[Non-Constitutional] Arbitrum DAO Delegate Incentive Program

Last update: 02/10/2024

This proposal has been updated based on feedback from delegates provided in this thread during the two calls we organized, as well as through discussions in the delegates’ Telegram group and private contributions from several delegates. We would like to thank the entire ArbitrumDAO community for their valuable input.

TL;DR

• Expand the program by introducing a new and improved version, to be implemented over the course of a year.
• We propose a total budget of USD 4.2 million (in a year) in delegate incentives, with a maximum monthly compensation of 7000 USD or 16,500 ARB per month per delegate.
• Creating Delegates’ compensation tiers:
  • Tier 3: TP ≥ 65% and < 70%. Compensation range: $3,000 to $3,250. ARB cap: 8,000.
  • Tier 2: TP ≥ 70% and < 85%. Compensation range: $4,200 to $5,100. ARB cap: 12,000.
  • Tier 1: TP ≥ 85%. Compensation range: $5,950 to $7,000. ARB cap: 16,500.
• Elimination of the special multisig, the DIP adheres to the MSS
• The DAO can cancel the program or modify parameters, such as the scoring methodology, through a Snapshot vote.
• Min threshold requirement change: Participation Rate (Karma) ≥ 75% participation in on-chain votes in the last 90 days. Previously, the requirement was 25% of total historical votes.
• Soft enforcement for DAO’s social agreements: Each delegate must adhere to and comply with all social agreements reached through Snapshot in order to receive incentives.
• Adding the possibility of revoking DIP Ban via Snapshot vote and also creating the DIP Suspension.
• Delegates’ Feedback Update: The DAO has opted for v1.5 of the DIP, so a new rubric will be applied to evaluate the feedback given by the delegates in the diverse discussions. Due to the experimental nature of this new scoring system, it will be in a testing phase, and we, as Administrators, commit to submitting it to the DAO for consultation after three months of running the program.
• Note that everything related to DIP 1.0 that has not been mentioned as modifications in this new proposal will remain in effect in v1.5.
• Scoring Weight Changes:
  • Participation Rate (PR): Previously weighted at 20% and based on historical participation rates in Tally. Now, it is reduced to 15%, calculated based on the participation rate of the last 90 days in on-chain votes (as calculated by Karma).
  • Snapshot Voting (SV): The weight of this parameter has increased from 15% to 20%.
  • Communicating Rationale (CR): The weight of this parameter has decreased from 25% to 10%.
  • Delegates’ Feedback (DF): The weight of this parameter has increased from 15% to 30%.
  • Total Participation (TP): The requirement for total participation has increased from +60% to +65%.
  • Bonus points update: Adding Bonus Points for delegates who attends to the “Arbitrum Governance Report Call” (monthly) and the “Open Discussion of Proposal(s) - Bi-weekly Governance Call.”
    • For the monthly call, 2,5% BP will be awarded for attendance.
    • For the bi-weekly calls, 2.5% BP will be awarded for attending each call.

Abstract

We propose renewing the ArbitrumDAO Delegate Incentive Program (DIP) for one year. This renewal will include adjustments to the parameters, requirements, budget, and incentives awarded to delegates.

Motivation

We’ve reached the fifth month of the current version of the incentive program, which ends on August 31.

As outlined in the mid-term report, the program has positively impacted ArbitrumDAO during the first three months.

However, simply renewing the program will not generate enough value. Therefore, we propose adjustments to improve the program and increase its impact on ArbitrumDAO.

These changes are based on our experience as administrators, the reports we’ve conducted, and feedback from delegates, the Karma team, and key community members.

Note: SEEDGov delivered the end-term report, you can check it here.

Strengthening DIP’s Mission & Vision

As we mentioned in the report, it is crucial to keep delegated voting power active within ArbitrumDAO. We believe the Incentive Program should focus on the professionalization of delegates.

By professionalization, delegates should dedicate a significant amount of time to staying informed about developments in ArbitrumDAO, gaining knowledge of Arbitrum’s technology, and making meaningful contributions to the DAO. This includes active participation in most DAO activities like providing feedback on proposals, attending to Governance Calls, maintaining high voting participation on Snapshot and Tally, and providing a rationale for such votes.

To achieve this, we also need to establish transparent and predictable incentives. Delegates should be confident that if they align with the DAO and improve their contributions over time—essentially if they professionalize—they will receive better incentives. These incentives should be transparent and attractive without being subject to manipulation or arbitrary changes in their amount. Delegates should focus on their role and DAO activities, not on understanding complex economic mechanisms to receive compensation.

We want delegates to be motivated to participate actively in ArbitrumDAO. In order to do this, incentives must be attractive enough for them to either participate directly or hire competent individuals to represent their interests, those of their community, or their protocol.

It’s important to note that while managing the incentive program, we realized that it doesn’t address all the challenges faced by the DAO, such as vote distribution, attracting new contributors, and other aspects. Expecting a single strategy to tackle all issues overlooks the diversity of factors involved. However, we’re pleased to see initiatives like ARB Staking, (Re)delegation Week, and the Public Good Citizen Enfranchisement Pool are underway to address these challenges. As each initiative matures, we can align them to achieve a more significant collective impact.

General parameters

The proposed changes below are based on the experience we’ve gained while managing the program, the delegates’ feedback during the discussion on this thread, and both reports we made for the DIP 1.0 (mid-term report and final report).

If you want to view the parameters of the previous program, click here.

Duration

The program’s first phase lasted six months, as it was designed as an experimental foundation. For this iteration, extending the duration to twelve months is appropriate, providing greater predictability and flexibility for implementing future changes.

ArbitrumDAO may cancel the program or modify parameters, such as scoring methodology, through an instantaneous vote.

Requirements to Participate in the DIP

The requirements to participate i

... please visit link below to view full proposal

https://tally.xyz/gov/arbitrum/proposal/7979895167029508946638584765496434407327098393519089113101189960001594458109