DAOs absolutely should be looking to fund and incentivize contributors, but, as the saying goes “show me the incentives and I’ll show you the outcome.” As was seen with MakerDAO up until the return of Rune in 2022, delegates were compensated based on their voting weight and in turn, the forum was overrun with pontification and debate while none of the delegates were held responsible for protocol metrics, KPIs, or growth.
If Arbitrum is serious about delegate compensation, it should start the design process from the ground up and focus on what specific actions is the community hoping to incentivize from these expenditures. Voting and posting are unlikely to be the most important avenues to drive material impact for each dollar spent on participation.
There are many avenues to pursue here, and it is worth potentially funding a small group to explore, flesh out, and propose more detailed options to the community for feedback and discussion (similar to the Uniswap bridge committee), but there is one I’ve been thinking about for a while…
Compensating “Delegates” for strategic need allocation
Instead of funding contributors to vote and post across the forum, empower small groups of delegates with clear mission alignment and KPIs to work for and deliver on behalf of the DAO. In exchange for real ownership and responsibility, the community should see an increase in output and dedication from these incentivized parties.
Instead of funding actors solely to participate in governance, the community outlines top strategic needs (growth, operations, engineering, security, etc.) and builds an incentive system by which domain experts can provide advice, guidance, and proposals for the betterment of the protocol.
Each strategic need is allocated a budget for “delegates” and, potentially, a budget for “grants”. The delegates, like other councils and committees as outlined in the constitution, will be publicly elected based on:
- Their prior work history & expertise
- Commitment / alignment with the DAO
- Proposed course of action and KPIs to be delivered during the term
Each delegate is then judged across two parallel considerations:
- Their delivery and execution of the strategic need (as outlined in the election process)
- Their otherwise participation in the forum and consistency of voting on proposals
Though this is a very high-level overview, the DAO could use this structure to compensate “delegates” while ensuring they are spending time and effort furthering Arbitrum based on their expertise and putting in real work alongside governance participation.