Request for Comment - Governance Improvement Grants

Grants
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Hey everyone.

This is the first in a series of RFCs I plan to post in order to help crowdsource grant / RFP ideas and increase community involvement in the DGP! The goal of this exercise is to try to identify any pain points in key areas of the protocol’s growth by soliciting feedback and ideas from as wide of a range of perspectives as possible, with the hope of producing some actionable ideas we can use to proactively source grantees or create RFPs.

dYdX Governance

Governance on dYdX is at an interesting inflection point. The launch of the v4 chain brings with it the opportunity to carry the best parts of the existing governance mechanism into a more decentralized and community driven arena.

At the same time, there are some improvements that could be made. Governance (as we often see in huge protocols on the scale of dYdX) suffers from relatively low participation, as well as information asymmetry between the average dYdX user and highly sophisticated institutions or DAO contributors.

This post is aimed at sparking a discussion on potential grants (or grantees) that could be deployed to improve governance on dYdX. Some potential topics could include (but are not limited to):

  • Delegated governance (endorsed delegates, interplay between them and validators on the v4 chain, etc)

  • Governance decentralization (delegation programs, mechanics aimed at reducing vote concentration)

  • Governance standards

  • Governance / Proposal education content or tooling

  • DAO contributor onboarding and incentives

  • Governance as a community-building tool

  • Bridging the gap between dYdX’s trader audience and governance participants

  • v4 governance vs v3 governance (what goes up for voting on each? Discussions / research around fully transitioning governance to v4)

I encourage everyone to not only share their ideas, but to give feedback on the ideas of others as well! My hope with this series is to encourage a robust conversation between members of the dYdX community. Please feel free to also give feedback on this RFC (do you find it valuable, etc?)

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Hello Robo!

This initiative to improve dYdX governance through the grants program is essential and your effort to engage the community in generating ideas is awesome!

I will therefore comment and enrich a little, two of your RFCs which I consider a must on improving governance on dYdX:

1. Governance / Proposal educational content
We need educational and training programs to teach community members about how dYdX DAO works. This might involve webinars, tutorials, and mentorship. The dYdX team should provide guidance and support to make sure these programs are top-notch and really help members understand the DAO here. From previous workshops that took place, many people were interested.

If it is done systematically, there will definitely be a positive result.

2. DAO contributor onboarding and incentives
As for this, it can be implemented with mechanisms that aim to motivate participants to contribute to a DAO over a long term.
These mechanisms are known as Sustainable Incentive Structures and they must be designed in a way to motivate and reward contributors for their efforts and participation in the dYdX DAO governance.

Normally almost every grantee spends the reward tokens in a matter of days from the payment transaction. Sustainable incentive structures can help prevent such burnout, and at the same time encourage active participation. Contributors can be rewarded through the grants with (only) DYDX tokens. These tokens could have a vesting schedule attached to them, encouraging long-term involvement.
Another implementation that can be run through these mechanisms is the revenue sharing where contributors could receive a share of the profits generated by the exchange in V4.

Drawbacks
Designing incentive systems for long-term success can be tricky. It needs careful planning and constant attention to make sure they keep working well with the DAO’s goals as it changes. Also, we have to find a good mix between encouraging people to join in and preventing malicious behavior.

Hope that helps

Alexios Valonasis

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Hey all,

I appreciate the opportunity to share some ideas and feedback on this initiative with the community.

A little bit of background on me: My name is Sam, and I am a Senior Research Analyst at Blockworks Research. For those who aren’t familiar, we host events, podcasts, have an editorial website, send out daily newsletters, and conduct crypto native research/data and analytics. We have a lot of experience when it comes to DAO governance between our crypto native team lurking around in the forums 24.7.365 across many DAOs, as well as our active participation as delegates for the Uniswap and Arbitrum DAOs. On the ground daily, we are no strangers to the inefficiencies of DAO governance and delegate systems. I say this as our team collectively spent 200+ hours talking to delegates, protocols, and token holders as part of Arbitrum STIP.

From my personal perspective, DAO governance has a very long way to go. I think that dYdX can be a trailblazer in this category given its position as the only truly decentralized perps application/chain with the launch of V4. I firmly agree with RoboMcGobo’s list of pain points, and have laid out some potential ideas to get the conversations started below:

  • Design and implement a delegate program framework, sourced via a community submission process open to anyone, and vote to determine the best one (there may need to be a bounty provided to source the highest quality submissions). Ideally, the delegate program has a mechanism in place to reward the most active delegates who add value with more voting power over time, but with an upper bound set to alleviate the risk of voting power concentration. As the original post notes, the way delegates and validators are related to each other will need to be addressed in the submission (e.g. most validators/traders will have immense stake in the protocol upgrades, for example, determining trading fees. These interests may conflict with the interest of the DAO, and as such, all stakeholders need to be carefully considered). Other criteria will need to be defined prior to opening submissions as well.

  • Once a delegation system has been established, host elections. This should be a fun event, and something that makes waves on socials to bring more folks into the dYdX ecosystem/forums. “Plead your case in the forum, on Twitter through a thread, and on XYZ podcast for a special episode!” This is just an example, but by requiring delegates to do all 3 you weed out some lazy folks while adding exposure to the elections process. Also be sure to establish a monthly (mandatory) call for delegates that will be recorded and shared with the community. Expectations of delegates should be CLEARLY defined prior to the election, such as term length, vote participation minimums, attendance on delegate calls, etc.

  • Education is absolutely critical. As an Arbitrum delegate, the recent STIPs process was… painful… to say the least. Reviewing 105 applications all 1500+ words in length was no easy task. I think it makes a lot of sense to outsource this leg work to service providers. It is hard to predict what types of services will be needed, but some ideas include a bi-weekly dYdX governance podcast to give token delegators and delegates a different medium to digest information through, objective proposal reviews that use both quantitative and qualitative evidence to examine proposals and their potential effects on the protocol so that delegates have a framework for making educated (but still independent) decisions, scoring delegate performance at a regular cadence, evaluating voting behavior on a regular cadence, releasing a monthly report on how delegate weights have changed recently, etc. I think the best way to do this is hiring service providers on a retainer, while giving the DAO the right to replace/cancel any service provider at any time via governance vote. The main goal should be educating the community in an unbiased manner such that ecosystem participants can make informed decisions and serve as a check on the health of dYdX governance.

It will also be very important to define what governance rights are held over V3 and V4 respectively. I believe defining this early on as a community will be critical to avoid confusion amongst various stakeholders.

These are just some ideas off the top of my head, but I do believe it all starts with establishing a framework for delegation. I would be happy to volunteer hosting bi-weekly calls with the dYdX community to discuss governance and other ideas that pop up in this thread!

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Hey all,

Firstly, I’d like to commend the proactive approach being taken to crowdsource ideas and enhance the governance of dYdX. It’s initiatives like these that truly embody the spirit of decentralization and community-driven development.

I’m writing on behalf of Boardroom, a governance data platform dedicated to supporting and improving governance processes across ecosystems. With over 350+ DAOs hosted on our platform, we’ve been at the forefront of decentralized governance for the past three years. As a Governance Facilitator for a number of projects, our core mission is to reduce information asymmetry across a community’s governance, instill best practices, and actively onboard new contributors from the ecosystem.

Recently, we delved into some of the challenges faced by DAOs in their governance structures. The insights gleaned from this exploration could offer valuable perspectives as dYdX stands at this pivotal juncture of governance evolution, and could provide areas of interest to create and support RFPs:

1. Strategy and Vision:

A robust strategy is the backbone of any successful DAO. Here are some actionable steps:

  • Draft a Governance Charter: Create a document that outlines the principles, objectives, and mechanisms of dYdX’s governance. This charter can serve as a reference point for all governance-related activities and decisions.
  • Governance Standards Document : Draft a comprehensive document detailing the standards and best practices for governance within dYdX.
  • Periodic Strategy Reviews: Schedule regular community sessions to revisit and refine the DAO’s mission statement, vision, and strategic objectives. This iterative process ensures that the DAO remains agile and responsive to the community’s evolving needs.
  • Community Feedback Mechanism: Implement a structured mechanism for the community to provide feedback on the DAO’s strategic direction. Tools like sentiment analysis on forum posts or periodic surveys can offer valuable insights.
  • Transparent Roadmap Publishing: Maintain a public, regularly updated roadmap that details upcoming governance initiatives, milestones, and objectives. This transparency can foster trust and ensure the community is aligned with the DAO’s strategic direction.

2. Governance / Proposal Education Content or Tooling:

Effective tooling can streamline the governance process, making it more accessible and efficient for all participants. Here are some actionable steps:

  • Governance Dashboard: Develop a user-friendly dashboard that provides an overview of ongoing proposals, voting statistics, and upcoming governance events.
  • Proposal Creation Toolkit: Offer a toolkit that guides users through the proposal creation process, ensuring that all necessary details are included and formatted correctly.
  • Interactive Tutorials: Create interactive tutorials that educate users on various aspects of dYdX’s governance, from voting mechanics to delegate responsibilities.
  • Feedback and Collaboration Tools: Implement tools that allow community members to collaborate on proposals, seek feedback, and refine their ideas before formal submission.
  • Notification System: Introduce a system that notifies users of upcoming votes, proposal deadlines, and other important governance events, ensuring they never miss an opportunity to participate.

3. Accountability and Execution:

Ensuring that decisions made within the DAO are executed effectively and that those responsible are held accountable is crucial for maintaining trust within the community. Here are some actionable steps:

  • Task Tracking Platforms: Implement platforms or tools that track the progress of approved proposals. This allows the community to monitor the execution phase and ensures transparency.
  • Feedback Loops: Establish regular check-ins or updates from individuals or teams responsible for executing on approved proposals. This keeps the community informed and allows for course corrections if needed.
  • Performance Metrics: Define clear metrics or KPIs for evaluating the success of executed proposals. This provides an objective measure of the impact of governance decisions.
  • Escalation Mechanisms: Create a structured mechanism for the community to raise concerns if they feel a decision is not being executed as intended or if there are delays.

4. Organizational Structure and Power Dynamics:

A clear organizational structure ensures that roles and responsibilities within the DAO are well-defined, and power dynamics are transparent. Here are some actionable steps:

  • Roles and Responsibilities Document: Draft a clear document that outlines the roles, responsibilities, and decision-making powers of each entity within the DAO, from individual contributors to committees.
  • Transparent Decision-making Hierarchy: Clearly define the hierarchy or flow of decision-making. This can help in resolving disputes and ensuring that decisions are made efficiently.
  • Conflict Resolution Mechanism: Implement a structured mechanism for resolving conflicts within the DAO. This could include mediation processes or community-driven arbitration.
  • Regular Power Audits: Conduct periodic audits to assess the distribution of power within the DAO. This ensures that no single entity or group holds disproportionate influence, maintaining the decentralized ethos.

5. Delegate Engagement and Education:

Engaging voters and ensuring they are well-informed is pivotal for active participation in governance. Here are some actionable steps:

  • Educational Workshops: Host regular workshops or webinars on key governance topics, ensuring that both new and existing members understand the intricacies of dYdX’s governance mechanisms.
  • Governance Playbooks: Create a series of playbooks or guides that detail the governance process, from proposal creation to voting and execution.
  • Feedback Forums: Establish dedicated forums or channels where the community can provide feedback, ask questions, and engage in constructive discussions about governance.
  • Engagement Incentives: Consider introducing incentives, such as rewards or recognition programs, to encourage active participation in governance discussions and voting.
  • Educational Portal: Develop an online portal with resources, tutorials, and guides on dYdX’s governance processes and proposal creation.

6. Onboarding and Contributor Growth:

Attracting and retaining talented contributors is essential for the continuous growth and innovation of a DAO. Here are some actionable steps:

  • Onboarding Kits: Develop comprehensive onboarding kits for new contributors, detailing the DAO’s mission, governance structure, and how they can get involved.
  • Mentorship Programs: Introduce mentorship initiatives where seasoned community members guide and support newcomers, helping them navigate the DAO’s ecosystem. Implement a system where community members can seek feedback on their proposals before formal submission.
  • Skill Development Workshops: Organize workshops and training sessions tailored to upskill contributors in areas relevant to dYdX’s objectives.
  • Recognition and Rewards: Implement a system to recognize and reward outstanding contributions, ensuring that active and valuable community members feel appreciated and motivated.

7. Bridging the Gap Between Different User Groups:

In a diverse ecosystem like dYdX, there’s a mix of traders, long-term holders, developers, and governance participants. Bridging the gap between these distinct user groups can lead to more holistic governance decisions. Here are some actionable steps:

  • User Group Forums: Create dedicated forums or channels for each user group, allowing them to voice their unique concerns and perspectives.
  • Cross-group Workshops: Organize workshops that bring together members from different user groups, fostering understanding and collaboration.
  • User Group Representatives: Consider electing representatives from each user group to participate in governance discussions, ensuring all voices are heard.
  • Feedback Mechanisms: Implement structured feedback mechanisms that allow each user group to provide input on proposals and decisions that might impact them.

8. Evolution of Governance Mechanisms:

As dYdX evolves, so should its governance mechanisms. Adapting to the changing needs of the community and the broader crypto ecosystem is crucial for maintaining relevance and effectiveness. Here are some actionable steps:

  • Governance Mechanism Audits: Periodically review and audit the existing governance mechanisms to identify areas of improvement or inefficiency.
  • Community-driven Iterations: Encourage the community to propose modifications or additions to the governance mechanisms based on their experiences and observations.
  • External Benchmarking: Look at governance best practices from other successful DAOs and consider if any can be adapted for dYdX.
  • Pilot Programs: Before fully implementing a new governance mechanism, consider running pilot programs to test its effectiveness and gather feedback.

9. Enhancing Transparency and Trust:

Building and maintaining trust is foundational for any DAO. Here are some actionable steps:

  • Transparent Reporting: Regularly publish detailed reports on governance activities, decisions made, and their outcomes. This keeps the community informed and holds decision-makers accountable.
  • Open Forums: Create open forums where community members can ask questions, seek clarifications, and voice concerns directly to those in decision-making roles.
  • Decision Rationale: Whenever a decision is made, especially if it’s contentious, provide a detailed rationale explaining the reasons behind it.
  • Third-party Audits: Consider periodic third-party audits of governance processes and decisions to ensure fairness and adherence to best practices.

Opening up this conversation is a brilliant move - we look forward to discussing further!

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As a critic of the current grant program, I welcome the initiative of an open dialogue with the community about possible Requests for Proposals (RFPs).

Endorsed delegates have been a crucial aspect of the governance system, and it would be desirable to see something similar for V4. I understand that we have certain limitations, but this issue requires detailed discussion in a separate thread.

Educational programs on governance operations on the dydx chain are of great importance. As a crypto native, it took me a considerable amount of time to fully understand all the intricacies of governance on Cosmos-like blockchains, as my background was predominantly in Ethereum

Hello, there

I strongly disagree with the use of vested dydx tokens as payments for grants. While this may work for 6+ months strategic grants, it is a terrible solution for community grants. I would like to remind former and current grantors about the current process of payments and how the grant system works. Payments occur once a month, and the consideration of applications takes several weeks. If you propose potential grants with vested tokens, nobody will be willing to fulfill such grants.

What individuals do with grant payments when they spend them is their personal matter, even if they invest them in newsletter trading companies.

I see many other lengthy posts with ideas, and I will try to respond to them as soon as possible.

Cheers, RV

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I’m just going to give some ideas on Governance that are think are important to fund in my experience.

Structured and automated delegation programs to lower VP concentration and risk to the chain. We are already seeing concentrated voting power on some validators (with one already have 26% VP). Stargaze has something that I believe is quite good here is the final delegation dashboard: https://smartdelegation.app/public/45d6488a-ffe6-427a-94e3-19079be867f1

Not having a staking interface native to dydx that has randomized order has also impacted negatively on the previous point, most users defaulting to using the Cosmostation UI that incorporates metamask. Again, stargaze has done a fabulous job here: https://www.stargaze.zone/stake

I think we should fund research into a way to improve governance in general, maybe by expanding on the governator role that Josh Lee presented at Cosmoverse. Endorsed delegates will probably disappear and migrate to this model instead.

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I would love to be part of a group experimenting with methods to try to trigger more participation in governance.

What we shouldn’t forget is finding out why exactly people don’t participate. We can do all sorts of actions to try to educate people or incentivize them, but that will be ineffective if we don’t tackle the root cause. I mean, do people not trust the system just like we see happening outside crypto in “real” politics? Are people lost in how to participate and how it can make a difference? Do people simply not care and are here just for the money?

Each root cause needs a different approach to get these people aboard.

One thing I really like in the list of @Boardroom is a system to notify people of proposals which are upcoming. Now we only get a notification when something is on chain, but if we can find a way where people get triggers about upcoming items (and not via the forum, but more linked to their wallet) it might trigger people to remember to vote or read up.

Another important topic are the delegations as @luisqa rightfully mentions. In some cases a vote can be swayed by a very big validator / delegator, which does not necessarily mean the majority is a fan of the outcome. Sometimes it is also a game of stakes ( / money) which rules the game, which also might cause people to stay away. I would like to see experiments with in-between forms of 1 wallet - 1 vote, a combination of stake and amount of addresses who voted, maybe even include the staking duration which might add weight to the vote (more skin in the game for a prolonged time could have more weight for example).

And what we also shouldn’t forget is to bring the content of the proposals down to an understandeable level. In a lot of cases you need an university degree to understand proposals. Turning it into short, digestable clips (TikTok?) might help in closing the gap and making governance more accessible.

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I also pondered on the areas where additional educational grants are needed. Training on all the intricacies and nuances of perpetual markets is required. This includes understanding concepts such as initial margin, baseline position, and additional requirements. It is essential to comprehend the risks faced by traders who hold open positions when certain parameters undergo changes. Recent events related to the massive sushi long serve as a practical example.

Educational products on governance for Cosmos-like chains are beneficial, but one must not forget who the key and most important client is.

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There have been a lot of really great responses here so far!

I’m very interested in the idea of incentivized governance, but I’m not sure vested DYDX is the solution here. Once contributors (or endorsed delegates / validators / etc) receive the tokens, they have no incentive to continue participating, even during the vesting period. One thing I’ve spent some time thinking about is a delegate compensation framework akin to the Maker DAO framework (similar to what @swmartin19 suggested), but Im not sure whether this is within the scope of the DGP (outside of maybe a research piece or a bounty to design that mechanism?). A mechanism like this that is adaptable to governance participation from all contributors might be a great mental model, albeit a controversial one given those payments need to come from somewhere. More broadly, I think the future of DAO governance will trend in the direction of “professional DAO contributors” that have a highly specialized set of skills and can lend their expertise to DAOs as a business model.

I love how much consensus there is on this forum about the need to onboard additional DAO contributors to the protocol and an incentives mechanism. I think this is a high-value area of focus for the protocol and all of its current contributors. I particularly love the idea of a mentorship program. How would something like this be implemented? One pain point that I see is that we’d effectively be asking professional, paid DAO contributors to mentor their competition. We might see this suffer from a lack of participation.

Be on the lookout for the first batch from this new iteration of the DGP, going out soon! I like to think we have some items directed at this (with potentially more in the pipeline) :slight_smile:

For the next RFC, what do you think about doing one tailored specifically at educational resources, so that we can source them all in one place for the various areas in which the community feels like these might be lacking?

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Hey Robo,

Will keep my input short as several points I wanted to make have been posted here - great job everyone for participating here, but let’s spread this post a bit more as it’s very important for us to get this right.

Thank you for leading the initiative in addressing the governance concerns within the dYdX ecosystem. I’ll offer my insights and propose a structured approach to foster better collaboration and effectiveness in our governance endeavors.

While there has been substantial discourse, the dYdX Governance seems to be experiencing an identity issue at present. This is evident in the community’s uncertainty on collective objectives and discussion topics. Although some may attribute this to the recent launch of the dYdX Chain and the challenges posed by the integration with Cosmos, I believe that the Cosmos-specific hurdles are easily surmountable. The more significant obstacle lies at the structural level, a challenge that extends beyond dYdX to the broader industry.

In light of this, I advocate for initiating focused discussions to explore, collaborate, and develop governance-related materials within our ecosystem. The previous efforts by @Cliff in organising discussions were fruitful, particularly in examining potential governance structures for V4.

I suggest the following approach to curate a series of Request for Proposals (RFPs) aimed at establishing a superior governance framework for the dYdX Chain:

  1. Research:

  • It’s crucial to incentivize members to undertake research on governance-related issues. Current governance frameworks have shown limitations, and merely funding similar RFPs could be unproductive. Our aim should be to innovate rather than replicate existing models.

  • An initial RFP could involve a thorough report evaluating token-holder behavior in Version 3 and comparing this with token-holder/validator behavior within Cosmos. Understanding these dynamics is foundational for addressing the identified issues.

  • In this regard, @NTinc @AndyGG and I had actually proposed to conduct such an assessment circa a year ago (should you want to discuss that proposal, please feel free to reach out - it was detailed in nature and would thus provide a great value-add for the Grants Team in structuring potential future RFPs).

  1. Structured Research Efforts:
  • Following the initial assessment, subsequent steps should include proposing solutions to the identified issues, fostering community discussions, and initiating governance proposals based on the insights gained. This iterative process of identification, discussion, refinement, and proposal initiation is essential for evolving our governance structure.
  1. Formation of a Working Group through RFP:
  • Moving away from the traditional approach of assigning RFPs to individual entities, I propose the creation of a working group. This group could collaboratively address the myriad governance aspects, with each member assuming responsibility for distinct areas. This collaborative model could significantly enhance the depth and breadth of our governance assessment and solution development.

I would also suggest starting off with reading through Section 8 of the dYdX V4 Report by @XenophonLabs (https://xenophonlabs.com/papers/dydx_v4_report.pdf), where Cosmos Governance is discussed. This report contains a holistic analysis of some ideas we can potentially research further and explore for V4, let’s not let it go to waste and use it as a tool to build off of.

In closing, I believe that a structured, collaborative, and iterative approach, as outlined above, will significantly advance our governance framework, ensuring it is robust, inclusive, and reflective of the collective wisdom within our community.

Kind regards,
IL , Axis Advisory

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The progressive dialogues here about enhancing our governance framework are truly inspiring. I’ve been following the contributions with great interest, especially the insights from @Boardroom and @swmartin19.

In the spirit of these discussions, I’d like to share a vision that could further elevate our governance model—a concept for the establishment of a Governance Trust for dYdX. This Trust wouldn’t just address existing governance issues but also create a governance structure in harmony with the principles of our anticipated decentralized v4 trading platform on Cosmos.

The Governance Trust Vision

Imagine a dedicated entity with a clear mission: to design, develop, and implement a governance model that sets new industry standards while truly reflecting our community’s goals. This Governance Trust would utilize community treasury funds to conduct in-depth research, ultimately forging a platform that stands as a paragon of transparency, efficiency, and decentralization.

Identifying Challenges and Outlining a Roadmap

The current governance model has revealed significant challenges—conflicts of interest and a deficit in transparency, to name a few. These issues run counter to the decentralized ethos we strive for. We propose a systemic rethinking that starts with comprehensive research and analysis, leading to the creation of a governance framework that resonates with the evolving dynamics of DAOs.

Conceptual Funding and Implementation

Should this concept gain traction, the Trust could be supported by the community treasury, reinforcing its commitment to exemplary governance. This investment would be directed toward the careful planning, design, and development of a governance platform that complements the v4 trading platform’s capabilities.

Envisioning a Decentralized Future

This idea represents a pledge to our community’s autonomy and our shared destiny. Transitioning to an optimized, automated system would minimize inefficiencies and costs, forming a robust foundation for our sustainable evolution.

We see dYdX as a leader not only in DeFi innovation but also in setting governance precedents. A place where every contributor has a voice that’s not just acknowledged but is influential. The Governance Trust could be our conduit to such a future.

I am eager to hear the community’s thoughts on this concept. It’s an opportunity for us to collectively design the next chapter in dYdX’s story.

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I agree paying delegates in straight liquid DYDX tokens is a bad idea. There’s no alignment or guarantee the delegates dont more or less just dip out after they get their payment, not to mention how this is harmful to the $ denominated value of the tokens given the fact they’re so likely to be dumped by delegates to cover overhead.

Given how USDC is the yield token, I think it would make sense to allocate a large amount of DYDX tokens from the treasury to be staked… and take the yield earned to payout the delegates. The amount from the treasury would need to be researched thoroughly, but it would be a loan from the DAO to generate passive income to incentivize aligned governance, eliminate the risk of added sell pressure, increases overall network security (by increasing $ value at stake), and comes at no cost other than slightly diluted staking yield. Additionally, these DYDX tokens could be spread across delegates to more broadly/evenly distribute the stake amongst validators, thus improving decentralization. The funds should be subject to being unstaked by the DAO at any time via governance vote.

This idea is just off the cuff and needs to be analyzed, but in my view it is an option worth exploring!

cc @RoboMcGobo

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Quite interesting part to read from the dYdX V4 report regarding governance. The use of the x/authz module might be a feasibile and exciting route to get the endorsed delegators part working. I would seriously be interested to work on exploring this. I am motivated by reforming governance in general. The current model is ok, but has its flaws. If there is research done on turning the model into something better, then I can’t miss out :slight_smile: (I might even know someone who can help build the front-end for managing the x/authz part on user-level)
( >> yes, this is an open sollicitation to work on this subject hahaha)

With respect to incentivizing people who vote in governance; I would still be very much against financial incentivization, since it always attracts people doing some effort in return for financial gain. These are not necessarily aligned with the best interest of the chain / project, but will simply just do the bare minimum to become eligible for the rewards. So if that can be avoided, it would certainly be recommendable imo.

We should also not be surprised that participation is not always on the level we want it. We are living in a world where more and more distruct is against governments and elections, so why would it be different in crypto (looking from the perspective of the users). I would really like to see projects setting the example that we in crypto can do better, governance can be decentralized and people can influence the outcome of proposals. If we manage to break the negative experiences from the “real” world, then we might have a shot at becoming really successful in having a highly collaborative governance environment.

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Thanks for your comment!

I think there are a myriad of ways to incentivise governance participation which are not financial in nature. We’ve seen mechanics such as proof-of-active-participation (POAP) medals being used to indirectly incentivize increased participation in the Ecosystem, but we can do a lot more and experiment and iterate further.

The main priority needs to be the agreement on a way forward and to have a harmonized north start for the community to be able to work towards. Without this, I’m afraid we’ll all be focusing our efforts in more fractionalized and dispersed directions (which will be very inefficient and lead to very few optimal outcomes - if any).

Agree on a north-star, fund research initiatives catered at developing ways & means of progressing towards that north-star, develop & experiment based on that research.

Kind regards,
IL, Axis Advisory

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Totally agreed! Without knowing the direction in which we need to move, all efforts are potentially in vain. A sense of direction, a north star, our ideal situation to strive for is a must before any funds are spend on experimenting and/or developing.

And based on the direction we can break it down into more sizeable pieces which can be tackled 1 by 1 in short sprints, where our ultimate customer is the community being satisfied with the work done.

With respect to setting the north star, what would be the preferred route? There are a myriad options to take, ranging from a survey amongst the community to having small targetted (online) workshops and more. My opinion would be that if we really want to make a difference, we should find out what the community wants, providing valuable input which has backing from the community as well.

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Hey all – pitching in my 2 cents here as a Community Grantor

@RoboMcGobo presents a critical series of questions that we have been thinking about as we gather community insights. Personally, I think that all of the responses are extremely valuable and should be considered with equal weighting from each commenter.

With the advent of v4, I echo the importance of a smooth transition of sound governance procedures that enhance transparency and decentralization. I think there are some golden nuggets in this thread on achieving such goals! The DGPs most recent batch addresses some of this: October '23 Update and I encourage everyone to take a look.

The comments I have quoted below stuck out to me as the most present, and we would like to gather more information on them and encourage more feedback.

Some thoughts:

  • I love the idea of implementing a community centric delegate program - and one that reduces risks associated with voting power concentration. I think it is also good to keep in mind that things are very early in v4, and that this concentration and its negatives are a type of growing pains that will progressively fall away with time. Either way, for true decentralization, we will need a framework for ensuring/managing it.

Some questions:

  • A clear question has presented itself here: how do we incentive align these initiatives without sacrificing quality contributors? I think the solution proposed by @swmartin19 is a great start, but i’d be curious to gauge the community on how this could be improved to create a proper rewards system? Perhaps a sort of retroactive mechanism could be useful here to base this more on merits.

Thanks :slight_smile:

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I think it also might be really good to make sure the group who will be assigned with this task does not contain validators / governators to avoid a potential conflict of interests. Setting a governance framework will need several rounds of iterations and fwiw it might even need several parallel paths imo where different groups work on the same problem. This might result in different solutions with different angles where the community (or good discussion where a best case solution is chosen) can choose which they prefer. Look at it from the concept of doing a hack-a-thon, but with a clear topic where you are searching for a solution instead of a free-for-all.

In the end it is really good to put the power back in the hands of the community. This also gives opportunity to allow multiple quality contributors to work on the subject and do their utmost best to help dYdX governance further.

Rewards need to be given in retrospect anyways. I believe that results in better outcomes in general, since work first needs to be done before a reward is given. If the result is given beforehand the incentive is gone to work for a 110% solution.

Regarding lowering VP centralisation; I know in the past some chains who worked with a delegation program for low ranked validators who had promising ideas or who proved to be stable enough to not hurt the chain. They got a delegation which allowed them to spend more time, purchase better equipment (if needed) because their ROI was better and VP was a bit more spread out.

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Time for the next step?

Maybe good to list the ideas in here, map pros and cons, find / found working groups and continue?

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We would love to discuss further on the opportunity to improve the governance as suggested by @CipherLabs, @Immutablelawyer and many others in the topic.

How about restarting a cadence of delegate calls to discuss what we have done so far and what we can next? Either Foundation can kick it off or community member(s) can do so.

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Yes - we currently lack basic infrastructure and administrative planning that could be effectively used to spearhead proposals, recommendations, & discussions. At Arbitrum, there are 3/4 calls per week where focus groups/working groups get together to discuss pending topics & initiatives (they always serve as a great value-add in solving issues and sharing knowledge).

Unfortunately, aside from the Hedgie Huddle organised by @Alucard there’s nothing else to freely discuss topics at this current stage (which is a shame).

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