[TempCheck] Empowering Underrepresented Delegates: A Path to Inclusive Decentralisation

[Baer_DAOplomats]

Summary

Distribute voting weight between recognised delegates who have been active but under-represented in voting weight to further the decentralisation of the DAO.

Motivation

AAVE is one of the top DeFi protocols today, boasting one of the highest TVLs in the industry, yet in terms of governance, the picture could be more precise. According to Boardroom, most delegates are inactive or ghost delegates, while the top 10 barely participate in voting.

On average, <6% of governance tokens participate in governance, which begs the question, is the AAVE token a governance token?

While the recent Orbit initiatives have motivated several new participants to be active in governance, the entry barrier for anyone needing more capital remains high. Delegates who may otherwise satisfy the conditions for being a Recognized Delegate can only attract delegation from token holders over time if they are well-connected in the industry or have sufficient capital.

It is in the best interest of the DAO to help underrepresented but dedicated and active delegates increase their voting weight over time.

The redelegation of tokens has three distinct advantages:

1. A clear path for new participants to join the DAO and become active governors.
2. Increase the proportion of tokens participating in voting.
3. Decentralise the AAVE DAO further.

B: DAO delegation. Enable underrepresented delegates to reach 57765 AAVE in voting weight

Specification

Eligibility

• According to the recognised delegate framework, the delegate must have fulfilled the requirements for being a Recognised delegate.
• The delegate must have fulfilled the other conditions from Orbit renewal, such as
  • Not an Aave Service Provider
  • Minimum 120 days since delegate platform creation
• The voting power is less than the average voting power of an active, recognised delegate (as of the date this proposal passes snapshot)

Delegate List:

Based on our analysis, there are 12 active delegates with an average voting weight of 57765. The complete list of delegate analyses can be found here.

Hence, we suggest the following delegates be delegated the remaining AAVE tokens from the DAO treasury.

Delegate Name	Voting Weight	Voting weight to be delegated
Wintermute Delegate Platform	42,871	14894
StableLab Delegate Platform	23587	34178
Keyrock delegate platform	24,394	33371
Karpatkey Delegate Platform	21,400	36365
HKUST Blockchain	2	57763
DAOplomats Delegate Platform	1	57764

This would imply delegating 234334 AAVE (25.4% of native tokens in the treasury) from the treasury between 6 delegates for 1 year.

Implementation

Timeline:

Delegation will be valid for one year from the date of the on-chain vote.

Option 1:

Deploy a non-transferable voting token, AVT (AaveVoting Token), which is only mintable and burnable through the DAO governance vote to delegate addresses.

The token should only contain voting and proposal power.

1AVT = 1AAVE(votingpower+ Proposal power)

1AVT ≠ 1 $AAVE (No monetary value as it’s non-transferable)

The Aave Governance V3 voting strategy contract should be updated to count the newly deployed AVT tokens.

Need

1. AVT token deployment
2. Coordinate with @bgdlabs with voting strategy specifications.
3. Deploy a new voting strategy.

Risks

• A voting strategy contract upgrade that needs a new audit
• Development of the Aave Voting Contract (Even though it’s a valueless token mintable using Governance and can’t be transferred.

Option 2:

This option uses the FranchiserFactory contract, which Uniswap Foundation recently used, but in this case, it can be customised to distribute AAVE from the treasury.

The FranchiserFactory deploys individual Franchiser contracts for each delegate funded by the number of tokens defined.

Aave governance PayloadsController will be the owner of all Franchiser contracts deployed from this vote and can recall the tokens by calling the recall function (via a subsequent on-chain vote) on each contract at any time.

Risk:

1. Transfer of value: The tokens must be sent to a different contract for this to work.
2. Even though no voting strategy contract upgrade is required, the new contracts should be audited.

Delegate selection

The eligible delegates will be shortlisted and temp-checked on the snapshot.

Delegate Votes

• Number of additional votes to be received by each delegate.
• Specify that either option 1 or 2 will only delegate a number of tokens to each corresponding delegate according to the proposal’s specifications.

Disclaimer

This proposal is neutrally presented based on current community sentiment.

DAOplomats are not compensated for this proposal in any manner. We are not associated with any parties mentioned in the proposal above.

Given the evolving nature of DAOs, there’s no assurance that the proposed changes will yield the intended results.

The author(s) and associated parties are not liable for any outcomes or damages from this proposal’s implementation or lack thereof.

Next Steps

• Gather feedback from the community
• Work with current service providers for contract writing and deployment

Copyright

Copyright and related rights waived via CC0.

[WintermuteGovernance]

Hey @Baer_DAOplomats,

This is a great initiative that has been pretty successful for Uniswap and we’d love to see something similar for Aave.

We are not sure if Option 1 makes sense at the proposed scale of this proposal, maybe if there was a larger campaign for this it would make sense as it would require additional audits and dev work to upgrade the governance strategy contract.

Option 2 is the best solution in our opinion. We would need to make sure the FranchiserFactory contracts are compatible with the new version of AAVE after the V3 upgrade where balance snapshots were removed (something for BGD to touch on).

[MarcZeller]

Hello,

There are two ways to get voting power in Aave:

1. Spend your hard-earned money to buy the asset

2. Do a good enough job and earn the trust of ppl in 1)

The ACI is working hard every day to earn the trust of the hundreds delegating to us; since day one, we have had no support from Avara, VCs, or other protocols; we only get support from individuals sharing our vision for the DAO.

It’s the same for @EzR3aL and for all the major delegate platforms of this DAO. In other DAOs, voting power is given as long as people vote aligned with the VCs & the founding team; in Aave, voting power is earned, and every delegate is truly independent.

Aave is not The UNI VC-puppet governance theater; we’re the most active, diverse, and decentralized DAO in this world. This is something we must cherish and not fade with this kind of proposal.

On a personal side, giving 57k voting power to the guys whose most noticeable contribution to this DAO was trying to extract 1M GHO to the BanklessDAO grift would be quite hard to bear.

The ACI will cast an NAY vote on this proposal.

[EzR3aL]

Can you please share some information about what Uniswap exactly did? I haven’t heard about it as im not really involved there.
Want to know more before deciding anything.
Thanks

[Baer_DAOplomats]

Hey @EzR3aL, thanks for the response.
Just like every DAO, Uniswap also had an asymmetry in the token delegated and the active delegates in the DAO. @Kene_StableLab’s team asked the DAO to delegate the UNI tokens from their governance timelock contract to a set of delegates that the DAO has picked. The aim is more inclusion; if you are looking for that proposal specifically then more details are available here.

---

We appreciate your commitment to AaveDAO and your professionalism,@MarcZeller.

Since the V3 gov update, everyone, including @stani, is asking the community to delegate the tokens to active delegates in the DAO. I think I shouldn’t convince you that a DAO is just an AO without sufficient distribution of decision-making power. It should be in the DAO’s best interest to decentralise.

If this proposal is accepted, the number of Aave tokens participating in governance will increase significantly.

A clarification:
We are not asking for us @DAOplomats to give any tokens; the tokens are always held under the custody of the DAO. We are asking the DAO to open itself to more delegates.

@MarcZeller

On a personal side, giving 57k voting power to the guys whose most noticeable contribution to this DAO was trying to extract 1M GHO to the BanklessDAO grift would be quite hard to bear.

Our most notable contribution to the DAO isn’t the one you have mentioned there, @MarcZeller; it was us trying to introduce some uniformity in the voting as many minor delegates like us (who are not part of the recognised delegates program) can’t keep up the phase of the DAO.

@MarcZeller

The Aave DAO recognized delegates are fairly compensated via the Orbit program. If it’s too hard for them, the ACI is happy to provide a fitting alternative opportunity.

[JosepBove]

For me DAO doesn’t mean that the delegation of power should be distributed. If someone has the trust of the community to gain a lot of power, so be it! Decentralisation doesn’t mean giving away free power to people, that would be extremely unfair to some of the delegates that are working very very hard in order to reach more people.

[EzR3aL]

Okay now i got some more input from the Uniswap proposal.

Well im kinda split, on the one hand if we decide to distribute those token and giving people more voting power more token will be actively voting.
On the other hand what will change? It will still be the same participants voting, simply with more token. No one new will be entering, no new view or opinion will join the DAO.
So what’s the benefit?
I don’t really see it, or are we expecting if we distribute them, that votings will look different in the future because now smaller delegate platforms just follow the big ones and with that distribution it will change?

Also I have to say I agree with Marc, whoever wants to have a voice in the DAO has either to buy Aave token or be able to gather token from other people.
I for myself have a good amount of Aave but never delegated them to me, but split them and delegated them to other known platforms here. All voting power I have is from several sources I know, because I build up reputation over the past years in some unofficial Aave chats, X or by having direct contact to some holder. They can pull their power whenever they want. So its my job to keep them satisfied.
Thats a risk I have to live with. If we distribute them via treasury there is no risk, at least no direct.

Also If we would decide to distribute them, we would then have to set the Orbit level higher imho. Otherwise we are just giving away money to delegates that didn’t do anything to be at this level.
So at least 60-70k should be threshold then. Orbit was created to incentivize governance and push people to be active. If we just distribute 5k GHO per month there is no incentive.

I would rather see and use those token/voting power for new delegate platforms that have established themselves in the DAO over 3 months and kickstart them a little bit till they reached some maturity and are able to gather voting power by themselves. Just to keep them couraged to move on.

And just to debunk this argument maybe…
Yes I am currently the one with most voting power, but I don’t mind if anyone decides to pull their power from me and give it to someone else they like more because of their vision or because they simply want to see more distribution. Im not here for the Orbit money, im here for governance, since 2020 and have been active without any incentive.

[midapple]

Im not here for the Orbit money, im here for governance, since 2020 and have been active without any incentive.

I wonder if this is a sustainable model. We see quite a lot of adverse selection in similarly incentivized political systems across the world, where those working in politics for the “right reasons” end up in power, rather than those who are actually competent.

[eboado]

Some thoughts of mine on the topic.

The discussion seems to be started from 2 premises:

• Participation on voting can improve.
• Voting power is unbalanced between largest and smallest delegates.
  I will leave for a moment aside the proposal and focus on why I think the previous happens and how (if) to solve it.

Participation on voting can improve
True, almost everything can improve, but let’s look more in detail.

• Voting supply. Following the graph of voting power presented, the average voting participation is in the order of ~600k per proposal. This seems pretty low if we compare with the 16m AAVE total supply, but AAVE total supply != AAVE effective supply.
  Even if changed since then, as presented HERE back in the days, there is a pretty meaningful amount of AAVE which in practise can’t participate in governance. This is the case of exchanges (both centralized and decentralized), non-Ethereum networks, and at the moment, still stkABPT.
  On decentralised locations (e.g. abpt, other networks), the plan is to enable them as voting asset in the short/medium term (for example, we are preparing on BGD a proposal for an extra voting asset at the moment). But at the moment, close to 1m AAVE is on stkABPT, ~250k AAVE is on Polygon, 17k in Avalanche, 10k in Optimism, etc.
  On centralised exchanges, just looking superficially, in the order of 2.5m AAVE are there. In this case, having them involved in voting (directly or ideally allowing their users to do it) involves way more effort, and most probably is not possible to get a meaningful supply voting (if any).
  Finally, the Aave Ecosystem Reserve holds more than 900k AAVE tokens, which also are not participating in voting.
  So we can say that just on a first look, in the order of ~5m tokens are practically not able to participate in governance. That means 11m AAVE are a realistic current effective supply.
• % of participation over effective supply. With the 2 previous numbers at hand (~600k average participation and 11m effective supply), that gives a 5.4% average participation, which seems pretty low. However, this number should not be taken out of context.
  Aave can be described as a decentralised software-based community, and close to 100% of its governance proposals are about that, software. Additionally, economic aspects are voted, but pretty frequently quite specific to Aave’s software.
  Now, even if not having rigorous data, the profile of holders of Aave can be assumed to be (in a pretty meaningful percentage) composed by entities which have trust on the system, but not completely understand it, simply because like any software, and specially in blockchain, it is complex.
  At the moment there is a rhythm of more 3 governance proposals per week, so expecting a meaningful percentage of holders to participate is not realistic, even if they can. And so the initial concept of delegates.
• Participation spikes. The Aave governance internally has 2 types of proposals: Level 1 has a YES required threshold of 320k, and Level 2 has a threshold of 1’040’000 YES.
  If we look historically, the spikes in participation are quite frequently aligned with the creation of Level 2 proposals, and even more, threshold almost always gets crossed.
  This is extremely important because the conclusion is very clear: when participation is really required, is not only that holders of Aave who rarely vote delegate, they vote directly even!
  Now, why is that? Maybe they get better visibility? Maybe they feel the vote counts? Maybe the scarcity of these Level 2 proposals have an influence on their participation (meaning if there will be more, they will stop)? Probably a combination of all of them, but a pretty important one to study, I have no answers.

Mind that I didn’t talk on purpose about delegation dynamics and obstacles on it, but that is to highlight on why actually “voting participation can improve” maybe has totally different causes that delegation could not solve.

Voting power is unbalanced between delegates
Keeping it simple: some delegate platforms have a lot of voting power, others don’t.
There is also a lot to comment on this, but to keep it simple:

• Ways of having governance power. Personally, I think voting power should be in mainly 2 entities: 1) whoever has made explicitly they want it by holding AAVE or its flavours, and 2) whoever has shown they deserve it, but for whatever reason not able to acquire AAVE. To simplify, first category is AAVE/stkAAVE/aAAVE holders, while the second is delegates.
  Now, not being able to acquire AAVE but seeking for having governance power should have a price, and that is in my opinion work. You show involvement with the community → you should probably get an explicit voice in the shape of voting delegation or directly power.
  However, this should also take into account that, unless the proof of participation is very very strict, it should not break the interests of direct AAVE holders: the skin in the game is way bigger by being a holder, so the “price” to get delegation with work or any other dynamic, should be high enough.
• Maybe there is a reason for big delegates having power? It is pretty clear that current big delegates in the community like @EzR3aL or @ACI have shown for a quite long time their involvement in the ecosystem, with deep participation on governance discussions, or voting. Additionally, I’m aware they made important delegation campaigns; we could even say that in some cases they set certain standards on how they should be done in a system like Aave, like in the case of ACI.
  So, do they deserve big power? Probably “deserving” is not applicable here, but well, the work is there to see.
  Detail: this post has been here for some days, and precisely the biggest delegates are sparking the discussion.
• Asymmetric delegation campaigns. The advantage of decentralised voting power systems is that “elections” happen continuously: you don’t go to the ballots on a random Sunday once every 4 years, you take your wallet and delegate by doing an Ethereum transaction from your computer.
  However, this also has a different implication. Whoever is able to run a better “continuous” delegation campaign has an edge on getting more delegation, at least initially.
  I’m not confident that this should change, but definitely I think there can be experiments on improving them, most probably of social nature.
• Delegation is expensive. More on the technical side, delegate tokens is still pretty expensive, compared with voting which is at the moment free, compensated by the DAO in batch.
  It is possible this creates some barrier for delegation on smaller holders, even if the objective for those is to be able to participate directly by voting for free.
• Granular delegation (sub-delegation). Currently if you hold AAVE in an address, you can only delegate to another address. This is a technical blockchain limitation, but potentially could cause big AAVE holders to be forced to or 1) split their holdings between multiple accounts 2) simply delegate everything to 1 single participant, for “lazyness”.
  This is actually pretty solvable, even if it requires some setup, so another route to explore.

So, what do I think about the proposal?

After the previous rant, my conclusions about the proposal:

• It tries to solve a “problem” which is actually not so big problem at the moment, if we compare with other so-called DAOs. However, Aave standards should be the highest, so makes a lot of sense to continuously look for better mechanisms to improve participation.
• Governance power is asymmetric in nature and so it should be. Personally, I think 1-party-1-vote systems only work at large and very open scale like countries, due to their heterogeneous nature.
• Probably other mechanisms should be explored or first, or in parallel: granularity of delegations, free delegations, contact with centralised entities (e.g. exchanges) to unlock participation for their users, etc.
• The amounts proposed are pretty much out of hand; nobody should get ~50k AAVE just because of some non-strict framework qualified them as “official”, that is just a tool of corruption and/or a circus.
  If having a proper framework for it, starting with relatively small amounts like 1k AAVE and build organically from there could be a consideration, but the rules of it should be carefully crafted, not only “the current average is X, let’s just give up to X”.

[Kene_StableLab]

We support the rationale behind delegating additional governance power to underrepresented delegates, however, the urgency of this proposal in Aave’s case is not very similar to Uniswap.

I would join my voice with @eboado to propose starting with small delegations that build up over time, considering the dollar value of the AAVE token, we should adopt an approach that starts small and builds up over time.

[PennBlockchain]

We agree with the sentiment shared by many others here, supporting the rationale behind this delegation of governance power from the DAO to underrepresented delegates. Although we are not presented in the list above, we appeal to everyone to include Franklin DAO as well. After more than a year of consistent activity and contribution to the DAO we are in a position where we must start over from scratch to gain delegation following the re-delegation requirements of Governance v3 and the un-delegation of Avara from the university clubs.

As a university organization we do not believe that it is our job to seek external delegation and lobby for them (although we have in the past and will continue to do the same if it’s what must be done). Instead, we see our position as an unbiased contributor, fueling the DAO with technical expertise, industry wide connections and protocol specific insights.

Its evident that any DAO can benefit from a greater presence of active delegates, particularly those who have shown a prior commitment. If the claim against this is that, in order to increase voter turnout and active participation, a delegate must vie for the position via lobbying and pitching – who is to say such a campaign ends in greater decentralization. Large token holders are already visibly uninterested in voting or contributing to the DAO, so why limit access to voting power when it’s sitting in the DAO being untapped.

Claims of VC and founding team alignment are, at least from our perspective, ignorant. Although we entertain delegation from VCs, founding teams, and other such parties we operate based off of our own judgement. In addition we have operated and continue to operate in such a fashion without being compensated from things such as the Orbit initiatives (albeit having met the qualifications). Therefore, without any voting power at the moment, it seems relevant to point this quote out.

@Baer_DAOplomats

I think I shouldn’t convince you that a DAO is just an AO without sufficient distribution of decision-making power.

Finally, we’d like to acknowledge our appreciation for @eboado’s thorough response!

[Baer_DAOplomats]

Thank you for your thoughts @eboado, @PennBlockchain @EzR3aL.
The conclusion I got from this discourse is that

1. The amount is too high.

@eboado

The amounts proposed are pretty much out of hand; nobody should get ~50k AAVE just because of some non-strict framework qualified them as “official”, that is just a tool of corruption and/or a circus.

2. Delegation is expensive, and many delegates lost delegations recently.

@PennBlockchain

re-delegation requirements of Governance v3 and the un-delegation of Avara from the university clubs.

3. The DAO needs unbiased token delegation.

@EzR3aL

They can pull their power whenever they want. So its my job to keep them satisfied.
Thats a risk I have to live with. If we distribute them via treasury there is no risk, at least no direct.

Our Suggestion:

1. Reduce the proposed amount to 1.7K and onboard new delegates.

2. Make a Community Proposal Tank like (https://www.fish.vote/) that enables anyone with a fixed amount of voting power but doesn’t have the proposal power for an onchain proposal to leverage the community pool and make proposals.