Abstract

In order to foster good governance participation in the ArbitrumDAO, this proposal puts forward the DAO Incentive Program, distinguishing between delegates, rewarded for their voting record and public rationale, and contributors, rewarded through a peer recognition program and "Nudge Seasons" to encourage positive governance actions. Since it serves as a continuation of, and builds upon learnings from the Delegate Incentive Program, we refer to it as DIP 2.0.

Key Terms

• Delegate: A party with voting power used to vote on proposals, eligible for voting activity-related incentives.
• Contributor: A party who positively supports ArbitrumDAO governance and/or the broader Arbitrum ecosystem.
• Peer Assembly: A peer-to-peer community group enabling contributors to receive rewards.
  • Vouches: Public endorsements from existing members and Arbitrum Aligned Entities (AAEs), required for new members to join the Peer Assembly.
• Peer Recognition: A monthly reward system for impactful contributions to the ArbitrumDAO/wider ecosystem.
  • Peer Assembly Recommendations: Submissions made by Peer Assembly members and AAEs to nominate impactful contributions for rewards.
• Nudge Seasons: Time-bound initiatives to encourage specific positive behaviors among contributors.
• OpCo: The AAE overseeing the DIP 2.0, authorized to modify the program, hire/terminate the Program Manager, and approve budgets.
• Program Manager: The team hired by the OpCo to handle day-to-day operations of the DIP 2.0.

Motivation and Rationale

We propose a new incentive program for the ArbitrumDAO that separates out rewards for delegates and contributors:

• Delegate. A party with voting power with the capability to vote on proposals.
• Contributor. A party who positively supports ArbitrumDAO governance and/or the broader Arbitrum ecosystem.

A delegate can be a contributor, but we should not assume that a contributor must be a delegate.

The incentive reward paid to delegates will only focus on their voting record and making public the rationale behind their decision. On the other hand, for contributors, there will be two forms of rewards available:

• Peer recognition program. Focus on identifying impactful contributions in the DAO based on the recommendation of their peers.
• Nudge seasons. Nudge the behaviour of contributors towards actions that are perceived as positive for the Arbitrum ecosystem as a whole.

We note the DAO incentive program should not replace a salary-like paid role or be sufficient to self-sustain an individual. However, it could be a stepping stone to enable parties to eventually find part time or full time work in the ecosystem. Most importantly, all payments should be viewed as a ‘thank you’ from others in the community.

To make the above work, we also propose introducing an Arbitrum Peer Assembly via a peer-to-peer vouching system. It requires existing members and/or AAEs to vouch for others to join before they are eligible for any payments, for delegates and/or contributors, in the DAO incentive program. The vouching system is designed to allow members to hold each other accountable and boost comradery among participants.

Specification

Rewarding Active Delegates

This program is designed to be objective and on a per-proposal basis. Any member of the Arbitrum Peer Assembly is eligible to receive a payment provided they:

• Cast a vote on a proposal,
• Publicly post rationale for how they voted and why.

Tracking Active Voters

Long-term program objectives are measured through the following key performance indicators:

• Increased active voting power. The total amount of active voting power is steadily increasing over time.
• Reduced voter apathy. The share of active voting power compared to total delegated voting power is increasing over time.

The following metric will be used to track the cost-effectiveness of the program:

• Dollar spent per vote cast. A cost-efficiency metric that measures the total program expenditure divided by the number of votes incentivized in a proposal. It represents how much funding is required to generate a single vote through the program.

The cost-efficiency metric should find a fair cost per vote that encourages delegates to participate without overspending the budget. For example, if the incentive budget per proposal is $10,000 and if the program manager decides to incentivize up to 200,000,000 votes per proposal, then the dollar spent per vote cast is 0.00005.

Periodic Incentive Budget

|Proposal type|Incentive Budget|Payout Cap|Reward Distribution|Contributor Bonus| | --- | --- | --- | --- | --- | |On-chain constitutional|10,000 ARB|700 ARB|Proportional to voting power|1,000 ARB| |On-chain funding transfer|8,000 ARB|500 ARB|Proportional to voting power|1,000 ARB| |Off-chain decision making|8,000 ARB|500 ARB|Proportional to voting power|0 ARB| |Off-chain temperature check (non-binding)|3,000 ARB|300 ARB|Quadratic relative to voting power|0 ARB|

Table 1: A hypothetical illustration of incentive grant budget for delegate rewards

As seen in Table 1, the program manager, in agreement with the OpCo, is required to set out an incentive grant budget that is paid on a per-proposal basis:

• Proposal type. Type of decision voted on by the DAO,
• Incentive budget. Budget allocated to a single proposal,
• Reward distribution curve. Strategy for allocating the incentive grant to active voting power,
• Payout caps (per proposal). Maximum incentive grant a delegate can receive from this vote.
• Contributor bonus. A bonus that is split between assembly members nominated by the proposal author.

The incentive grant budget for proposals that are published within a 3-month period must be shared at the start of every 3-month period by the program manager alongside an optional maximum cap for the entire period.

The intention is to provide delegates with predictability on the reward structure in the coming months while allowing the payout strategies to change over time. For example, as seen in Table 1, if an on-chain constitutional proposal is voted on by the DAO, then a 10k ARB incentive grant will be allocated for that specific proposal.

The program manager, in agreement with the OpCo, reserves the right to offer bespoke incentive grant budgets for specific proposals. For example, if the DAO is required to participate in several sub-proposals within a single initiative (like in the STIP), then all such proposals may fall within a single bespoke incentive budget. They may decide not to offer any reward in order to prevent potential abuse such as an avalanche of unnecessary proposals or decisions that are deemed very minor in nature (including cancelled proposals). If so, the rationale should be published prior or during the on-chain/off-chain proposal by the program manager.

The contributor bonus allows the proposal author to nominate contributors who made a meaningful impact on the proposal. This is not limited to posts on the forum, but any communication medium that enables the contributor to support the proposal author. The proposal author can name a handful of contributors alongside a short description on each contributor’s impact on the proposal. This is sent to the program manager, who will then publish it to the DAO. The bonus will be split between the named contributors. The contributor bonus is optional and it should be viewed as a small ‘thank you’ for making the proposal better.

Finally, the incentive budget should define a minimum voting power required to be eligible for delegate rewards. It will apply across all proposal types. This should be set to a reasonable value to help reduce the overhead of tracking rewards.

Peer Recognition Program for DAO Contributors

The program is designed to recognise contributors who have made meaningful contributions to the ArbitrumDAO or the wider ecosystem as acknowledged by their peers.

Eligible Contributions

The contribution should be:

• Worthy in stature such that there is likely to be no objection that the work deserves praise among the DAO,
• Not solely restricted to activities within the DAO, but any contribution that aids and strengthens the Arbitrum ecosystem,
• Focused on voluntary activities, but eventually recognized by others as impactful.

The program may reward recurring tasks, but it should be an exception. For example, if a contributor hosts a monthly call, this will not result in a payout being issued every month.

Rankings and Rewards

The program manager is expected to act as an ordering service:

• Review all recommendations,
• Pick a final ordering,
• Require approval from the OpCo (including any required modifications).

... please visit link below to view full proposal

https://snapshot.org/#/arbitrumfoundation.eth/proposal/0x44dedacbdae958904427db9ee93065917f57f50b71b4e87a94a318de18df399b