Before we get into the thread, I’d like to clarify that based on what we’ve seen so far, delegation is a big win for MakerDAO as a whole. It is also clear to me that the time the delegates spend and the possible legal risks they are accepting makes it important that we compensate them adequately. Finally, the current number of delegates is insufficient - we need more people to prevent centralization of MKR voting power. I think the community is largely united on all the above points.
In this thread, I’d like to raise some issues with the governance process being followed for the delegate compensation. There are two parts to this - the first is the trial compensation period signal request here and the second is MIP61. @LongForWisdom and I briefly discussed this privately but we both agree that it is better if more people engage on this issue to chart our way forward. I also believe that this is not the first time we will run into these issues with our current process so I’d rather they be fixed sooner than later.
The first informal poll here on 07-Sep had options compensating delegates up to 120k DAI per year excluding SourceCred. The highest option that got a non-zero number of votes was 96k DAI per year and the winning option was 48k DAI per year. MIP61 was created with 48k DAI being set as compensation.
Next came the signal request on 13-Oct for trialing delegate compensation with this iteration of MIP61 in mind. This poll is still live but seems like it will almost certainly pass.
@LongForWisdom then detailed his new thinking around higher delegate compensation here on 16-Oct where he suggested a three fold increase in compensation to 144k DAI per year in MIP61. This was incorporated into MIP61 and since it changed, the signal request asking to trial MIP61’s compensation for three months also changed today, 19-Oct.
I think there are several issues with how we’re following governance process
- While I understand the logic behind proposing higher compensation, I do feel that this did not get sufficiently discussed in the forum. There were no polls or signal requests on this matter after the first one.
- Most people who voted on the signal request for trial compensation did so with the 48k DAI compensation figure in mind i.e. MIP61 v1. After a change that significant, it doesn’t seem acceptable to claim that the signal request passed. If governance was ever evil, this would be a sort of bait-and-switch tactic.
- Usually, 1. and 2. would be okay because the only risk at that point would be that the on-chain polls would fail. However, in this case, delegates are voting to raise their own compensation and are capable of swinging that vote. If they act in their own self interest, this would be a problem.
Let me put it another way: @LongForWisdom could have suggested an arbitrarily large amount and if the delegates vote in their own self-interest, both the trial compensation and MIP61 would still pass.
To make it absolutely clear, I am not suggesting that either governance facilitators or delegates are trying anything shady here. The intentions of all parties, as far as I can see, are good. But the lack of checks and balances in how we’ve gone about this has exposed vulnerabilities in our governance process and that is the for me, is problem enough that it’s worth bringing up.
I think that MIP61, in its v1 version, which most of the signal request voters voted for should be what is polled on-chain. In parallel, a signal request with higher amounts can indeed be made and should go on chain only if it succeeds.
The other tricky issue is delegates voting for their own compensation on-chain. I really appreciated @PaperImperium’s decision to abstain on his supplemental (non-delegate work) compensation poll because it was the right thing to do. @ElProgreso also reflected on conflicts of interest in this post. Personally, I think that is the way forward. There are is enough undelegated MKR in the voting contract and enough shadow delegates who will vote on the on-chain poll. This sets the correct precedent for this issue, as well as for future issues where delegates may have conflicts of interest.
I admit that I don’t have a great one to fix everything here but I will say some things.
I know there are concerns about the speed of the process. Governance is unfortunately slow because consensus takes time. This is true in most countries and it should be true in a DAO as well. I think there is an element of trying to rush it that is happening now. This can be dangerous and to be very honest, I don’t think delaying decisions like this one by a month or two should ever be seen as a negative.
Our delegate recruitment rate isn’t great. On this, I think the issue is that delegates are discouraged (although not forbidden) from having roles in a CU due to possible conflicts of interest. I would encourage the community to think about this more deeply. I can imagine a system where such conflicts of interests can be raised and the corresponding delegate abstains from voting. It might not be perfect but our best people are already part of one CU or another. Many of them would make excellent delegates, if such an arrangement was not discouraged.
Happy to hear everybody’s thoughts! Particularly from the @Recognised-Delegates.