Hi @Frisson
We would like to share some final thoughts based on the amended proposal and the recent research of the ARDC.
Frisson:
In the future, we believe it would make sense to integrate the delegate incentives program with ARB staking so that, instead of getting delegate incentive funds from the ARB treasury, they come directly from DAO revenue. However, delegate incentives are not included in the scope of this proposal. Implementation of delegate incentives into ARB Staking will be decided on at a future date by the DAO.
As we have stated in the ARDC research on the proposal in question:
We would like to mention that from our perspective the Delegate Incentive Program (DIP) focuses on improving participation in governance more qualitatively than quantitatively. This means that in the first instance, one of the main goals of the program is to professionalize delegates so they can keep focusing on building for ArbitrumDAO.
We see the ARB Staking program as a solution to increase the number of delegated tokens, but despite contemplating issues such as the “Karma Score”, it’s hard to consider it as a possible replacement for the DIP because we would be ceding control of the incentives to a mere mathematical formula when today the DIP not only contemplates votes or the number of comments in the forum but also analyzes the impact of the latter, also ensuring that no one can “take advantage” of it.
It should also be mentioned that simply limiting delegate incentives to a mere “commission” of the Arbitrum DAO revenue could take away the predictability of the incentive itself, which defeats the purpose of the DIP. Despite this, we agree that interesting synergies can be generated between both programs : We could implement a mixed model in the future, where for example the top 50 delegates (according to the DIP table) get a fixed monthly amount in ARB as now and then in parallel a commission model like the one you have proposed for all the delegates is applied.
Frisson:
ARB Staking unlocks financial utility and aligns governance by creating a mechanism to stream rewards in the future from DAO-generated sources like sequencer fees, MEV fees, validator fees, token inflation, and treasury diversification to token holders who are delegated to an active governance participant. ARB Staking makes ARB usable in restaking and DeFi by returning voting power locked in contracts to the DAO.
Here we will bring up another related comment we made in that post:
This is good information, extrapolating the new daily average mentioned here we would get about 1,800 ETH per year vs. the 12,000 ETH estimated in Frisson’s original proposal and vs. the 9,200 ETH per year that the DAO obtained in the 100 days pre-blobs.
Assuming that 50% of this revenue is distributed, that would be about 900 ETH ($2,250,000 at $2,500) among about 324,000,000 delegated ARBs ($162,000,000 at $0.5) leaving us with an estimated 1.4% APY.
It seems that further revenue sources could be needed to improve this stream and make the Staking more attractive, we are confident that in the future there will be more DAO-generated streams as proposed about MEV fees , validator fees , token inflation, the gas fee increase , treasury diversification initiatives and Orbit Chains fees.
The information gathered by the ARDC indicates that we should work together to provide sufficient sources of revenue for the Staking program, as in principle the fees obtained from the sequencer may be relatively low compared to the capital staked. While it is true that today those who delegate tokens get 0% APY, it would be important to consider that the initial estimations have changed significantly.
Frisson:
We define an active delegate using Karma Score. The DAO will define the Karma Score requirement for being considered an active delegate. Karma Score is a combination of delegate’s Snapshot voting stats, onchain voting stats and their forum activity. To accurately calculate forum activity score, delegates are required to prove ownership of their forum handle by signing a message with their delegate address and posting on the forum. The current Karma score formula is below, which can be adjusted by the DAO going forward:
((100) * ((Forum Activity Score * 1) + (Off-chain Votes % * 3) + (On-chain Votes % * 5))) / (Sum of Weights times Max Score Setting * 1)
It could be interesting to align the Scoring requirements with the current delegate program, although the process to obtain a Total Participation Score in DIP is different, it is important that as a DAO we are clear about what an active delegate means.
Frisson:
Users can verify Karma score calculations independently.
The DAO will have the ability to block Karma Scores if it believes they are being calculated incorrectly.
If Karma scores fail to arrive or the scores are blocked by the DAO, ARB Staking will distribute rewards to all stakers regardless of whether they are delegated to an active governance participant until the situation is resolved.
Regardless of the score requirements defined by the DAO, it would be good to be able to block any score individually if someone detects a delegate trying to raise his participation score in the forum with comments of little value.
Frisson:
I explicitly clarified that, in parallel with the development of ARB Staking, Tally will lead two separate DAO working groups that are focused on aspects of the system that will be implemented after development is complete. The working groups will be formed via an open call for contributors that will be posted after this proposal passes the temp check stage. Each working group will deliver their recommendations in October, so that the recommendations can be turned into DAO proposals and created following the implementation of ARB Staking.
We agree on the need to create these working groups for the reasons explained above . The proposal in the current format is interesting and we hope that in a joint effort the remaining details can be decided upon. We are aware of the importance of generating mechanisms to provide an additional use case for the token as well as increase the number of delegated ARBs.
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