiming to represent their interests consistently. We hope that others do, but I don’t want to mislead anyone in the community on our intent.

In full transparency, the main / only objective would be to represent Pantera and to the extent that MKR holders trust us to act in the best long-term interest of the protocol, we’d welcome that support.

4 Likes

Thanks guys! You are both awesome long-term community members. I’d be happy to see you propose yourself as delegate.

I wonder if, beside of delegating to a person, we might evolve in some due time to delegating to something like a “political party”.

This would have some kind of manifesto, a declaration of intent, a website where it clearly states what they voted in the past, and why, etc.
Of course this requires resources (compensation schemes likely coming in the future), but it’s really exciting.

EDIT: I propose The Little Shrimps party :rofl: :rofl: :rofl:

8 Likes