Been awhile since I got back to writing! Have been working on all things governance at the dYdX Foundation, and this foray into governance has got me thinking about how governance as a whole in Web3 can be improved. Let’s start with delegation.

Seeing delegate initiatives like Tally’s Delegation Week (tl;dr here), Uniswap Foundation’s Delegate Race , and the Optimism community brainstorming on Delegate Discovery Initiatives, it really got me thinking about how DAOs can improve delegation.

Voter apathy is very real in DAOs, and is precisely the issue that delegation solves for.

Voter apathy refers to a lack of interest in participating in governance, which translates to low voter turnout in governance proceedings. We can talk all we want about decentralized governance, but across DAOs, only an average of ~5% of the total votable supply actually participate in governance.

• Lack of interest. Most token holders are speculators and are only interested in direct profits through upward price appreciation of their tokens. Voting in DAOs can be time-consuming, as it often requires reading through proposals and understanding the implications of each vote. Many people are simply not interested enough to commit themselves to this process.

  “As long as I get a mouth-watering ROI, I don’t care about how the DAO is governed.”

• Lack of knowledge. Some proposals are just too technical to understand, especially for regular joes. The sensible thing to do in such cases is to abstain from voting.

• Disillusionment that their vote actually counts for something. Sure, politicians love to say that every vote counts. But does it, truly? For DAOs which run on a one-token-one-vote governance model, governance is tilted in favor of big players. So why vote at all, when a single whale can come in and literally decide on the outcome of the vote?

Delegation, in Web3, refers to token holders selecting another address to make governance decisions on their behalf. The token holder still retains full ownership of the tokens, but the selected delegate will wield the voting power associated with those tokens.

Delegation enables DAOs to harness their community leaders' collective intelligence and expertise, and ensures that decision-making remains transparent, inclusive, and adaptable. It is a form of representative democracy, where smaller token holders can pool their voting power to individuals who volunteer to participate actively in the ecosystem and governance, and potentially have the same voting power as larger token holders.

So, how can delegation be improved?

DAOs can proactively push comms & initiatives to elevate their delegates OBJECTIVELY. This concerted effort is highly motivational as delegates know that their work and efforts are being recognized.

The key is being OBJECTIVE. Diversity of thought should always be encouraged, and DAOs should not only be promoting popular opinions/delegates - as much as possible, all constructive perspectives should be promoted.

2 simple ways that DAOs can go about these are:

• Promote delegate profiles, delegate-led initiatives, and reasons why they voted in a certain way on the DAO accounts.

• Have recurring common spaces for delegates to exchange ideas in person. As much as anonymity is commonplace in Web3, we’re all still human, and being able to put a face and voice to a profile does help with building trust.

A few DAOs 'enforce' delegation on airdrop claims. More often than not, these delegations are one-offs, and people usually just blindly delegate to the popular profiles at the top of the list.

Blindly delegating is a real issue that worsens the distribution of voting and/or proposal powers, and it also de-motivates many delegates who’ve been active, but not able to get the delegations they ‘deserve’.

So how can quality delegations to smaller, active delegates be incentivized and rewarded?

• Decide what being an active delegate entails. Being active goes beyond simply voting on proposals. Off-chain elements, like contributing to discussions on the governance forum and replying to community members on Discord, should also be taken into account when scoring for a delegate’s level of activity.

  • @karmahq is great at developing a transparent weighted scoring that includes qualitative contributions like forum participation and voting to sort for active delegates.

  • @gitcoin's steward health cards uses a very deliberate weighted point scoring framework for stewards (delegate equivalent). The higher the number of health points, the more active the steward is.

• Create a criteria for delegator rewards for a defined period of time (eg seasons in @optimismFND). This criteria should be iterative, and teams should evaluate the ROI for these rewards. A potential criteria could include:

  • A delegator with a new delegate transaction to a delegatee with <0.X% voting power.

  • The delegatee achieving a high contributor score for the period.

  • Multiplier effect (achieve previous 2 criteria in past periods)

  For this to work, there should be a readily available tooling (imagining a dashboard like what KarmaHQ has built out for many DAOs) to sift out and sort delegates by their scores, so that they can easily participate and achieve the criteria. @karmahq does a great job at this.

A drawback of this recommendation is that active delegates with more delegated voting power (VP) might see a decrease in their delegated VP. However, this re-distribution does help mitigate VP concentration and is good in making governance more inclusive and decentralized.

Governance participation is beyond just voting on proposals. Being a delegate requires a serious time commitment, and delegates should be rewarded for their time and efforts. @optimismFND does a great job of retroactively paying its delegates (see their retroactive delegate rewards for Season 3 here), and should be something that all DAOs look to emulate and iterate on top off.

This goes without saying - rewards for delegates need to be based on an objective framework that is ideally voted for by the community. The last thing DAOs would want is for these rewards framework to apply to only a select top few delegates in a discretionary manner.

As mentioned in point 2 around having readily available tooling to sift out and sort delegates by their scores, tooling to optimize the delegation experience is an absolute necessity if DAOs hope to improve their token holders’ quality of delegation.

Potential tooling ideas include:

• Dashboard aggregating participation metrics from various avenues (Discord, Forum, Off-chain Voting, On-chain Voting) for delegates, and by default lists out the smaller active delegates.

• A notification bot summarizing your delegate's activities weekly.

• Gas fee waivers for delegation.

Delegation is clearly an important lever to pull for DAO governance to be effective, decentralized, representative, and inclusive. Definitely think there’s a lot more room to innovate on improving quality delegation. Again, the emphasis is on quality, and the design of the whole delegation process should be deliberate to attain a good level of quality. Would love feedback on these ideas to improve delegation! Feel free to DM me on Twitter so we can exchange ideas on not just delegation, but how Web3 can improve its governance practices as a whole.

https://twitter.com/Clifftonishere/status/1667082154889838592

Been awhile since I got back to writing! Have been working on all things governance at the dYdX Foundation, and this foray into governance has got me thinking about how governance as a whole in Web3 can be improved. Let’s start with delegation.

Seeing delegate initiatives like Tally’s Delegation Week (tl;dr here), Uniswap Foundation’s Delegate Race , and the Optimism community brainstorming on Delegate Discovery Initiatives, it really got me thinking about how DAOs can improve delegation.

Voter apathy is very real in DAOs, and is precisely the issue that delegation solves for.

Voter apathy refers to a lack of interest in participating in governance, which translates to low voter turnout in governance proceedings. We can talk all we want about decentralized governance, but across DAOs, only an average of ~5% of the total votable supply actually participate in governance.

• Lack of interest. Most token holders are speculators and are only interested in direct profits through upward price appreciation of their tokens. Voting in DAOs can be time-consuming, as it often requires reading through proposals and understanding the implications of each vote. Many people are simply not interested enough to commit themselves to this process.

  “As long as I get a mouth-watering ROI, I don’t care about how the DAO is governed.”

• Lack of knowledge. Some proposals are just too technical to understand, especially for regular joes. The sensible thing to do in such cases is to abstain from voting.

• Disillusionment that their vote actually counts for something. Sure, politicians love to say that every vote counts. But does it, truly? For DAOs which run on a one-token-one-vote governance model, governance is tilted in favor of big players. So why vote at all, when a single whale can come in and literally decide on the outcome of the vote?

Delegation, in Web3, refers to token holders selecting another address to make governance decisions on their behalf. The token holder still retains full ownership of the tokens, but the selected delegate will wield the voting power associated with those tokens.

Delegation enables DAOs to harness their community leaders' collective intelligence and expertise, and ensures that decision-making remains transparent, inclusive, and adaptable. It is a form of representative democracy, where smaller token holders can pool their voting power to individuals who volunteer to participate actively in the ecosystem and governance, and potentially have the same voting power as larger token holders.

So, how can delegation be improved?

DAOs can proactively push comms & initiatives to elevate their delegates OBJECTIVELY. This concerted effort is highly motivational as delegates know that their work and efforts are being recognized.

The key is being OBJECTIVE. Diversity of thought should always be encouraged, and DAOs should not only be promoting popular opinions/delegates - as much as possible, all constructive perspectives should be promoted.

2 simple ways that DAOs can go about these are:

• Promote delegate profiles, delegate-led initiatives, and reasons why they voted in a certain way on the DAO accounts.

• Have recurring common spaces for delegates to exchange ideas in person. As much as anonymity is commonplace in Web3, we’re all still human, and being able to put a face and voice to a profile does help with building trust.

A few DAOs 'enforce' delegation on airdrop claims. More often than not, these delegations are one-offs, and people usually just blindly delegate to the popular profiles at the top of the list.

Blindly delegating is a real issue that worsens the distribution of voting and/or proposal powers, and it also de-motivates many delegates who’ve been active, but not able to get the delegations they ‘deserve’.

So how can quality delegations to smaller, active delegates be incentivized and rewarded?

• Decide what being an active delegate entails. Being active goes beyond simply voting on proposals. Off-chain elements, like contributing to discussions on the governance forum and replying to community members on Discord, should also be taken into account when scoring for a delegate’s level of activity.

  • @karmahq is great at developing a transparent weighted scoring that includes qualitative contributions like forum participation and voting to sort for active delegates.

  • @gitcoin's steward health cards uses a very deliberate weighted point scoring framework for stewards (delegate equivalent). The higher the number of health points, the more active the steward is.

• Create a criteria for delegator rewards for a defined period of time (eg seasons in @optimismFND). This criteria should be iterative, and teams should evaluate the ROI for these rewards. A potential criteria could include:

  • A delegator with a new delegate transaction to a delegatee with <0.X% voting power.

  • The delegatee achieving a high contributor score for the period.

  • Multiplier effect (achieve previous 2 criteria in past periods)

  For this to work, there should be a readily available tooling (imagining a dashboard like what KarmaHQ has built out for many DAOs) to sift out and sort delegates by their scores, so that they can easily participate and achieve the criteria. @karmahq does a great job at this.

A drawback of this recommendation is that active delegates with more delegated voting power (VP) might see a decrease in their delegated VP. However, this re-distribution does help mitigate VP concentration and is good in making governance more inclusive and decentralized.

Governance participation is beyond just voting on proposals. Being a delegate requires a serious time commitment, and delegates should be rewarded for their time and efforts. @optimismFND does a great job of retroactively paying its delegates (see their retroactive delegate rewards for Season 3 here), and should be something that all DAOs look to emulate and iterate on top off.

This goes without saying - rewards for delegates need to be based on an objective framework that is ideally voted for by the community. The last thing DAOs would want is for these rewards framework to apply to only a select top few delegates in a discretionary manner.

As mentioned in point 2 around having readily available tooling to sift out and sort delegates by their scores, tooling to optimize the delegation experience is an absolute necessity if DAOs hope to improve their token holders’ quality of delegation.

Potential tooling ideas include:

• Dashboard aggregating participation metrics from various avenues (Discord, Forum, Off-chain Voting, On-chain Voting) for delegates, and by default lists out the smaller active delegates.

• A notification bot summarizing your delegate's activities weekly.

• Gas fee waivers for delegation.

Delegation is clearly an important lever to pull for DAO governance to be effective, decentralized, representative, and inclusive. Definitely think there’s a lot more room to innovate on improving quality delegation. Again, the emphasis is on quality, and the design of the whole delegation process should be deliberate to attain a good level of quality. Would love feedback on these ideas to improve delegation! Feel free to DM me on Twitter so we can exchange ideas on not just delegation, but how Web3 can improve its governance practices as a whole.

https://twitter.com/Clifftonishere/status/1667082154889838592