[Signal Request] Should we increase Maximum Delegate Compensation as described in MIP61 to 144k DAI for the initial 3 month delegate compensation trial?

See previous signal and discussion for context.

I’ve covered why I think higher compensation than initially proposed is necessary elsewhere, but to summarize:

  • We are not attracting any new delegates at the 48k max offered compensation.
  • Existing recognised delegates are quitting and / or taking positions elsewhere in the industry.
  • We really need a wider selection of delegates than what we currently have in order to avoid a heavy centralization of voting power in very few hands.
  • The trial expires after 3 months, meaning that any undue negative results will be temporary.
  • In our judgement we cannot safely and consistently govern the protocol without additional active voters. Delegation is the lowest hanging fruit when it comes to attracting additional active voters.
  • Overpaying is vastly preferable to having a non-functional delegate and governance ecosystem, so we should lean towards failing on that side of the spectrum (overpaying, having delegates) than on the other side of the spectrum (underpaying, having no delegates.)
Should we increase Maximum Delegate Compensation as described in MIP61 to 144k DAI for the initial 3 month delegate compensation trial?
  • Yes
  • No
  • Abstain

0 voters

If this signal passes then the maximum delegate compensation will be set to 144k DAI at a level of 10K MKR as described in MIP61. Note that this compensation is only offered to Recognised Delegates that meet a threshold of 90% participation and communication.

Next Steps
This signal poll will be active until 2021-11-04T00:00:00Z, if successful it will proceed to an on-chain poll on the subsequent Monday.

5 Likes

Is there documentation anywhere that outlines the responsibilities and expectations of delegates?

3 Likes

Not sure there is a document, but this is some info:

This seems like a very high salary for a role that doesn’t have any KPIs or tangible deliverables. Maybe a solution would be to outline some key responsibilities, deliverables, etc. I think part of the issue with delegate compensation is that it is unclear what the official duties and deliverables are when it comes to the delegate role. Clearly this is a very important position and component of governance. However, there is quite a bit of gray area for what would be considered a high salary, even for Bay Area standards.

5 Likes

This is maybe the closest to what you’re looking for. There are additional requirements with respect to metrics in MIP61.

@LongForWisdom I think your title might be misinterpreted–ALL DELEGATES are not going to get paid 144K. Please rephrase the signal request. There is only 1 Delegate that currently meets the threshold. Most folks here will think that every single delegate is going to make it rain. :slight_smile:

6 Likes

I’ve changed my mind as it doesn’t appear that it is how delegates were planed to be.

Small MKR are not going to move the needle (mainly because they are not even on the forum). It’s really about 10 people holding 90% of what is the chief. If those people don’t want to vote, they can easily be introduced to shadow delegates (I can make intros). I’m willing to spin a shadow delegate that only votes on executives as this is the problem, not governance polls.

Since the introduction of delegates, the governance strength is decreasing, not increasing. It’s been 2.5 months. I don’t see evidence that decision-making was better due to more work. The most important votes (Nexo institutional vault, D3M, Lido stETH) were unanimous and the only vote where the distribution of vote between recognized delegates and others doesn’t match at all is the Paper supplemental remuneration.

Nevertheless, I think we should incentivize participation in committees for instance.

So I don’t think there is a need for such a level of compensation. Let’s see what happens and we can always increase compensation if needed. The opposite is not true.

9 Likes

Thanks for the analysis @SebVentures .

Without deriving any conclusions from the data you proposed, I love how you always push for scientific governance.

Does this mean that MKR delegated to your Shadow will be used to voted accordingly with forum outcomes, kind of automatically?

If the above is correct, I think it’s a great idea.

2 Likes

I think you’re forgetting the Custodial MKR–that has yet to work itself out. Be patient. This is a fairly new program that GovAlpha is testing. I can still remember you and I pleading for Votes via twitter. I don’t think I want to revert back to those days. That was not fun.

1 Like

Sure, but why? You seem to argue that less governance strength means that delegation isn’t working. To me, an alternate explanation is that MKR holders stopping voting themselves because they expected delegation to work. At the same time, recognized delegates gained an appreciation for the work load and legal risk that was not counterbalanced by compensation.

And then you only discuss actual votes. I contend that we’re not just asking delegates to vote, we’re asking them to keep informed, engage on the forums, and interface with external actors like regulators.

1 Like

I disagree. I regard it more like a rocket launch :rocket:. If you don’t load enough fuel :fuelpump: then you’re not going to get into orbit :artificial_satellite:.

Maybe there won’t be any takers at 48k/year.

I have not had time to complete my analysis so it is difficult to say anything without looking at wallet participation here.

My impression is that we are getting more consistent voting from delegates but the issue is MKR is leaving governance generally.

I still want to do an analysis but I am rapidly coming to a general conclusion that if Maker wants governance participation then it should seriously consider rewarding with either DAI equivalent of MKR or MKR directly to the tune of .1% of the existing MC. This reward should be across the board for all MKR voting and to facilitate delegation for people who have a small amount of MKR something like a 50% pass through reward for delegates 50% to the delegator. These rewards would be based on poll and executive vote participation.

I honestly don’t see any other solution that aligns interests punishing MKR holders that are not participating in governance, and rewarding those who do consistently participate. Rewards have to be linear because the guard of the hat is a linear MKR function. Doing anything like quadratic rewards here just punishes large MKR holders.

Taking existing governance data and running it through my own analysis to produce what I call a ‘wallet_importance’ metric (separated poll and executives) so the rewards can be weighted appropriately i think is important.

Also I don’t know if anyone has reviewed a chart of MKR in governance since inception but the graph seb has only goes back to 1/1/2021. Go back further and we see governance late in 2020 had 350K MKR in it. Sebs chart has more up to date data indicating further MKR leaving governance which confirms a general downtrend in MKR in governance.

Apologies for the lack of labels here - this was just a first pass on the data for a quick look at how much MKR had in governance from inception till now before I sat and finished my data restructuring to be able to calculate my wallet_importance metrics and to analyze all wallets over all time behaviors in governance.

I just found it particularly interesting that MKR in governance continued to grow up until the end of 2020. An interesting correlative analysis would be of the wallets holding MKR over time as well but that is for another analytical pass.

The chart I have is not up to date but you can see @SebVentures chart within mine for 2021.

I think since this whole delegate compensation thing, and governance participation is rising in importance I am going to priortize my analytic work to see if I can get some basic form of my own GovAlpha report out within next 2-4 weeks. My own basic analysis of the situation is that there is a proper alignment of governance interests if rewards that dilute all MKR holders to compensate governance participation via some defined participation metric. Making it so small players can delegate their MKR to one delegate and get the participation performance of the delegate via a ~50% reward pass through actually can help bring in smaller players to delegation. BTW: rewards can vest and either MKR sold to compensate in DAI or MKR simply paid out. .1% of entire float is approx 1000MKR which corresponds to 2.5M/yr to compensate ALL MKR either voting or delegating to vote. This is not a huge number and the pass through via MKR delgated to delegates as ‘their pay’ (which can have an additional adjustment component via some moderate delegate compensation along the lines of the first MIP) isn’t unreasonable.

The issue is that MKR in governance in the past has not been willing to dilute itself even to compensate itself for voting. I think the idea of rewarding governance participation with a component linear to MKR being voted multipled by a performance factor between 0 and 1 with a weighting component for polls and executives is probably the fairest and best model to encourage governance participation. .1% (or 1000MKR equivalent in value) is cheap to get people in here voting. with 1/2 of the delegate capture going to delegate compensation potentially a great way to get smaller MKR holders to delegate and earn some return protecting the system via their favorite delegates.

1 Like

Me neither, that’s why I’m ready to pay. But we will not, we need a few people (at least the current one) that don’t want to vote to delegate to shadow delegates (which can be the VC that are already currently voting). I know where to find A16Z, the big whale and few VCs. If they are not willing to delegate to a voting VCs, well … we have more serious problems.

Not voting at all on gov so just implementing what was decided by people actually voting.

This is the part we haven’t discussed much and that I’m not in agreement. You are saying that delegates are co-CEO that represent the DAO externally without being elected. I understand they will have to say they only represent themselves, but it is clear to me that confusion is easy and was done in the past.

And a delegate that is too deep in the operations is not going to be helpful.

Anyway, let me work on my delegate platform: Strategic Scientific MakerDAO :thinking:

3 Likes

@MakerMan Here is a full history version (well missing the chief before the previous chief it seems). Didn’t check to regroup wallets owned by the same entity in the past, it’s time-consuming.

3 Likes

I am against this, at least in the present form.

@PaperImperium for example, has pioneered this so far, which is great. But I don’t think the current setup is optimal. I’d like, e.g., to have these meetings with regulators recorded and publicly available. Otherwise how can we know what is being discussed, and in what terms?

In any case I don’t think delegates should do lobbying (as part of their mandate). We can definitely have dedicated CUs for that. Don’t really get why it should be a task/job done by Delegates tbh.

4 Likes

I voted yes purely to unblock the situation we are in today, where being a delegate is practically a fulltime job and there is no attractive compensation.

I see it as a short term bandaid. We know that a more fundamental discussion about scalable governance is coming up, but we can’t expect fulltime delegates to be that patient.

As for the role and responsibilities of delegates, this is a really complicated question because the main function that delegates have today, is spending time and attention where MKR holders have none.

As a result, MKR holders may not have the time and attention to define exactly what they want from delegates either, let alone check on them to see if they’re doing a good job.

So the delegates have to be kept in check by another mechanism. And we don’t know what that mechanism is. Whatever it will be, this control mechanism should not be under the delegates’ influence.

Compensation is just one aspect of this.

2 Likes

This data is misleading. Governance participation (in terms of MKR weight) decreased with the introduction of delegates because the VC’s no longer needed to vote in order for governance to function.

Prior to this, @prose11 and I were hassling them every other day to get the votes that we required to keep Maker functioning. The VC’s do not want to vote each week, they would rather delegate. They can’t delegate yet because custody platforms haven’t integrated with the delegation contracts. At least one VC would rather delegate to Recognised Delegates than shadow delegates and signalled an intention to spread their voting power amongst ‘proven’ recognised delegates.

The only reason we stopped having to chase the VC’s was that another large MKR Holder was willing to engage with the delegation contracts without going though custody platforms. They delegated to a few of the Recognised Delegates as opposed to the shadow delegates.

Recognised Delegates offer more transparency, more accountability and a road to actual decentralization of effective governance power. Shadow delegates do not have those advantages.

3 Likes

In retrospect, I think what I meant is that part of being a delegate is to look for things to do that aren’t being done and do them. If we form a CU for lobbying, that’s great. Delegates can find other gaps to fill.

Why do you think this is so urgent? We haven’t had delegates the majority of time Maker has been in existence. Wouldn’t it make more sense to come up with a scalable solution that will work long term, rather than rush to put a bandaid on a problem that only recently came into existence?

2 Likes

Then I would more than agree on the compensation (even higher) and we agree that the real part of a job of a delegate is not full time. But that’s mixing the supervisory board (delegates) with the management board (mandated actors) in a dual board structure which is a bad idea in my view.

The initial problem was a lack of participation for executive polls and now it’s morphing into structuring the management of MakerDAO. We can turn MakerDAO into a corporate structure, but this is probably something we need to discuss more in detail.

Let’s start with “simple” delegates (shadow or not, it was fixed by 1 person delegating), fix the initial problem, see if we can get people to delegate, and meanwhile, we can discuss the management structure.

1 Like