OIP#4 Delegate Compensation and Delegate Reputation Score Integration for stOBOL

[Stakesaurus]

Just managed to catch up with the discussion here. First of all, thanks @coolhorsegirl for the detailed proposal and @Leo-ObolAssoc for the response to the concerns laid out so far.

Overall, I support proactively implementing an incentive system to ensure the sustainable and continuous participation of the best delegates in the governance of the Obol Collective.

However, the details of its current form still need to be deliberated, and I’ll chime in with my thoughts on each of the 3 main discussion points below:

Is it too early to think about delegate incentivisation?

In my opinion, this is the right time to lay down a strong foundation for this goal, i.e., when we have organic, high-quality, and enthusiastic delegates who are actively participating in governance.

Most DAOs implement such measures when voter fatigue and apathy have already set in, resulting in the loss of quality + organic delegates to greener pastures and leaving space for more “mercenary” types of delegates to fill the space

@Ignas

If we wait until there are more proposals and more activity, it will be too late to onboard capable delegates and establish a reliable governance culture. We’ll be stuck playing catch up.

I agree with @Ignas here

Overreliance on the “enthusiasm” of our delegates may also be a centralisation vector, where only the delegates who do not need to be compensated for their time remain

Unexpected/unbudgeted development costs

To be fair, the features in this proposal were mentioned in the previous proposal to enabling stObol under “Future Development”

@coolhorsegirl

Future Developments

Other rules about staking rewards eligibility can be defined in future proposals, such as:

• Delegates could be eligible for a portion of the staking rewards based on how much voting power is delegated to them. This would ensure Active Delegates get paid for participating in governance.
• Token Holders could only be eligible for rewards if they are delegating to an Active Delegate. This proposal does not consider the definition of active delegate but the feature is available in the Staking contract, therefore it can be turned on in the future if Governance defines and approves it.

That said, it might help for the Association to lay out a Governance Roadmap and estimate associated costs to implement each phase. We don’t have to decide on it now, but the delegates can start discussing the pros vs cons and whether the timing of each phase makes sense.

$65k does not seem too crazy for the entirely new custom feature that will be much more scalable than manual alternatives (e.g., scripts) if the Obol Collective owns the rights to the product. @Leo-ObolAssoc do you have a benchmark of how much similar solutions would cost in the market?

Otherwise, if this is something Tally can and plans to resell as a product, then I agree that the cost incurred by the collective should be much lower- e.g.,
(i) licensing or subscription fee, (ii) only subsidise a fraction of the build cost.

@enti

If there’s demand from the collective to study and evaluate delegate compensation, we at Vista would be more than happy to come up with an extensive analysis and recommendations on governance updates based on historical data and needs, and welcome the participation from others.

Happy to review an alternative proposal as well before making a decision.

Incentive structure

Paying both delegates and delegators from a separate pool from the staking rewards pool makes sense. Otherwise, stakers will be disincentivised to delegate and only stake.

One point I’d add here is to keep the scoring system fluid and adjustable by the Association for the first X months to prevent farming until we have reliable data showing that we have figured out the right formula.

This is because any known system will be subject to exploitation, and we have to be nimble enough to stay one step ahead of exploiters. Hence, I’d lean on giving the Association more flexibility during this early stage to figure out the right way to do things. To address centralisation concerns, we can decide on a time limit for the association to have full power to adjust the DRS.

Summing up my thoughts

1. We should explore and implement delegate incentivisation today, while we have high participation rates from organic delegates
2. It was expected that implementing a system for delegate incentivisation will come with additional costs
3. However, the cost to develop the proposed system should not be fully borne by the Obol Collective if Tally is able to resell this system
4. Let’s hear from Vista @enti on an alternative
5. Paying both delegates and delegators from a separate pool from the staking rewards pool makes sense as we want to minimise the opportunity cost of delegation.
6. The Association should be granted a time-limited flexibility to adjust the DRS during the initial phase