Meta-Delegates for DAOs
Boosting governance engagement and organizational strength
The organizational development of DAOs is still in its early stages. With voting fatigue becoming more apparent and lobbying tendencies on the rise, the question of how to involve and activate stakeholders in decentralized governance processes is hotly debated. This is all the more important as DAOs are rapidly growing in value & size (around governance 1.7 million token holders to date). Not to mention the increasing complexity of products marketed by DAOs and the corresponding strategic decisions.
This article addresses the new approach of meta-delegation to involving student groups and similar consortia in DAO governance. It provides insights into current practices and highlights potential pathways to implementation.
Challenges of a decentralized c-suite
Whereas in traditional corporations we entrust a hierarchically elected management with strategic leadership, in DAOs we rely on the governance contribution and decision-making activities from token holders. Ideation, proposal writing, voting, and strategy challenging from technical, legal, economic, and social perspectives are just some of the requirements. Thus, diversity and knowledgeability amongst the governance contributors become a competitive advantage of every DAO.
However, many DAOs struggle to fulfill these demands. DeepDAO shows that in most DAOs only 1–3% of token holders become active, which at times can make it difficult to reach the minimum voter threshold (quorum). Further, the intersection to those who have customer insight, applicable background knowledge, or simply the resources to research thoroughly is limited. At the same time, the utility of governance tokens, especially in DeFi, is gaining profit-enhancing properties (see Curve Wars and Gauges Voting). In conjunction with expanding governance-influencing infrastructures, such as short-term token-rentals Bribe Protocol or Paladin, the demand for a counterbalance through independent and diverse governance input is increasing.
Upgrading DAO governance via meta-delegates
Now, to put DAO governance on a broader foundation, DAOs have started to set up processes to mandate qualified 3rd parties with governance contributions, turning them into so-called Meta-Delegates. Amongst others, Andreessen Horowitz (A16z) has open calls for applicants, such as academic groups and NGOs, to become delegates for their DeFi portfolio. The objective is to provide them with the token power needed to perform tasks such as publishing governance improvement proposals or voting. Recently, to this effect, Uniswap reported having brought in Stanford Blockchain Club as the 9th largest governance delegate.
True to a DAO’s core values, these 3rd parties are engaged as groups, rather than individuals. As highlighted in the article “DAO Delegates: Misunderstood and Misused”, an individual owning a delegation may represent a single point of failure, both in terms of commitment and the complex decisions that must be made to cast a vote. Following this, delegate groups first have to reach their own internal consensus in order to make influential decisions for the commissioning DAO. They essentially become a temporary SubDAO.
New processes & tools for governance engagement
For delegates to gain full access to a DAO governance, they need a certain amount of tokens or respective voting power, depending on the specified limits. For example, Uniswap requires 0.25% of all tokens (2.5m UNI) to create a proposal. To reach that limit, the usual practice for potential delegates is to post their commitment in the governance forum and, if token holders agree, the delegation is carried out. The economic value remains with the original owner at all times (example of Idle’s Voting Delegation). Other solutions could include zero interest token loans with reimbursement of gas fees. Further, Uniswap has set up a special pitch procedure for Meta-Delegates to bypass the barriers of token gated governance processes.
From the DAO’s point of view, this all sounds very good, but what do the delegates get out of it? Often rewards are the first incentive that comes to mind, but with meta-delegation, the educational aspect can’t be emphasized enough. Hands-on experience and insights can be gained and thus incorporated into scientific work and future job engagements. For the latter, certificates such as “Proof of Contribution” NFTs can be a great added value. In addition, the media reach of DAOs and their useful multiplier and marketing effect for participating groups can be considered an incentive. Other considerations go as far as involving agencies (strategy consultancies or law firms) as temporary Meta-Delegates, with honorary paid in native tokens.
This is only the beginning. Get involved!
Meta-delegate activities have just begun, and we will see many exciting developments and new practices in this field. Idle is determined to be active on the front lines. If you are interested in sharing your thoughts on the topic, or in joining Idle as a Meta-Delegate, please feel free to stop by on our Discord and reach out to EmixPrime | Idle DAO#7473 or Kathleen#1649. You can also message us via info@idle.finance.
About the Authors
- Kathleen Olstedt: she’s a contributor at Idle Treasury League, one of the subDAOs of Idle DAO, mainly focusing on the Business development area and collaborating with the meta-delegate initiative.
- EmixPrime: he’s a contributor at Idle Treasury League, one of the subDAOs of Idle DAO, mainly focusing on the Ecosystem development and DAO Architecture areas and currently collaborating with the meta-delegate initiative.
