[RFC] Governance Community Participation Incentives

Author: @Bobbay_stablenode

Introduction

To boost governance activity on 1inch, we would like to incentivize community members to present proposals and receive rewards. We have outlined the workflow for the incentive system and would like to invite the community to provide any feedback during the discussion stage.

Motivation

An active governance culture is an essential aspect of every DAO’s operations. Active governance means that the community is dedicated to improving the protocol’s operations, which builds a culture of iteration around the protocol. However, governance work is continuously under or unpaid, making it an unattractive role.

By incentivizing an active governance culture at 1inch, we can attract participants to become more involved in 1inch DAO, thus enabling more opportunities for 1INCH to decentralize.

References

Governance process
Hop example
Idle Finance example
MakerDAO

Specification

Contents

  1. Aims
  2. Allocation
  3. Eligibility (Eligible Proposals & Ineligible Proposals)
  4. Eligible Recipients
  5. Distribution
  6. Administration
  7. Accountability
  8. Reflection

Aims

1INCH governance is new and in these current market conditions, it is even harder to attract governance participation. We hope that some form of incentives will attract users to engage with the 1inch DAO.

We would like to present this program for 6 months.

Allocation

The total amount for the 6 months, $12k will be distributed upfront to avoid any potential multi-sig issues in the future.

This proposal would allocate 2,000 USDC per month to a newly-made community multi-sig. Each successful proposal would receive 500 USDC. If there are more than 4 proposals, then the rewards will still be distributed based on the 2,000 USDC.

At the end of each month, the community multi-sig will distribute rewards to the eligible authors. If all USDC is distributed, this would cost the DAO a total of 12,000 USDC for 6 months.

Since 1INCH earns protocol revenue in USDC, it is easier to distribute governance rewards in USDC.

Eligibility

Eligible Proposals

All proposals that follow the outlined governance workflow within 1inch DAO and successfully pass Phase 4.

Ineligible Proposals

  1. Proposals requesting budgets or grants are excluded.
  2. Proposals making minimal amendments to previous proposals (e.g. fixing only typos) are excluded from this program.
  3. Proposals that have no direct, actionable outcome (e.g. establishing a mission statement) are excluded from this program.

Eligible Recipients

The original authors of a proposal are considered the eligible recipients of the reward. Those who initiate the Snapshot vote will not be eligible for a reward. If there are multiple authors of a proposal, it will be assumed that the reward will be evenly split unless explicitly stated otherwise to the community multi-sig disbursers.

Distribution

@RoundElephant , StableNode (@Bobbay_stablenode) and @DAOplomats.eth can form the newly made community multi-sig for these community incentives.

Distribution will occur at the beginning of the following month.

Authors of a proposal should communicate with community multi-sig signers to provide the correct wallet information for distribution. Wallet information can be communicated in private, but all transactions are public since they are on the blockchain.

StableNode, 1INCH Core Contributors and DAOplaomats will be exempt from this program and will not be eligible to receive any rewards.

Administration

  1. StableNode provides a monthly update of eligible proposals in the current month.
  2. Community multi-sig distributes funds in the first week of the following month.

Accountability

StableNode will document a record of all successful proposals providing the following information:

  1. Link to Proposal
  2. Summary of Proposal
  3. Authors
  4. Transaction Payments

This will help us review this proposal and consider whether 1INCH DAO should continue to provide governance incentives or pause the program.

Reflection

The community can review these governance incentives after 6 months to evaluate their success and whether to let it continue or pause the program.

Next Steps

We would appreciate any community feedback to help refine this proposal before we move it to a 1IP.

7 Likes

Hey @Bobbay_stablenode, I’m totally in favour of this proposal.

There is a need for a new multisig, like a hot wallet for the distributions of funds; many of our initiatives rely on having a hot wallet, as it might be unfeasible for the central treasury to distribute smaller amounts to every contributor once things like coordinape are implemented.

I have a couple of questions.

  1. The rationale behind the distribution of USDC instead of 1INCH.
    Is this proposal considering 1INCH a premium asset due to the treasury’s relative allocation or the associated voting rights? There is only a total of 73K wallets holding at least one 1INCH on the ETH mainnet
  1. Getting proposals to phase 4 is a considerable task I haven’t seen any community proposal achieve that stage till now. This might be due to the inexperience of the community or due to a high proposal threshold. as recognised delegates, we might help/ co-author many of these proposals. Should we (recognised delegates) abstain from the program?
2 Likes

USDC is a more stable asset in these current market conditions so it removes the need to amend the proposal if 1INCH falls in price. It ensures all contributors are fairly compensated and are free to convert USDC to 1INCH once they receive comp.

This isn’t an issue. I would argue that it isn’t a considerable task but a standard process that should be upheld across DAOs. The aim of this proposal is to attract participants to get involved who might have the experience or who are happy to invest more time since they will receive a reward.

I am happy for StableNode and DAOplaomats to be exempt from this program and will amend the proposal as such.

1 Like

Changes to the proposal:

  1. Distribute the $12k upfront to a newly made community multi-sig
  2. Jordan (1inch), Stablenode, and Daoplamats on multi-sig with a minimum of 2/3 signatures.
  3. StableNode, 1INCH Core contributors and DAOplamats will be exempt from this program.
1 Like

I’m personally a huge fan and think this is ready for formalization! My only comment is that I believe that 1inch Core Contributors, like me, should be ineligible to receive the incentive (same category as the recognized delegates in this proposal).

My reasoning being that a large portion of the past proposals have been put forth by 1inch Core Contributors so we should use the DAO funds to incentivize contributions from the silent majority.

2 Likes

I think the ideas are not bad, but they seem to lack decisiveness.

I don’t think I’ll be on the receiving end of higher rewards, though, as I’m not capable of making suggestions.
If I did have the ability, would I be willing to spend the time of my own life to achieve the 250$ reward? My answer would be no. To make it attractive, I think another order of magnitude higher, 2500$, would be fine.

Is this proposal intended to be a token of appreciation, albeit small, to selfless contributors?
Or do you aim to attract more possible contributors with an attractive reward offer?
I thought it might be necessary to change the direction of the reward amount depending on which of the two objectives you have in mind.

3 Likes

In support of that and amended the proposal @RoundElephant

This is exactly the aim of this program, so these exemptions make it more attractive for inactive participants. In combination with marketing efforts, we will hopefully be able to attract participants.

  • List item

Proposals take a fair amount of time, but not as much as you might expect. Governance in general isn’t compensated and most people participate out of interest, albeit there is small participation.

The simple fact that we are introducing this program, is an improvement over many other DAOs where governance or community participants receive no compensation. I referenced a few other DAOs who employed similar programs. To be honest, $2500 for a single proposal is unrealistic and not something any DAO should employ since it’s unsustainable and not cost-effective for the DAO.

I’d prefer to start with smaller rewards and see how it plays out, but I would like to hear from the rest of the community.

FYI, 1INCH ran a governance bounty on layer3 xyz which attracted around 12 participants. The reward was 200 INCH, at the time around $200 USD or so.

2 Likes

I seem to have a bad habit of rushing results. Here is my self-analysis of your post. I got a little ahead of myself emotionally. I need to talk logically and numerically.

Certainly, as you say, I have to be concerned about continuity.

I recognize that the first transaction occurred 360 days ago on Oct/13/2021 in treasury.
From here, in about a year.
Approximately $15M has accumulated.
At $2500 per deal, that’s $20,000 assuming an average of 8 deals per month, or $240,000 per year.
This is 1.6% of the total accumulated over the past year.
Surely, that seems a little too high.

On the other hand, if you are trying to stay ahead of the rest of the competition, you don’t want to fit in with the others.
We believe it is also true that we need to stay one step ahead in our measures.
If we match our surroundings, our growth rate will also be in line with our surroundings.

I recognize that the first transaction occurred 360 days ago on Oct/13/2021 in treasury.
From here, in about a year.
Approximately $1.5M has accumulated.

Doesn’t detract your point but I just wanted to point out that the 1inch DAO treasury has accumulated over $15M over the past year.


@Bobbay_stablenode can correct me if I’m misrepresenting his proposal, but I don’t think this is meant to be the end-all of DAO contribution rewards. Rather, I see it as a way to incentivize a form of DAO participation that can be easily measured – authors of proposals that go the distance stand to earn some rewards for their time.

Example: Someone could author a proposal that requests $50k to build out, and maintain, an alternative 1inch front-end. ← In this scenario the lion’s share of their compensation would come from the payment for their development work.

I made a one-digit mistake.
Thanks for pointing that out.

Corrected.

Yes, it’s merely meant to incentivize DAO participation. Your example explains it well. cc @ma70_supra

1 Like

IMO I think it’d be far better giving out Multiple benefits to the Winning Proposer than just narrowing it down to a Single $ Reward .

Let’s say the proposer Connected his blockchain address as proposal Author then that Partcular address can get multiple benefits such as -

  1. 3 Month Free Swaps through 1inch Dapp on Any chain [Quota < 500k]
  2. Freebies like Bitrefill Coupons like Recharge etc.
  3. 0.1% Profit share from 1inch treasury’s 1 month revenue
  4. Free Accommodation to next 1inch event
  5. Special winning NFT

It just seems more lucrative …

2 Likes

Thank you for your answer.

I will try to say it regularly, but sorry if it is a strange English sentence.

I am glad to know it is the latter of the two I mentioned.
I thought it should be too.

I think that people who have no experience participating in DAO, people who have already participated in other DAO, and people in this category are the ones who should be targeted to participate in the 1inch DAO first. Since excellent proposers who spend time in other DAO already have attachment to and attraction for those DAO, it is necessary to have more attractive conditions than other DAO in any case to pull those people away and bring them here, or to lead inexperienced DAO.
(We know that 1inch has its strengths. But, to put it that way, other DAO must have some charms that 1inch doesn’t have, so I won’t argue this point.)

1 Like

I think Roxan has given us a good idea here.

I thought it might be a good idea to extend this so that, for example, if a proposal does not pass, the reward would still be sized according to the number of votes received.
For fewer votes, a relatively small reward.
If the proposal does not pass, but receives a large number of votes, the reward would be relatively large, and so on, with several tiers of rewards.

Your suggestion would make it better than it has been in the past. That is a really good suggestion when you think about it. (Why didn’t I think of that…)
However, that would only put us in line with other DAOs. No, the later we start, the later we are behind.
I’d love some additional charm to our 1inch DAO!

1 Like

Also, and this is a more forward-looking opinion, but if this proposal makes 1inch DAO more attractive than other DAO, then these will be published for the purpose of attracting people, and at the same time, other DAO who learn of this may do the same thing, so the publication needs to be complete, fast, and reach a large enough number of people at the same time.

I thought that it was necessary to have a plan in place to ensure that the DAO would be able to communicate this to a large enough number of people completely and quickly, and that measures would need to be taken at the same time to ensure that those who joined the DAO would not be taken back by other DAO. Otherwise, they would just get their reward and go away again.

1 Like

These are really cool ideas, and I’m down to explore them further! Thoughts on trialing this program as USD first for the first 3 months and swapping over to benefits such as the ones you listed? We can do the A/B experimentation to see what attracts more users.

I think initially starting with USD works as it appeals to a broader crowd because some people might not be interested in NFTs or might not be able to attend a 1INCH event, whereas USD works for everyone.

also agree @ma70_supra with increasing the prize, maybe it can be $500 per proposal, still capping at 4 proposals a month for a total of $2k a month.

3 Likes

Changes:

  1. USDC reward has been amended from 250 USDC to 500 USDC per proposal.

Will be moving this forward to the next phase and formalising it as a proposal on Wednesday, unless there is any other feedback,

cc @RoundElephant @DAOplomats.eth @ma70_supra @Roxan

3 Likes

Thanks for taking my input into consideration.

I’ve raised this before in conjunction with the reward increase, but in the absence of an idea that would make it harder for people to leave once they’ve joined.
If other DAOs raise their rewards as well, a simple competition to increase rewards may begin.
If this competition cannot be won, the evaluation of the 1inch DAO may be lowered relative to other DAOs.

If the 1inch DAO does not gain much momentum as a result of your proposal, it will not be a problem because other DAOs will not bother to imitate it, but if competition to increase compensation begins, the probability of winning the competition against a DAO with abundant financial resources is low.

I have come up with one idea to make it harder for people to leave who have been rewarded for their suggestions.
The way to make it harder for people to leave one place may be poorly expressed, but I thought it would be a good idea to make sure that the activity builds assets that are valid only within the 1inch DAO. In other words, it’s about getting people to become attached.

This idea is to foster attachment to the assets within the 1inch DAO (these assets may eventually lead to money, but it does not have to be direct money, it can be information, status, experience, or anything that brings benefits by accumulating.), something that fosters attachment. If anyone has any good ideas from these expressions, please post them. I’m trying to be a little roundabout for the sake of it, in case it inspires other people to come up with ideas.

So, sorry it’s taken me so long to talk about the ideas I came up with.
It’s the idea that if a proposal is made within a certain period of time from a previous proposal, it brings some sort of advantage over making a single proposal. For example, if you make another proposal within 3 months of the last proposal, you could multiply the reward by a coefficient to increase the reward, or something like that.

Or, introduce a system similar to the experience level in a game.
It would be nice to have a gamification-like system in which the more experience is accumulated, the higher the reward.

Any form of “assets confined within a 1inch DAO” must be reset to zero if there is no activity in the 1inch DAO for a period of time. This gives the proposer an incentive to continue his/her own activities in order to ensure that they are not literally wasted.

However, this can be copied relatively quickly by other DAOs if they want to.
The only way to reduce the number of competitors is to play in a field you are good at beforehand.

If you have an idea that takes advantage of the fact that 1inch is an aggregator, you can narrow down the competition because the number of aggregators is small compared to Defi as a whole. That way, even if they imitate us, we can maintain our competitive advantage.
However, I can’t think of any ideas at the moment that take advantage of being an aggregator.