Why GG

The protocol governance ecosystem divides into two distinct groups: those who make governance decisions and those who build the systems they use. A third group, who remain even further removed, work to establish which forms of governance produce the results society needs while another explores entirely novel ideas for collective decision-making. A key challenge in our field is that the ideas and efforts of one group often remain isolated from the other.

GG’s mission is to bridge this gap by creating physical and virtual spaces where governance folks from various fields and organizations come together. GG offers a collaborative environment for practitioners, experts, leaders, builders, researchers, and investors to coordinate their efforts.

By promoting a shared understanding of the challenges and fostering interdisciplinary dialogue, GG aims to advance mechanism design as a critical tool for addressing protocol governance issues.

What Happened

The event featured a diverse group of attendees, including governance practitioners, researchers, builders, and investors. Participants included:

• Researchers: Leading thinkers like Robin Hanson, Bo Waggoner, Jeff Strnad, and Matt Stephenson.

• Governance Experts: Representatives from Uniswap Foundation and Optimism Foundation.

• Builders: Innovators such as David Minarsch (Valory), Connor McCormick (Network Goods Institute), Matan Field (Common), David Zhou (Doxa), Paul Sengh (OpenBlockLabs), and Leo (Community Graphs).

• Ecosystem and Investors: Key figures like Juan Benet from Protocol Labs and representatives from Blockchain Capital.

The event was packed with insightful talks, fireside chats, interactive workshops, and governance-related games. Full playlist here:

https://www.youtube.com/playlist?list=PLoNuRyUpGhvwSkeGzaQHSbyl-61b4i-fV

What GG Means for Butter

For Butter, the success of GG represents a significant step forward in developing the MechGov (Mechanism Governance) research space.

Key achievements include:

• Strengthening Relationships: GG allowed us to forge stronger ties with fellow researchers, builders, and governance professionals.

• Building a Community: We’ve established a GG Telegram group and recently launched a research forum, which will serve as a hub for the best MechGov research and foster discussion within the broader governance community.

• Ongoing Support: Thanks to the success of GG, we received commitments to roll out governance games and to support GG events in the future.

Why We Chose Edge City

GG’s alignment with Edge Esmeralda’s mission made it a natural partnership. Edge City is committed to being a ‘society incubator’—a laboratory for experimenting with new ideas, technologies, and cultural practices that promote human flourishing. By bringing together people working in seemingly unrelated fields yet on the cutting edge of technology, science, and society, Edge City provided the ideal environment for GG to flourish.

What’s Next for GG?

Stay updated by joining our telegram group:

https://t.me/+Yi_0fVEkVv1mY2Q0

Join the community:

https://community.ggresear.ch/

Election Summary

On March 23rd, we initiated a Temperature Check to select a delegate for a three-month incentivized Delegate Campaign. Funded by a $15k AAVE grant from the Aave Grants DAO, the campaign aimed to compensate the winning delegate for their governance duties during the three-month campaign.

13 candidates applied, with voters choosing from a Snapshot proposal. On April 10th, the Snapshot election concluded with TokenLogic emerging as the winner.

TokenLogic won the election with 185K AAVE (24.94%), followed by StableLab with 146K AAVE (19.7%), and Fire Eyes with 105K AAVE (14.12%). Detailed results are available on the Snapshot proposal page.

Engagement and Influence in the Election

As the proposal focuses on electing a delegate who will contribute to the governance process, analyzing the dynamics of voter participation in this election can provide valuable insights into the DAO's governance structure.

We will examine community engagement together with the progression of governance dynamics, and finally delve into voter distribution and influence.

Voter Engagement and Dynamics

Butter's election was the top proposal in terms of voting power and participation rate, according to a ranking based on: rank by voting power + rank by wallets, as seen in this query.

The following chart (available in the Participation tab of our Election dashboard), shows how this Snapshot proposal stands out among a trend of larger participation rates over the past year.

Let’s dig into the composition of this participation.

Influence of Voting Power Whales

We're considering Voting Power Whales as the top holders of voting power in this analysis.

As shown on our Election dashboard hosted on Flipside, Voting Power Whales votes have heavily influenced the outcome of the election.

As part of our effort to understand further the dynamics of voting power in this election, we’ve produced a more detailed Pivotality Report (see our previous large-scale report on Voting Power Whales’ influence here). The analysis is focused on the top 10 proposals and looks at how the outcome would have changed had whales not participated.

As seen in our conclusions, Blockworks would have been elected if the top 5th percentile of voters hadn’t participated.

Whale Voting Power Distribution

We also looked into how the top Voting Power Whales voted in the election. Here we’re defining whales as the top 0.1%, for increased clarity.

The following Sankey diagram illustrates how whale votes flowed into each candidate, highlighting the top supporters (in terms of voting power) of each delegate.

We see that most candidate delegates did not cast a vote in the election, with the notable exception of:

• Flipside. Flipside spread their votes evenly across TokenLogic, StableLab, FranklinDAO, Blockworks Research, ConsenSys, and Curia. Flipside did not vote for themselves.

• TokenLogic & Llama. Matthew, founder of TokenLogic, is the Aave Program Manager for Llama, as detailed here. TokenLogic’s Delegate Platform notes, “The founder does not have access to Llama’s Aave voting wallet and does not partake in any Llama internal voting decision making process”. Llama spread its votes between Flipside and, mostly, TokenLogic.

Participation Rate by Tokenholders Category

Despite having one of the highest overall participation rates, it was essential to better understand the types of tokenholders that comprised the voter base for this Snapshot proposal.

Our analysis, available on this Dune dashboard and related query, reveals that Butter's election experienced relatively high participation rates from both New Holders (wallets currently holding AAVE/stkAAVE/aAAVE & which made their first AAVE/stkAAVE/aAAVE transaction ≤ 1 year ago) and Non-Participating Holders (wallets who have never participated in on-chain governance):

• Butter:

  • New Holders: 84%

  • Non-Participating Holders: 82%

• Top 10 Snapshot proposals average:

  • New Holders: 65%

  • Non-Participating Holders: 63%

Note: In this analysis, we filtered out whales by token holdings (> 0.1% of the total supply) at the time of the Snapshot.

From this data, we can conclude that a considerable number of relatively new AAVE tokenholders, who are not accustomed to participating in on-chain governance, showed interest in the proposal and actively voted.

Conclusion

The well attended Delegate Election highlighted the community's commitment to decentralized governance and the importance of active involvement from tokenholders. Unsurpisingly, Voting Power Whales' votes had a significant influence on the outcome. This showcases the considerable sway these large holders of voting power hold in the decision-making processes within the Aave community.

Furthermore, the data suggests that a substantial number of relatively new AAVE tokenholders, who may not be familiar with on-chain governance, actively participated in the voting process. As the Aave ecosystem continues to evolve, fostering transparency and engagement from diverse tokenholder categories will be essential in promoting a robust DAO, inclusive of all tokenholders.

With another election scheduled in three months, it will be interesting to observe if the participation dynamics change. The upcoming election may present an opportunity to further analyze the impact of whales on voting outcomes and assess the effectiveness of governance incentives to encourage participation from a broader range of tokenholders.

April 10, 2023, 12 PM EDT - April 17, 2023, 12 PM EDT. Add the Calendar here

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TokenLogic wins. Time to Delegate

The tokens have spoken. TokenLogic will be your delegate for the next 90 days.

We’ll be providing an analysis of voter behavior during the election, later this week.

How to Delegate

To qualify as a participant in the Butter’d Aave Delegate Campaign, you’ll need to delegate your AAVE or stkAAVE to the winning delegate during the delegation window.

We have two options for you: Manual Delegation and Automatic Delegation. Note: Each option either yields a different participation badge (see below):

1. Manually delegate to the winning candidate using one of the following options (sorted alphabetically):

   1. Aave Governance

   2. Boardroom

   3. Tally

2. Deposit tokens into Butter’s Vaults (details here).

   1. Upon deposit, depositors will be issued with Vault shares which can be used to retrieve AAVE from the vault at any time

   2. The vault policies restrict the vault owners, i.e. Butter, to make use of any tokens deposited to the vault (which you can verify here and here)

   3. The vault will automatically delegate all voting power deposited to the winning delegate.

Delegation Window

Delegation Window: April 10, 2023, 12 PM EDT - April 17, 2023, 12 PM EDT. Subscribe to the Google Calendar.

Manual Delegation

Delegate Address: 0x2cc1ADE245020FC5AAE66Ad443e1F66e01c54Df1

✋ **Need some help?** Here’s a great [guide from Fig at Flipside Governance](https://medium.com/flipside-governance/how-to-delegate-in-aave-519a5c2611ff) explaining how to delegate your AAVE

Vault Delegation

AAVE Vault: https://app.enzyme.finance/vault/0x9d4c5e00c47de8f789a2ba971c37279c5188a891

stkAAVE Vault: https://app.enzyme.finance/vault/0x066b5139c1335d159f823f2bbc0d55fc270ccfcb

Participation Badges

We’re still in development but we want to recognize the time and effort contributed by everyone that participated in our very first pilot with Aave.

With that in mind, We’ll be providing a range of Otterspace badges for Butter participants. More info on badges here:

https://www.loom.com/share/a40e127b6b0442ad97843bfc87fac42c

Once the campaign is complete, participants will be able to claim a badge for any address that:

1. Participated in the election by voting in the snapshot

2. Delegated to the winning address during the delegation window

3. Remained delegated until the end of the campaign

Vault Delegation NFTs

For anyone that decides to use Vault Delegation, you’re helping us to test a key assumption in our research and demonstrating that you’re confident enough in Butter to let us manage your delegation.

In the future, Vault Delegation will form the core experience for people using Butter so we’re excited to see how many of you decide to use it. As a token of our appreciation, every Vault Delegation participant will be eligible to claim a badge and will also receive a Butter NFT.

As usual, Butter will report on delegate and tokenholder voting behavior during the delegation period so the process is transparent and easily auditable by all tokenholders.

A Final Reminder

Delegations using either method must be maintained for the duration of the three-month campaign (April 17, 2023 - July 17, 2023) to be eligible for either badges or NFTs.

[EDIT 2023-07-11: updated TokenLogic delegation address]

Make sure you’re familiar with each delegate’s Delegate Initiative before participating. We’ll use the initiative to assess their participation in governance during and after the campaign.

Before we get into the details, a quick reminder that this is still a pilot, so things are a little more clunky than you’re probably expecting. With that in mind, we recommend reading this post carefully to ensure you understand how to participate.

Let’s get to it!

Delegate Campaign: tldr

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If you do anything, read this section. Still too much effort? Add the calendar

========================================================

The campaign is split into three phases:

1. Election Week: Elect a delegate from the 13 candidates on Snapshot—live now

2. Delegation Week: Delegate to the winning delegate—NFTs for delegatoors

3. Campaign: Your delegate represents you in Aave governance. We send them AAVE

Phase 1: Election Week

*April 3, 2023, 12PM EDT - April 10, 2023, 12PM EDT. Add the Calendar here.*

1. Visit Aave’s Snapshot space to participate in the election phase, which is live ⚡️

2. By participating, your address will be eligible for a badge you can mint after the delegation phase.

3. Review the 13 delegate candidates’ Delegate Initiatives

4. Vote for your favorite candidate using Snapshot’s Weighted Voting System. Weighted Voting allows you to split your Aave among all 13 delegates and weight your vote depending on how much you prefer each candidate, e.g., 10 AAVE on Candidate A, two on Candidate B, and three on Candidate C. You can find more information here.

5. Butter will report on delegate and tokenholder voting behavior during the election so the process is transparent and easily auditable by all tokenholders.

6. The winner will receive voting power delegated during the delegation period for three months (instructions below)

7. Election Week finishes on April 10, 2023, at 12:00 PM EDT.

Phase 2: Delegation Week

April 10, 2023, 12 PM EDT - April 17, 2023, 12 PM EDT. Add the Calendar here.

1. After the election concludes, the delegation window opens for seven days, until April 17, 2023, at 12:00 PM EDT. Delegates, if not already active, can commence their governance duties from April 10, 2023.

2. Tokenholders can now select one of the following delegation options:

   1. Manually delegate to the winning candidate using one of the following ( sorted alphabetically):

      1. Aave Governance

      2. Boardroom

      3. Tally

   2. Deposit into our Enzyme Vault (details to follow). The vault will automatically delegate all voting power deposited to the winning delegate. AAVE can be retrieved from the vault at any time.

3. Badges are claimable by addresses that have participated in the election, delegated to the winning address during the delegation window, and remained delegated until the end of the campaign.

4. NFTs will be sent to participants who delegate using vault delegation.

5. Butter will report on delegate and tokenholder voting behavior during the delegation period so the process is transparent and easily auditable by all tokenholders.

6. Tokens delegated using either method must be maintained for the duration of the three-month campaign (April 17, 2023 - July 17, 2023) to be eligible for delegation badges or NFTs.

Phase 3: Campaign Term

April 17, 2023, 12 PM EDT - July 17, 2023, 12 PM EDT. Add the Calendar here.

1. Reporting: During the campaign, Butter will monitor the elected delegate based on the commitments and KPIs detailed in their Delegate Initiatives.

2. Compensation: One-third of the ~222 AAVE provided as a grant by Aave Grants DAO will be distributed to the winning delegate each month, redeemable at the end of each month.

3. Closing:

   1. As the campaign draws to a close, the next election will be announced, and the subsequent round of delegation will begin.

   2. Butter will provide closing reports on delegate performance during the campaign.

Help Me

If you need assistance, please jump into our Discord and throw your question in the #support channel. Someone will be in touch ASAP.

Closing

Participating in Butter’s pilot Delegate Campaign provides a unique opportunity to shape Aave and the future of DAO Governance.

Follow the instructions above to ensure your efforts aren’t wasted, and don't forget to stay updated on campaign developments by following Aave on Twitter, Butter on Twitter, and joining the Aave forums.

Good luck!

👔 We're delighted that 13 delegates are standing for candidacy – and we'd like to introduce them!

Some of these delegates are already well-known, while others are up-and-coming. Some are already deeply involved in Aave, while others have spent time as delegates or contributors in other protocols.

The goal of this pilot was to increase the pool of delegates tokenholders can select from because we believe that governance is most effective when it is inclusive and representative of its stakeholders.

To that end, we're excited that governance incentives (with a helping hand from Aave Grants DAO) have helped attract a diverse set of delegates ready to support tokenholders and contribute new ideas to Aave’s continued success.

You can find the list of delegates (in reverse alphabetical order) here:

• Wallfacer Labs

• TokenLogic

• StableLab

• Oxytocin

• OnChainCoop

• FranklinDAO

• Flipside Governance

• Fireyes

• Diego Ortiz

• DAOStewards

• Curia

• ConsenSys

• Blockworks Research

Electing a delegate

🗳 The election starts next week—running from April 3 to April 9, 2023.

You can learn more about your favorite candidate's plans during the 90 days of the campaign below:

📣 All published Delegate Initiatives are available at this link:

https://www.notion.so/butterd/Butter-Aave-Delegate-Initiatives-45e1ce2ac08a4b4298518b193ed8a7ce?pvs=4

For more details, please refer to our Aave Governance forum post:

https://governance.aave.com/t/arc-incentivized-delegate-campaign-3-month/11732

As is widely acknowledged, most DAO governance decisions are made by large voters, leaving little room for smaller voters to make a difference. But just how much influence do whales have?

We dug into 100 of the most recent proposals from the top 60 DAOs to crunch the numbers.

How unbalanced is the distribution of voters? Are large voting power holders aligned with minority voters? Would proposals outcomes have been different if minority voters were better represented?

We came up with a whale pivotality metric, showing the proportion of whale votes which were pivotal — that is their vote alters the outcome.

Read more in our Report below, built in collaboration with takeabreath:

https://butterymoney.github.io/gov_analysis/report/plutocracy_report.html

This characterization is probably unfair for all DAOs, but considering the worst case is helpful if we want robust solutions.

Weakly-aligned

The most common complaints of weakly-aligned DAO Governance include the following:

Self-dealing & Collusion. Delegates have strong incentives to engage in transactions that benefit them personally at a cost to tokenholders, as seen in Decentraland's attempts to elect a committee member after their election victory was determined by a single vote from someone long-suspected to be a scammer.

There have been repeated claims that a select few have the power to extract significant resources from NounsDAO.

Free-riding. DAO governance systems allow delegates to maintain their voting power with little-to-no effort, encouraging delegate free-riding. MakerDAO monitors its paid delegates' participation in voting and communication, with compensation tied to maintaining agreed levels.

Resource wasting. With minimal incentives to seek high returns, risk-averse delegates commit resources to inbound, low-risk, low-return projects.

Strongly-aligned

DAOs need strong alignment between governance participants to achieve their potential. Where their potential is:

1. Fulfilment of the DAO's objective

2. Growth in the adoption of goods and services the DAO produces

3. Growth in the value of the DAO and governance token price

To help DAOs achieve their potential, we introduce stronger incentives for delegates and voters to increase alignment between participants in DAO governance.

Our pilot attempts to validate that new governance features can augment voter and delegate incentives to increase alignment.

Delegate Compensation. By increasing, or in most cases, introducing delegate compensation, we expect to increase the pool of delegates and increase the cost of bribery.

Competitive Elections. By making elections competitive, we expect voters to increase the probability a delegate is selected that represents their preferences and is competent enough to complete the governance work required of them.

Periodic Elections. By introducing periodic elections, we expect to limit the probability that underperforming, weakly-aligned delegates retain voting power for long or are incentivized to stand for election.

Delegate Monitoring. By providing a monitoring service, we expect to increase the cost of bribing delegates and reduce the overhead for voters to evaluate a delegate's performance when considering them for re-election.

Aave Pilot

We were recently awarded a grant by Aave Grants DAO to run a pilot with Aave.

We're starting with a simple implementation for the Aave pilot, detailed here.

If you'd like to participate as a Delegate or a Voter, please join the #delegates channel in our Discord.

Below we detail our first step towards launching Butter: A 3-month incentivized delegate campaign at Aave.

To summarize, the campaign tests the effect of incentives on (i) who chooses to become a delegate and (ii) their behaviour once they are active in governance.

Butter combines incentives for delegates, periodic elections, and a competitive election process to improve guarantees that delegates, once elected, will represent the preferences of all tokenholders, gain influence based on merit and performance, and have the resources to deliver on their goals.

By improving the guarantees delegates provide voters, we aim to incentivize more voters to participate in governance and attract the best talent and expertise to govern DAOs.

A tl;dr for delegates and token holders who want to get involved is available at the end of this article.

Aave Grant

We're delighted to announce that Aave Grants DAO has granted $15k to this proposal. The grant demonstrates the commitment from Aave to improve delegate compensation and alignment between delegates and AAVE tokenholders.

We will use the grant to compensate the delegate that wins the election described below.

Process

To be considered for election, delegates will undergo a selection process stewarded by Butter. The application form will be open to all and auditable via an NFT.

The main event will be a Snapshot-based vote, conducted in a separate Butter-owned space, to elect an Aave delegate for a 3-month term.

Once voters select a winner, Butter will announce to Snapshot voters that they can begin delegating their voting power to the winner.

The winning delegate will receive compensation of approx. $15k in AAVE total (amount in AAVE TBC).

Notably, at the end of the 3-month term, voters that maintain their delegation for the entire 3-month period will receive an NFT representing their successful participation in Butter's pilot campaign.

We'll announce the election for the following term in the final month. In parallel, Butter will produce a report on the delegate's performance against the goals and KPIs stated in their delegate platform.

Delegate Signup

The NFT of this Mirror Entry represents the right to participate in the election. To enter, delegates must mint an NFT of this post by clicking "Collect Entry" at the bottom of the page. Minting comes with a small fee of 0.01 ETH to prevent spam.

Delegates are required to post an application, which requires the following:

• A Delegate Platform that conforms to Aave's Delegate Platform standards published in the corresponding forum category.

• A Delegate Initiative, which includes:

  • a 90-Day Plan

  • a commitment to goals and relevant KPIs.

As a steward of this election process, Butter will filter applications based on the above criteria.

Further details and guidance are available on the Delegate Application form.

The voting period will start when five qualifying delegates have completed their candidacies.

Snapshot-based election

Butter will launch a 3-day Proposal on Snapshot that will be open to voting by AAVE and stkAAVE holders on a 1-token-1-vote basis.

The Snapshot Proposal will contain a link to all candidates' Delegate Platforms and Delegate Initiatives and will consist of a single-choice selection among these delegates.

Delegation period

At the end of the voting period, Butter will announce the winning delegate in Aave's forums, Twitter, and Discord.

Voters in the Snapshot Proposal will have a 7-day Delegation Period to delegate their voting power to the winning delegate.

We will track delegations made during this period, and only delegations made in this period will be considered valid and eligible for voter participation NFTs. Voters will be able to verify that their delegation is valid.

3-month term

At the end of the Delegation Period, the 3-month term will start.

The delegate will receive $5k after each month served, for a total of $15k.

Delegate Reporting

Butter will provide reports on delegate activities and performance each month and a comprehensive report at the end of the 3-month term.

The reports will include checkpoints relative to goals and KPIs announced in the Delegate Initiative.

Butter will make these reports available for voter consideration to help them make an informed judgment about the delegate's performance during the term.

Repeat

After this 3-month campaign, Butter will restart the process with a new election for a new 3-month delegate term in Aave.

Risks and Mitigations

We designed this simple election & delegation process to test the basic assumptions of governance incentives in weeks instead of months. We have, therefore, designed the process to meet the needs of this first experiment, including its security considerations. Let's review the risks and their mitigation.

Future iterations of our election design will provide even stronger guarantees, as described here.

Direct governance attack

Attackers whose objective is to cause harm to Aave governance may try to use the election to promote a colluding party as a delegate and gain the voting power attracted by the process. This scenario seems unreasonable as our experiment is small and, therefore, unlikely to attract and grant a delegate a controlling share of voting power. Finally, our design does not improve the attacker's ability to attack Aave governance.

Election hijacking by whales

Large whales might vote in the election to direct voting power to the delegate of their choice. However, we are promoting the election to increase the representation of minority token holders. As votes are auditable, this would have negative repercussions in terms of the reputation of such whales. Butter will closely track and report any such behavior and terminate the campaign if we believe any actor has compromised the election process.

Delegate corruption

A delegate may receive some form of bribe from voters in exchange for supporting the interests of the bribers using the acquired voting power. Butter offers minimal protection against such bribes in this version, through delegate monitoring and engagement.

Drain attack

An attacker could decide to participate in the campaign to steal the reward. We have sufficient protection against this as Butter will manually distribute funds. To steal the funds, the attacker would have first to win the election and then do the work of a delegate for three months.

tl;dr

To sign up as a delegate:

1. Mint an NFT of this post by using Mirror’s Collect Entry button at the bottom of this article.

2. Submit an application on the Delegate Application form. If in doubt, submit an application for review or contact us on Discord.

To get involved as a voters, you can follow updates on Twitter and in our Discord server.

https://discord.gg/SeVaFH8M