# Non-Constitutional: Amendment to the Delegate Incentives Program **URL:** \ **Category:** Archived Proposals\ **Created:** [February 2, 2025, 4:17am UTC](https://forum.arbitrum.foundation/t/non-constitutional-amendment-to-the-delegate-incentives-program/28331 "2025-02-02T04:17:30Z")\ **Posts on this page:** 1\ **Showing post:** 36
**Author:** ![SEEDGov](https://yyz1.discourse-cdn.com/flex029/user_avatar/forum.arbitrum.foundation/seedgov/32/14560_2.png) [@SEEDGov](https://forum.arbitrum.foundation/u/SEEDGov)\ **Post date:** [February 4, 2025, 1:54pm UTC](https://forum.arbitrum.foundation/t/non-constitutional-amendment-to-the-delegate-incentives-program/28331/36 "2025-02-04T13:54:32Z")
Hi @thedevanshmehta First of all, thank you for bringing this discussion to the forum. We believe that these types of debates are valuable not only for the incentive program but also for the DAO members. Additionally, this is the first time a DAO member has proposed modifications to the program, which we find truly valuable. Before addressing specific points in your proposal, we would like to briefly review **how we got here** : In the [first draft](https://forum.arbitrum.foundation/t/draft-experimental-incentive-system-for-active-arbitrumdao-delegates/16501) of the program, we proposed the following: > [@\[DRAFT\] Experimental Incentive System for Active ArbitrumDAO Delegates](https://forum.arbitrum.foundation/t/draft-experimental-incentive-system-for-active-arbitrumdao-delegates/16501/1): > > ### Tiers > > We’ve established three levels for delegate qualification: > > - **Tier 1:** This category includes only delegates meeting the following criteria: > > - **Voting Power:** 30M ARB - 1M ARB > > - **Delegates to Receive Incentives:** 10 > > - **Budget Allocation:** 360.000 USD (6000 USD per delegate per month) > > - **All-time Participation Rate (Tally):** +75% (Excluding test votes or mistaken proposals) > > - **ARB Token Lock Requirement:** +3,500 ARB > > - **Tier 2:** For delegates that fit these standards: > > - **Voting Power:** 999,999 ARB - 300,000 ARB > > - **Delegates to Receive Incentives:** 10 > > - **Budget Allocation:** 240,000 USD (4000 USD per delegate per month) > > - **All-time Participation Rate (Tally):** +75% (Excluding test votes or mistaken proposals) > > - **ARB Token Lock Requirement:** +2,500 ARB > > - **Tier 3:** Exclusively for delegates meeting the subsequent criteria: > > - **Voting Power:** 299,999 ARB - 100,000 ARB > > - **Delegates to Receive Incentives:** 10 > > - **Budget Allocation:** 120,000 USD (2,000 USD per delegate per month) > > - **All-time Participation Rate (Tally):** +75% (Excluding test votes or mistaken proposals) > > - **ARB Token Lock Requirement:** +750 ARB After a period of feedback and meetings, the DAO members at that time expressed their disagreement with the existence of tiers, the lock mechanism, and the 100k minimum requirement for participation. The reasoning behind this was that, at that stage of the DAO, the priority was to attract more contributors and make it easier for new delegates to participate. As a result, we introduced changes in a [new proposal](https://forum.arbitrum.foundation/t/proposal-experimental-incentive-system-for-active-arbitrumdao-delegates/19467): > [@Proposal: Experimental Incentive System for Active ArbitrumDAO Delegates](https://forum.arbitrum.foundation/t/proposal-experimental-incentive-system-for-active-arbitrumdao-delegates/19467/1): > > ### Requirements > > Based on the feedback received, we’ve opted for a single-tier instead of a multi-tiered program, allowing a wider array of participants, the requirements would be as follows: > > - **Voting Power** : \>50K ARB, corresponding to 194 delegates. (Source:[Arbitrum Delegates and Voting Power - Dune Analytics](https://dune.com/pandajackson42/arbitrum-delegates-and-voting-power)). > > - **Delegates to Receive Incentives** : 50. > > - **Budget Allocation** : 1,500,000 ARB (5,000 ARB per delegate per month). > > - **Historical Participation Rate (Tally)**: Over 25% There was also debate regarding the 50k ARB minimum, as some delegates felt it was still too high. However, our reasoning for keeping it at that level was that, at the time, there were at least 194 delegates within that range, making it a reasonable number for us. Ultimately, this was the proposal that was approved for the first version of the incentive program. Over the six-month duration of the program, [only 50% of the allocated budget was spent](https://forum.arbitrum.foundation/t/dip-v1-0-from-engagement-to-rewards-a-comprehensive-analysis-of-participation-and-incentives-part-2-final-report/26982#p-59714-payments-tracking-14): > [@\[DIP v1.0\]From Engagement to Rewards: A Comprehensive Analysis of Participation and Incentives (Part 2 - Final Report)](https://forum.arbitrum.foundation/t/dip-v1-0-from-engagement-to-rewards-a-comprehensive-analysis-of-participation-and-incentives-part-2-final-report/26982/1): > > ![image](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/b/b0397e8ee4956b9d45f68b40127a287d322a6058.png) > > The data in this table can be used to calculate the average total TP since the beginning of the program, as well as the cumulative total ARB spent so far. > > ![image](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/3/3b1d4b0d7f7408f29dcca4d28a09858f7ddc38a7.png) > > The budget requested at the beginning of the program was ARB **1,580,000** , distributed as follows: > > - 1,500,000 ARB for incentives > > - 30,000 ARB for the development of Karma > > - 20,000 ARB for administrative costs (SEED Latam) > > - 30,000 ARB for multisig members This allowed us to extend the program for an [additional two months](https://forum.arbitrum.foundation/t/proposal-to-temporary-extend-delegate-incentive-system/26179) without requesting **extra funds from the DAO treasury**. It also gave us more time to work on [version 1.5](https://forum.arbitrum.foundation/t/proposal-delegate-incentive-program-dip/26496) of the program, ensuring a broader feedback window. The proposal included the current requirements: > [@Proposal - Delegate Incentive Program (DIP)](https://forum.arbitrum.foundation/t/proposal-delegate-incentive-program-dip/26496/1): > > **Voting Power: \>50K ARB, corresponding to 176 delegates.** (Source:[Arbitrum Delegates and Voting Power - Dune Analytics](https://dune.com/pandajackson42/arbitrum-delegates-and-voting-power)). > [@Proposal - Delegate Incentive Program (DIP)](https://forum.arbitrum.foundation/t/proposal-delegate-incentive-program-dip/26496/1): > > Participation Rate (Karma): ≥75% participation in on-chain votes in the last 90 days. Once again, discussions arose regarding lowering the 50k ARB entry barrier and increasing the number of delegates eligible for rewards. However, we opposed these changes for the following reasons, which were outlined in our [final report on the v1.0 program](https://forum.arbitrum.foundation/t/dip-v1-0-from-engagement-to-rewards-a-comprehensive-analysis-of-participation-and-incentives-part-2-final-report/26982/1): The number of inactive delegates within the 50k ARB range was **twice** that of active delegates. On average, there were 132 inactive delegates, as shown in this table: > [@\[DIP v1.0\]From Engagement to Rewards: A Comprehensive Analysis of Participation and Incentives (Part 2 - Final Report)](https://forum.arbitrum.foundation/t/dip-v1-0-from-engagement-to-rewards-a-comprehensive-analysis-of-participation-and-incentives-part-2-final-report/26982/1): > > ![image](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/a/a9f640090b4dfbc985bf3a90a909764d19d097c6.png) > > image360×632 6.86 KB Active delegates within this range represent approximately 98% of the VP in each proposal approved by the DAO: > [@\[DIP v1.0\]From Engagement to Rewards: A Comprehensive Analysis of Participation and Incentives (Part 2 - Final Report)](https://forum.arbitrum.foundation/t/dip-v1-0-from-engagement-to-rewards-a-comprehensive-analysis-of-participation-and-incentives-part-2-final-report/26982/1): > > ![Gráfico](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/4/4d279366380358e124d63d660bffde19def1fe99.png) > > Delegates in the “Over 50k VP” range contribute the most VPs to the proposals, representing on average 98% of the VPs. The following table shows the number of active and inactive voters within this range for each ballot: These metrics reinforced our position to **maintain the 50k ARB minimum** , increase participation requirements, and keep the number of incentivized delegates at **50** , as we did not see a need to expand this number. However, it also made us realize that a large number of inactive delegates within this range could potentially **reactivate and participate in the DAO**. This insight led us to **increase the incentive amounts** , setting them above those of other DAOs. As seen, the 50k threshold is **not arbitrary** , and while it can certainly be improved, our goal is to **strike a balance** between keeping the entry barrier accessible, attracting new delegates, reactivating inactive ones, and professionalizing active participants. **Now let’s get into the details of this proposal.** > [@thedevanshmehta](#): > > _Benchmarking with other DAOs_ : if we look at [similar](https://docs.google.com/presentation/d/1tIbDpeqpCmDHtAL40G15AzjpvSIc_FpgO8L8Z2DQUUU/edit#slide=id.g31bb20503da_0_0) delegate compensation program, Arbitrum stands out in having a much lower barrier to entry and a much higher amount earmarked for paying delegates. We appreciate the effort to compare Arbitrum’s Delegate Incentives Program with other DAOs. However, the document used as the foundation for this proposal contains **several inaccuracies** that significantly impacts the validity of the comparison. We brought this up in the Telegram group, and for clarity, we will highlight only those errors relevant to the **Arbitrum** program: - **“Min 25% participation and 50k ARB delegation”** : This is incorrect. Currently, a **75% on-chain participation rate over the last 90 days** is required **just to apply** , and even then, **this does not guarantee** that a delegate will receive any compensation. - **“50 delegates get compensated, 194 eligible”** : Not necessarily—the program has never reached 50 compensated delegates since **not all eligible delegates** reach the **minimum required score**. (Yes, there is a **minimum score required** , which is missing from the document.) > [@thedevanshmehta](#): > > 1. Aave pays a comparable $5k USDC, but excludes service providers and only includes those with 20k AAVE in voting power (~6 million usd). Similarly, Lido requires 0.1% of voting power delegated to be eligible for payments. The most comparable program is 1inch, which requires a minimum of 500k 1Inch (~ USD 150,000) and pays $4k USDC per month . While we see the rationale behind these comparisons, it is important to point out that **none of these DAOs operate a blockchain** , making their governance structures and activity levels fundamentally different from **Arbitrum DAO**. Given these structural differences, a direct comparison **may not fully capture the unique challenges** of Arbitrum’s governance. Additionally, **a quick look at the 1inch forum** would reveal that the level of discussion and governance activity is nowhere near comparable to what we experience in Arbitrum DAO. > [@thedevanshmehta](#): > > The proposal committed to a review process on the parameters at the 3 month mark To clarify, the **3-month review period** was meant **exclusively** for the new rubric system, as was explicitly stated in the original [proposal](https://www.tally.xyz/gov/arbitrum/proposal/7979895167029508946638584765496434407327098393519089113101189960001594458109?govId=eip155:42161:0x789fC99093B09aD01C34DC7251D0C89ce743e5a4). ![](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/b/bb8dc33aa1a6f9b10ceeabc0769929d5684866d7.png) That being said, as you mentioned, **anyone is free to propose modifications via Snapshot** , and we encourage open discussions on potential improvements. > [@thedevanshmehta](#): > > On October 27 2024, Arbitrum DAO approved the Delegate Incentives Program for a total budget of $4.2 million. As **@jameskbh** correctly pointed out, the **$4.2 million** budget is a **maximum allocation** , assuming **every single compensated delegate** reaches **Tier 1** , which is **highly unlikely**. Note that with the last [changes](https://forum.arbitrum.foundation/t/dip-v1-51a-updates-thread/28018/) + the [Voting Power Multiplier](https://docs.google.com/document/d/1hUCGLr6qD6VJUk2mknPzMrDv4PJBOmyNuLlNh_QN35w/edit?usp=sharing), the spending will be even lower. Your **original (now edited) proposal** suggested that the main motivation behind this change was to **cut expenses in half**. ![](https://canada1.discourse-cdn.com/flex029/uploads/arbitrum1/original/2X/b/b809b866b840e39d4132394ca50c6dbabca7c665.png) However, under your revised model, if every small delegate secures an endorsement, there would be **no savings at all** , nor would there be **any difference in treatment** between delegates with \>500k ARB and those below that threshold. This contradiction raises an important question: **What specific issue is this proposal aiming to solve?** > [@thedevanshmehta](#): > > _Improved economic foundation_: Currently, the program treats all delegates equally, whether they have 50k ARB or 20 million ARB delegated. This is not reflective of reality. Programs based on equality rarely end well. > [@thedevanshmehta](#): > > @pedrob can correct me if im mistaken, but the original intention of DIP was that major delegates dont have time to stay on top of everything going on in the DAO. So the funds could be used to hire someone that would do the research for them. For many reasons that didn’t play out, What are your arguments to say that this “didn’t play out” when we are only 3 months into the 1.5? We had several comments from delegates who have hired/are looking to hire assistants. We still don’t understand the relationship between Hiring someone for your own delegation vs Giving an endorsement to a third party completely unrelated to your delegation. ### On Endorsements > [@thedevanshmehta](#): > > When level 2 delegates are accountable to level 1 delegates (who may withdraw their endorsement at any time) we will not face this issue as acutely. As already pointed out by other delegates, we believe this model introduces several **serious challenges** that could ultimately work against the DAO’s best interests: - **The number of compensated delegates is always limited** , so a high-VP delegate would have no incentive to endorse someone who competes for a compensation slot. - **Endorsements could be weaponized as a tool for coercion** —if a small delegate does not align with a Level 1 delegate’s preferences, they could simply be removed from the program. - **This endorsement requirement effectively shuts the door to new contributors** who lack an existing reputation or connections with current DIP-participating delegates. **The proposed system creates a highly permissioned program** for potential new contributors. - **Operational challenges** have not been considered. - **Increased Centralization & Lack of Accountability** : There is **no accountability** for **Level 1 delegates** regarding how they grant endorsements. The system **assumes good faith** , but as we have seen in many governance models, unchecked authority can lead to unintended consequences. We truly value constructive dialogue and **would have appreciated being consulted** as **Program Administrators** (by the way, it’s **SEEDGov** , not **SEEDLATAM** ). For context, before this discussion was brought to **[Twitter](https://x.com/TheDevanshMehta/status/1883823974439911630)**, we were already working on a [Voting Power Score Multiplier](https://docs.google.com/document/d/1hUCGLr6qD6VJUk2mknPzMrDv4PJBOmyNuLlNh_QN35w/edit?usp=sharing), which essentially provides **differentiated treatment** for high-VP delegates while still requiring lower-VP delegates to **demonstrate high-quality contributions** in the forum to reach the upper tiers. This multiplier was developed after **multiple meetings with various DAO stakeholders** , who provided feedback on the first two months of DIP 1.5, and it represents one of the many changes we have been making every month to improve the existing framework. Note that there is a [thread](https://forum.arbitrum.foundation/t/dip-v1-51a-updates-thread/28018/) in which we inform in advance about each modification. ### Conclusion **SEEDGov DOES NOT SUPPORT** the proposed change. We truly appreciate the effort put into this proposal and recognize the intention behind it, but after careful analysis, we have identified several issues that lead us to respectfully disagree based on our experience as **Program Administrators** of the DIP and thorough research into this matter. We remain **fully open to additional suggestions** on **how we can further optimize the program**. We acknowledge that the system can always be improved, which is precisely why we are **continuously refining the framework** to ensure that **Arbitrum DAO has the most effective Delegate Incentive Program in the crypto space**. --- _[View the full topic](https://forum.arbitrum.foundation/t/non-constitutional-amendment-to-the-delegate-incentives-program/28331)._