For a lot of causes—from saving gasoline prices by bundling votes to token holders not having time to keep up the context to thoughtfully vote on proposals—delegation has emerged as the first mechanism for DAOs to spice up governance participation and make selections extra successfully.
DAOs like Uniswap, Arbitrum, Optimism, and ENS are all delegate voting DAOs, which means token holders can delegate their voting energy to a person or group to vote for them. It’s primarily consultant governance with optionality to decide on your consultant or train direct democracy if you wish to solid votes your self.
Being a token holder in a delegate voting DAO is a robust position. By delegating tokens, you’re assigning voting energy, and subsequently decision-making energy, to a different tackle. So how do you select the delegate that can greatest symbolize your pursuits?
We interviewed delegates throughout the ecosystem to listen to the requirements they might set when delegating their tokens. Let’s cowl the broad subjects they really helpful token holders look into when figuring out who they need to delegate to.
Are their incentives aligned with yours?
Incentive alignment was the subject that got here up most in our interviews with delegates.
“It is important to ensure the delegate’s values and long-term imaginative and prescient align with yours,” mentioned Simona Pop, advisor for the Optimism Basis, Authorities Technique at Ingredient Basis, and Public Items Steward at ENS. “They need to share a typical perspective on the broader aims of the DAO, in addition to an curiosity within the paths to attaining mentioned aims.”
The MKR Holders Guide to Delegation dives into incentive alignment as properly. It reads, “Your delegate can have completely different incentives than you. These might not be solely monetary. These could not all the time be everlasting.” They provide examples of incentives that delegates could have, similar to holding MKR, having Maker Protocol as their major employment, and believing that Maker Protocol advantages society. Not all of those incentives are everlasting, so a delegate can go from being incentive-aligned to not being so. That’s why repeatedly re-evaluating your delegation is so vital.
Superphiz, delegate for Diva, Hop protocol, and a part of the Oracle DAO at Rocket Pool, shared some questions to think about about incentive alignment. “What are their objectives in crypto? Are they revenue maximalists? Web3 builders? Ecosystem builders? How does that align along with your values?”
One of many methods token holders can determine worth alignment is by taking a look at their voting historical past. This is without doubt one of the benefits to votes being onchain: there’s a clear file of voting historical past.
DAOplomats, a governance service venture lively in Gitcoin, Aave, BanklessDAO, 1inch, and others, mentioned that taking a look at voting historical past is one vital technique to make the choice round delegation. “Their voting historical past ought to resonate along with your beliefs and priorities,” they mentioned.
Questions to think about:
- What incentives does my delegate should behave in a sure method?
- Are they a part of one other staff which may need to push a sure initiative?
- Are they being paid by the DAO, or not?
Have they got a deep understanding of the DAO and its mission? Are they the suitable particular person for the job?
Simona Pop talked about “Information and Context” as an vital class to look into when discovering the suitable delegate. “This can be a VERY vital one which many individuals miss – a deep understanding of the DAO’s mission and the broader ecosystem it operates in. This permits them to make knowledgeable selections.”
Matt Fiebach, Analysis Analyst at Blockworks Analysis, an entity which is a delegate at Uniswap and Arbitrum, famous that data required to be a great delegate varies considerably based mostly on the DAO. “Relying on the DAO, the abilities and experience wanted can change drastically,” he mentioned. “For instance, Uniswap DAO solely controls a treasury, licenses, and a price change and most contracts are immutable; whereas Arbitrum DAO has energy over just about each facet of the protocol. So after all these require completely different ranges of information of their delegates.”
A technique this qualification may be evaluated is by how lengthy the delegate has been concerned within the venture. Max Lomuscio, a delegate for Arbitrum, mentioned that “long run dedication of the delegate to the venture” is without doubt one of the key areas to think about when delegating.
It may be laborious to know what the delegate is considering the DAO and its mission, so that is when delegate mission statements and member profiles can play an vital position. If the delegate shared an announcement with a plan for a way they need to use their delegation, this may be a part of your resolution.
Questions to think about:
- How lengthy have they been a delegate or been a part of the DAO?
- Have they got a transparent understanding of the DAO’s mission, or do they appear to have a diverging agenda for the DAO?
- Have they got a long run dedication to the venture? Are they concerned in a number of different issues which may trigger that dedication to waver?
Are they prepared to be contrarian somewhat than all the time going with the bulk?
One other high quality to search for in delegates is having opinions they’re prepared to face by, even when they’re not the preferred opinions. Variety of concepts and contrarianism is wholesome for a DAO, as a result of debate means concepts are pushed up in opposition to and molded into their greatest kind, somewhat than simply letting the primary iteration go.
Delegates that all the time vote with the bulk may be doing so to maintain their delegation. This could be a centralization drawback, as a result of if most delegates are following the group, then the variety of delegates truly making a call is considerably decrease.
“I search for delegates which have a powerful imaginative and prescient and are not afraid to take contrarian positions,” mentioned Carl Cervone, a Gitcoin delegate who can also be a token holder who has delegated in Arbitrum, Optimism, and ENS. “I recognize delegates who’re lively in governance discussions earlier than issues go to a vote, particularly if it is a contentious problem. This retains them accountable to the individuals they symbolize. I’ve by no means discovered myself in a scenario the place I re-delegated proper earlier than a vote, however I recognize the truth that it is an choice.”
The contrarian positions needs to be made thoughtfully, nevertheless. Max Lomuscio really helpful token holders search for delegates who’ve “a earlier monitor file of creating sensible selections.” In different phrases, in the event that they’re taking the minority stance, do you imagine they’re doing so for a great purpose?
Questions to think about:
- Has the delegate all the time voted with the group, or are they prepared to take minority opinions?
- Do they put ahead numerous concepts within the DAO’s communication channels, such because the discussion board?
- Do they appear to make considerate and knowledgeable selections?
How clear are they about their selections, and will they be simply lobbied or bribed?
Transparency is one other subject that got here up a number of instances in our interviews.
DAOplomats mentioned that transparency was one of the vital vital issues to search for in a delegate. “They need to clearly clarify their voting selections and be open to suggestions, delegates ought to share any conflicts of curiosity every time attainable.”
Transparency of intention, not simply motion, was additionally raised. “They need to be reliable and clear of their intentions and actions,” mentioned Simona. “You could search for a confirmed monitor file of performing ethically and persistently with the perfect pursuits of the group in thoughts.”
Transparency can also be vital as a result of it may possibly showcase that the delegate can’t be simply lobbied or bribed.
“I need to double down on integrity, mentioned Griff Green, delegate for Optimism, Arbitrum, ENS, and others. “As a delegate in numerous ecosystems, I get lobbied on a regular basis from teams which can be making an attempt to go proposals and have even been supplied bribes! Crypto politics is simply as soiled as common politics is alleged to be.”
Delegates who share the rationale behind their selections could also be extra reliable than those that don’t. Nonetheless, trustworthiness may be laborious to measure and will simply be a intestine feeling you will have when making your delegation alternative.
Questions to think about:
- How do they share the pondering behind the selections they make?
- Do they actively attempt to share the rationale of their selections, or do they keep away from it?
- Do any of their previous actions lead you to imagine that they could possibly be lobbied or bribed?
Are they capable of put within the time required to get context and do due diligence on proposals?
Many delegates raised the purpose that maintaining with context required to solid knowledgeable votes is an enormous job. So, it won’t be cheap for delegates to be cut up throughout a ton of various roles directly.
“Good delegates ought to have a deep dedication to some issues somewhat than a floor stage dedication to a number of issues,” mentioned superphiz.eth. “It is best to have a good suggestion what their priorities are with out a lot digging.”
A part of being a delegate can also be being proactive to search out the suitable info, which could be a main time sink as properly.
“You additionally should not anticipate context to be served to you on a platter,” mentioned Carl Cervone. “You need to be proactive, get to know the core staff, exit of your technique to make connections, hang around on the discussion board, be part of the vast majority of governance calls, and so forth. For that reason, I am unable to think about being a “good” delegate at multiple or two DAOs at any given time. It is a labor of affection. If you cannot make the dedication, then your pursuits are higher served by delegating your vote to somebody who can.”
With the ability to get the suitable context to grasp proposals can require way more than simply time, although. It will possibly require particular data and experience, similar to understanding sensible contracts, enterprise improvement, or tokenomics. “A delegate also needs to have an present popularity to uphold, bandwidth to remain up with proposals, and class to do correct due diligence into these proposals,” mentioned Matt from Blockworks Analysis.
Questions to think about:
- What number of different initiatives is the delegate concerned in?
- How a lot time do they appear to place towards their work of delegating?
- Have they got the suitable talent set to have the ability to do proposal due diligence?
Do they transfer options ahead?
In DAOs, it may be straightforward to search out the issues, however skip driving an answer ahead. A great delegate is somebody who can transfer initiatives and options ahead for the DAO and it’s product or protocol.
A delegate’s capacity to drive outcomes got here up in our interviews. “In a hiring context, the precedence listing of qualities I search for are: motivation, transferable abilities, and values alignment. For governance it’s the identical listing, however we additionally need to perceive their capability for advocacy, constructing consensus and driving outcomes,” mentioned Rob Morris, delegate and multisig member at JokeCouncil, BibliothecaDAO, Thorchain, and others.
As a result of DAOs are decentralized, it may possibly require a number of inside motivation to drive outcomes successfully. You may need to think about delegating your tokens to somebody who has a monitor file of creating actual change.
Questions to think about:
- Do they put ahead options, somewhat than simply declaring issues?
- Can they collaborate with others to drive outcomes?
Token holders ought to repeatedly re-evaluate if the delegate is true for them
When you select the delegate that works for you, you’re not utterly off the hook as a token holder.
“Set-it-and-forget-it delegating could be very harmful to a DAO,” mentioned Bob-Rossi, delegate for Hop and Arbitrum. ”It will possibly create a centralizing impact because it limits the power for brand spanking new delegates to realize traction in a longtime DAO. Plus, a delegate who now not aligns along with your beliefs, or presumably is not voting in any respect, will probably be successfully losing your votes.”
He famous that token holders have to actively sustain with how their delegates are voting to ensure their voting energy is being utilized in a method that represents their pursuits. “A technique to fight that problem is to periodically overview the actions of these you delegate to and altering who you assist in the event that they now not successfully symbolize your pursuits,” he mentioned.
DisruptionJoe, a delegate at Arbitrum and Gitcoin, expressed an analogous sentiment. “The way in which it really works at this time, token holders delegate on day one and are not anticipated to point out up on election day after that. Their job is completed. We’d like methods to have interaction the token holders in a method that encourages holding context as a voter and contributing worth as a group member.”
Contemplate setting a reminder each few months to re-evaluate your delegation and guarantee your delegate is voting in a method that aligns along with your pursuits and values.
Accountable delegation may be the distinction between an efficient DAO and an ineffective one
“Ineffective or participation-starved governance will kill the Maker Protocol over the long run simply as certainly as governance assaults will within the quick time period,” is written on the MKR Holder’s Information to Governance.
Fortunately, accountable delegation can resolve that.
Accountable delegation may be the best way to construct efficient governance with enough participation. Extra participation will increase safety, and makes for a extra resilient DAO general. And accountable delegation begins with token holders.
Delegate your tokens on the Aragon App and Aragon OSx
Any DAO on the Aragon App and Aragon OSx can delegate their tokens. You can even choose out of delegation at any time by claiming your voting energy.
Begin delegating your tokens on the Aragon App and OSx at this time!
Due to everybody who shared their ideas on delegation!
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