PGM-46: Renew delegate incentives program

Paladin Governance Management (PGM) PGM - Approved
1

Authors: @Dydymoon & @AkgEmilio

Summary

This post aims to revise & renew the Delegates Incentives Program from January to April 2024, initially approved from September to December 2023.

Context

Reminder of incentivization eligibility criteria:

  • Governance participation: Initially 80%, update to minimum 90%
  • Obligation of transparency: Explain voting rationale
  • Delegation Threshold: Minimum 10 000 hPAL delegated from 2 stakeholders
  • Recognised Delegates have to self-report on a monthly basis in this thread in order to get their incentives

Rationale

This proposal aims to evaluate the Paladin delegates status & spending over the past months, as well as propose to revise & renew this program for an additional 4 months.

The two previous renewals were defining the budget based on the price of PAL at the period start, which is not ideal considering its strong volatility. After the analysis, I’ll share a few options below to update this distribution method.

Recap of the past period (September to December)

Max budget approved : 200 000 PAL

5 eligible delegates: Dydymoon; Kene; Bozo; Alex; 0xTekGrinder

Breakdown of actual spendings

955×206 8.96 KB

This represents 36,7% of the max spending approved.

Overview of the past period

Despite not all delegates being active during the full period (some actually joined in the middle and others didn’t self-report), we’ve reached the goal of 5 active delegates mentioned in PGM-33 & 40.

According to Boardroom, 7 addresses have 10k+ PAL from 2+ delegators. However, only 5 of them fill all eligibility criteria including participation rate according to Karma & Boardroom.

Analytics of defined metrics

956×406 11.7 KB

Options to update PAL incentives distribution for delegates

I believe the delegation rewards should be based on $ value but paid in PAL for now, & would say we have a few options to update this program.

Delegation rewards still based on delegation weight

This option would require to define a compensation amount in USD, and probably update the current formula. Rewards would still be paid in PAL.

If the base compensation is calculated from the value of the first program, the new formula to be used should be the following one:

f(x) = 0.165*(sqrt(x^(1.27718))+641.607)/PALy

Where 0,165 & PALy = price of $PAL at every monthly snapshot

If the community would like to update the amount, feel free to propose an alternative in the comments

Keep the current design (No changes)

This option would renew the program on the same terms as PGM-40, so compensation based on PAL value & multiplicator updated each quarter.

Options to not renew the delegate program & abstain are also added.

Means

Define new program budget

Technical Implementation

Remove old delegates & add new ones on the portal.

Voting Options

  • PAL reward based on USD value & delegation weight
  • Reward based on PAL value & quarterly multiplicator update (No changes)
  • Don’t renew the delegate program
  • Abstain

Poll

Sould we renew the delegate program
  • Yes, based on USD value
  • Yes, with current design
  • No, don’t renew program
  • Abstain
0 voters
2 Likes
2

Renewing the program one way or another seems like a no-brainer. A few questions however:

  • I see in this proposal that participation is counted by quarters and not in months, which isn’t a problem per se, but does it mean we should distribute rewards per quarter?

  • USD value makes sense, but it would be great to have a cleaner eventually. Something that isn’t discussed here, is that the biggest delegate is current earning half the rewards of the whole program. This is not a bad thing per se, considering Dydymoon is by far the most involved delegate as of now. However it does highlight that the system can be gamed, especially as a higher part of the PAL supply is emitted and locked.

But I do insist that we need to keep supporting this initiative

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Yes, but it’s also because some delegates joined later and forgot to self-report. To better distribute the rewards, we should encourage delegation, and I believe we should suggest delegating when people lock their PAL into HPAL. I’m thinking, for example, of the Optimism airdrop, which required users to delegate their voting power to claim OP tokens.

2 Likes
4

Thanks for the feedback !

Not necessarily, it was more to verify that no delegates went below 80%
But you right this analysis should be done monthly if we keep sending the rewards each month, I thought it was already done before sending the rewards.
(It could also be asked to delegates in the self report)

Not sure I undersood, “have a cleaner” ?

The whole program budget was 200k PAL, on which I received 30684 PAL. However, It is indeed almost half of the part spent (72,7K).

Another thing that isn’t discussed is that the biggest delegate is also earning less per votes, because of the current formula advantaging smaller delegates.
(Approx 0,057 PAL/vote for the smallest vs 0,025 PAL for the biggest)

We could consider to remove this formula and to pay the same to all delegates, instead of choosing to base reward only on the voting power held/delegated.
I suggested that option in the committee channel (which didn’t receive feedback) and to the co author that was supporting the current formula, so it was removed from the draft to simplify the post.

Tbh a delegate has the same tasks (reading proposals, asking questions if needed, sharing thoughts on the post/voting intention, vote, monthly self remport) no matter if they vote with 10k or 500k PAL. Note that moving to same value for all would require to define this value upfront, happy to add this option if there is interest.

Thanks, and on that note, imo if a better way to evaluate compensation if we wanna keep different ones would be qualitative criteria such as participation to discussions etc but which is much harder to track (for exemple it happened that I spent hours to properly read, understand and answer/suggest stuff on some proposals, vs it takes 5min to just comment “I support” & vote on snapshot)

I agree on the fact that it can be gamed, not really by me though as demonstrated on the reward/vote above, but potentially by new “ghost delegates” creating addresses with 10k PAL from two delegators+. (However it didn’t happen so far)

Agree that would be a great addition to the Paladin app ! It still needs to be updated with new delegates so your suggestion might already be in the works for the version ?
Otherwise it’s worth adding it imo

5

I still think this is a bad idea at least for now because delegates don’t work as hard. Most do not bother in crafting proposals (which is the most time consuming). Having such formula is also a way to reward delegates who have been able to attract more delegation.

Imo a bare rate for delegates only makes sense if we can reward additional qualitative contributions (like crafting proposals)

Iirc it will be integrated in the new UX in prod

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This is unrelated to being a delegate imo (which must read other proposals, understand, ask questions if needed, share feedback & vote). Crafting proposal is a service provider work that should be rewarded as such, or with retroactive grants (what I’m planing to do at some point)

Not really since the more you attract votes the least you get paid in token/vote compared to small delegators as described above.

Good idea to have a base delegate reward + potentially additional for qualitative task in the delegate scope would but it’s quite hard to track in practice, so not sure how to do that, and I’m obviously biaised on this topic.

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I prefer the idea of compensating delegates for their actions (drafting proposals, voting, discussing) instead of for their responsibilty (voting power), as their responsibility is not towards the DAO but their delegators.
It is in their self-interest already to accumulate more voting power, as they are voting for the subjectively correct option, so them having more voting power, means more votes for the ‘correct’ option, which should be maximally beneficial for the protocol and therefore maximally beneficient to holders and therefore themselves.

It is in the nature of a delegate to draft proposals. Supposedly, they are the people most in tune with what is best for the protocol and officially recognized by the DAO as such.
If their compensation really is for spending their time and expertise on evaluating and discussing proposals, this should naturally be extended beyond proposals already manifested in this forum to also include future proposals still unmanifested (their own proposals).
Therefore I believe delegates should be punished for not drafting at least a reasonable amount of proposals.
As punishing is hard, we should instead inversely punish them by rewarding those who make objectively useful proposals to the DAO. Some questions we may want to discuss:

  • what are objectively useful proposals? (to prevent spam-proposing to game the system. useful proposals might not be limited to successful proposals.)
  • what is a reasonable amount of proposals? (relative to all proposals, relative to all delegate’s proposals in time period x? at least y amount?)

I support a base compensation (perhaps 20% of total put aside for this?) + additional compensation according to activeness in drafting proposals (up to 80% of total?). (should there be an upper limit of additional compensation per delegate?)

It would be beneficial to remove 2 stakeholder delegation threshold. Any user with good participation taking the time to explain their actions in their delegate thread should be recognized by the DAO to receive compensation. Their submissions can be just as valuable as anyone else’s. Would also remove this perverted incentive to delegate to yourself from other wallets just to do the same as you would if you just self-delegated.

I believe required participation rate should remain at 80%.

Payout should be in x$ worth of $PAL (30d TWAP or similar).

9

That is unfortunately quite untrue, in fact most delegates (in all DAOs) just vote and comment, which is already significant work.

The risk of doing so is that you will force bad quality proposals to plague the forums.

That could be interesting, but imo we should also have a mechanism that rewards logarithmically (like now) the delegates who are able to attract delegation, because today still, a fair amount of lockers do not delegate or vote.

So paying everyone that participates? Doesn’t that open the door to large gamification?

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It is significant work, yes. And delegates might not be doing it but that just means we might be calling them delegates prematurely. The question is “should a delegate be drafting proposals?” and in my opinion the answer is a clear yes; “yes, they should.”.

Of course that is a risk, but won’t it always be a risk when we reward drafting proposals? What I definitely believe is not everyone should be rewarded for drafting proposals, only people who are recognized as delegates. Also that is the reason I was explicitly mentioning:

which would of course have to be defined.

Is it even the job of the DAO to increase voter turnout? In actual democratic elections, there are good arguments for increasing voter turnout. But here? You are not ‘forced’ to accept voting outcomes like with national elections (where moving elsewhere might be difficult or impossible). You can simply sell the token and move on.

Here not voting might actually be a vote of confidence for the voters and delegates who have been running the DAO so far. Not delegating/voting = delegating to all voters relative to the total voting power.

If you have a problem with the decisions which are made, it is on you to vote and express your opinion on proposals. Whether through actually voting or delegating to someone with similar opinions.

The DAO doesn’t have direct impact on your life, voting in the DAO has impact on what the DAO does. And if that has an significant enough impact on you, then it is in your own personal interest to delegate to someone you trust or vote yourself. It’s part of the token’s value to be able to vote, if you don’t want to realize that part of the value, that’s on you for not maximizing extracted value.

There might be arguments to be made about the legitimacy of DAO decisions, but that’s what the quorum is for, no?

Also might be missing something?

Imo there are two reasons which would call for disproportionate delegate rewards.

  1. if it is the DAO’s job to increase voter turnout (which I just argued against).
  2. if voting power is used as a key performance indicator for delegates.

So regarding 2., do we need to use voting power as KPI? That would basically assume that higher voting power is probably a result of more value provided to the DAO and that being the reason more people have decided to delegate to that person.
But if we actually use a model similar to this:

There is no need to assume that ‘more voting power’ equals ‘more value provided’, as we can reward more value provided directly through the 80% allocation for drafting proposals.

Isn’t the door to gamification wide open already? I can buy PAL right now on two wallets, delegate to a third and be done, that’s the only thing that would change.

The actual barriers in my opinion are the participation rate and explaining decisions in a delegate thread. These are the two things which continuously take time.
Not everyone that participates is rewarded, everyone who shows genuine interest by regularly being active on the forums to vote, report in their delegate thread and therefore bring value to the discussion is compensated.

Also, if above model is used, simply being a recognized delegate would only come with 20% of rewards while the main up-to-80%-rewards come with drafting proposals.

This would align incentives, as, if you became a delegate simply to farm part of the 20% and not spend any work on proposals, it will probably not be worth it from a time/money perspective. To make it worth the time, you would need to also draft proposals, and as potential delegates know this before trying to become a delegate, everyone who was not planning to draft up meaningful proposals anyways (and just planning to cash-in on the 20%) will be discouraged from trying to become a delegate in the first place.
This will leave the people who are willing to go all the way, and they will be well-compensated as they are going to split up to 80% of compensation between themselves.
Of course, again, it all hinges on what makes a beneficial proposal, that is eligible to be rewarded? And even though the answer a beneficial proposal is one that is accepted is not perfect, it might be a good starting point for us, and the more I think about it, the more I like it.

I think we should definitely take the time for all these discussions.

1 Like
11

From our end, we are in support of renewing the delegate program, the value that can be created by delegates through active participation, and an allocation of incentives ensures that delegates can allocate adequate time and resources to contributing.

Regarding the methodology for determining compensation, we believe it is better to leave that the rest of the DAO to decide.

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You are right, maybe worth opening another topic in order to discuss as we will likely need multiple weeks in order to set this up properly

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Hello, thank you for your detailled feedback !

I disagree on this view. A delegate scope, especially in active DAOs is already quite significant without adding a requirement to create proposals.

It seems you’re confusing DAO delegates & service providers so will try to explain both below. Also the Paladin DAO currently only have 1 technical service provider compensated which is Mithras Labs but others are doing SP tasks as well (including me), so that probably doesn’t help to see the differences.

In my opinion (and experience for being a delegate in several DAOs over the past years) the delegate scope requires the following:

  • Read & understand proposals submitted on the governance forum
  • Ask questions to proposals authors if needed
  • Share feedback which helps find a consensus before moving to snapshot
  • Vote on proposals (the max possible) to represent their delegators

While this might sound like it doesn’t take much time, that can actually be quite time consuming, especially if you’re doing it right. Being a delegate doesn’t mean supporting litterally everything that is proposed, but rather to analyse/suggest alternatives, and potentially argue with authors if you believe there is a better way.

A delegate amount of work basically depends on the amount of proposals submitted, and it can quickly take a lot of time if you have many service providers / team members / community members proposing topics.

On the other side, a service provider is an entity that does specific tasks for a DAO. It can be in various domains such as dev tasks, strategy work, BD work, treasury management work, data analysis tasks, DAO Ops tasks, marketing tasks etc which can all require a different type of proposals but also additional work.

Each of these SP scopes requires specific skills and time requirements that can represent up to full time jobs. Now, considering these are paid by the DAO to deliver, they usually create a lot of proposals, which requires delegates attention.

As the Paladin DAO is not the most active in terms of proposals amount, I’ll use the Aave DAO as an example to illustrate my point. When looking at the Aave DAO lvl of activity, it is obvious that being a delegate there should be a full time job as it seems nearly impossible to do the above with a few hours/week.

Now imagine that in addition to reading, commenting & voting on the proposals of all SPs, team & community members, they also need to find the time & skills to draft proposals that make sense (& that would most likely overlap on some SP scope, creating a double spending for the DAO).

Moreover, there is a risk of conflict of interest if the ones working for the DAO (drafting proposals in your example), are also the ones having most of the voting power because they are also delegates.

Anyway, I hope this helps understand the differences & I strongly believe not all delegates should be service providers (That’s almost the case in Aave, or at least many delegates are doing it first to later request a service provider funding, which results in only few delegates actually doing their job correctly there, and service providers with a lot of voting power).

However, I’m not saying that no delegate should be service provider either (I’m kinda already doing it with writing proposals on Treasury Strategy/Management, DAO Ops, Partnerships, or when I’m creating the monthly transactions as I’m also a committee member) but my point is that these are different level of contributions compared to acting as a delegate on other proposals, so that should not be confused as the same.

Sorry for the long answer ^^

That’s why we have a governance framework with specific categories & parameters. Check out PIP-8 for more details about it.

Yes in theory you could do that, but you wouldn’t be eligible for rewards if you’re not participating.

That’s litterally the delegate job ser

Agree that we should consider having a framework to price contributions (SP/Grants) but that’s a topic for another proposal imo as unrelated to delegates rewards renewal.

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I also believe there’s a clear distinction between the roles of a delegate and a proposal creator in a DAO. This may require another proposal and discussion about how to compensate proposal creators and potentially reallocating a part of the delegates’ budget to the proposal creators if deemed appropriate.

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Thanks for the participation on this topic !

If no additional comment arises, the snapshot vote will be published tonight with the initial post voting options which includes:

  • Yes, PAL reward based on USD value & delegation weight
    (Based on price of the initial delegate program: 0,165$/PAL)

  • Yes, Reward based on PAL value & quarterly multiplicator update
    (No changes from current setup)

  • No, Don’t renew the delegate program

  • Abstain

1 Like
16

Reporting for January 2024, just in case the proposal is approved :blush::
My ENS is tradercameraman.eth
Voting Power: 62.65k
Delegators: 4 addresses (including mine)

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The vote has been submitted on snapshot.

Quorum PGM-46: 737 664 votes.

image

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Delegate Self Reporting for January 2024 (if approved)
ENS: Dydymoon.sismo.eth
Voting Power: 320 410 votes
Delegators: 11 addresses (including mine)

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gm Pals, thanks @Dydymoon & @AkgEmilio for this proposal, I will support it and vote for even if as a delegate I am obviously biased. Some thoughts regarding the points raised earlier

  • Agreed that USD value makes more sense and adding HPAL as a criteria

  • Completely agreed that Crafting proposal should fit more in the Service Provider category and should be rewarded as such as it involved way much more time and work to make and follow-up

  • Regarding the difference of quality and quantity of work between Delegates I agree this should be taken into account in a way. The hard part is to find the right criteria without creating a complex mechanism. For those interested in this, Arbitrum is trying to crack this topic with this proposal here

Imo something like that isn’t suited for Paladin as it is too complex and required too much monitoring. The easier option but not very decentralized would be to have a central authority highly involved in the DAO allocating those qualitative points (this central authority could change every quarter).

If not we could trust the good faith of all delegates and use a tool like Coordinape but it still involve monitoring and potential issues of delegate voting only for themselvees or their friends. The risk of any criteria based on number of posts, lenghts etc. is that it could be tricked easily especially now with tool like chatGPT while lowering the quality of the debate.

Would love to follow up the discussion on this as it is a real issue many DAOs are having imo

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Delegate Self Reporting for January 2024 (if approved)
ENS: 0xalex0.eth
Voting Power: 88.6k
Delegators: 3 addresses (including mine)

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Reporting for february 2024
My ENS is tradercameraman.eth
Voting Power: 61.89k
Delegators: 4 addresses (including mine)