Recognized Delegates Program
To grow to its maximum potential, Interest Protocol needs to decentralize its ownership and put control of the protocol into a large group of thoughtful and intelligent participants. IP has two primary tools to jump-start decentralization. First, the token sale will distribute the majority of the circulating supply and is designed to distribute tokens to a large number of wallets. The second tool could be the Recognized Delegates Program.
The Recognized Delegates Program could be modeled after MakerDAO’s delegates program which has been active for the last 6 months. The program helped MakerDAO increase the number and quality of governance participants, increased the amount of MKR participating in governance, and saw a reduction in the average number of votes per voter. To attract talent, their program compensates delegates depending on the number of their votes, with the pay capped out at 142,000 for those with 10k MKR or more.
GFX Labs has allocated 5% of the total token supply for the IP community to run a program of their own. While it will be up to the Interest Protocol community to develop, vote, and facilitate any program, we have outlined some thoughts based on what has been helpful for other protocols.
First, the goal of the program is to increase the number of participants. Second, the participants should be able to contribute a skill useful to the IP community. That could be being an ambassador to new community members or getting involved in making protocol-level improvements.
With that in mind, for an individual IPT delegate to qualify as a Recognized Delegate, they could be asked to:
- Publicly announce their intent to become a Recognized Delegate;
- Provide a detailed platform, philosophy, or other appeal to IPT holders wishing to delegate;
- Provide an Ethereum address and/or ENS for delegation purposes;
- Provide a list of authorized representatives if the Recognized Delegate is a team or institution;
- Disclose all conflicts of interest (potential and actual), and provide a written policy on how current or future conflicts will be handled when voting.
To then act as a Recognized Delegate and receive full compensation, an IPT delegate that meets the above criteria could have additional community-approved requirements, such as:
- Command voting weight greater than or equal to 1 basis point of the total IPT supply;
- Participate in at least 90% of all on-chain IP votes within the previous 90 days
- Clearly communicate on the IP forum how and why they voted the way they did within seven days of the close of a vote;
- At least 90% of all votes must include this communication — including those votes that were missed
- The Recognized Delegate (or one authorized representative if a team or institution) must attend a minimum of one public protocol development call each month.
Some Recognized Delegates may wish to remain completely anonymous for privacy reasons. That could be entirely acceptable so long as they are open and honest about their decisions and their reasoning. Anonymous or not, staying sufficiently informed, voting regularly, and communicating the reasoning behind those regular votes will require a time commitment.
Thus, an initial proposal for the Recognized Delegates Program could include a compensation package weighted towards smaller Recognized Delegates such that it increases faster at lower levels of IPT delegated. This would acknowledge the time, overhead, and energy costs of regular engagement are somewhat fixed for every delegate.
Because a Recognized Delegates Program would set the precedent for delegates and compensation, a sunset clause could be built into the program that requires a new proposal to renew, reduce, or expand the program after it has been in effect for a fixed term.
Ideally, all token holders would be directly involved in every discussion and vote; given the required time commitment, however, this is not realistic. Delegation to an active community member allows any IPT holder who chooses to do so the ability to remain involved with decision-making without having to immerse themself in every issue.
Recognized Delegates would therefore have a community-defined duty to stay sufficiently informed and to make well-reasoned decisions on behalf of those who delegated their votes. The actual hours and effort required to perform these duties are likely to vary. Some periods may see a flurry of activity, particularly as IP governance initially finds its footing.
As outlined earlier and illustrated below, the compensation plan could account for the time and responsibilities associated with serving as a Recognized Delegate.
In addition to compensation, Recognized Delegates would gain a valuable opportunity to demonstrate value and build a reputation in DeFi governance generally.
While IPT holders are the final authority for Interest Protocol, many will prefer to not devote the necessary time and energy to every vote. In that case, they are able to delegate voting power to an address of their choice. If a token holder wants to delegate but does not have an existing relationship with any qualified delegates, they can review the record of statements Recognized Delegates have made. This allows them to make an informed decision even at the outset of IP governance. Over time, Recognized Delegates’ voting history and communicated reasoning will provide any IPT holder considering a delegation fine-grained information as to whether their interests and beliefs align with a particular Recognized Delegate.
Note that voting power is not “locked” for any period of time, allowing IPT holders to shift their delegations at any time. Particularly for large IPT holders, it may be advisable to delegate to multiple Recognized Delegates, and regularly rebalance how much is granted to each based on satisfaction with their voting record.
The combined effect of a set of community-defined requirements to become a recognized delegate, the standards they must observe, the transparency of governance votes, and IPT holders’ ability to withdraw their delegation at any time keeps delegates accountable to their constituents and provides the best trade-off between direct involvement and effective governance.
