What’s Next for Delegate Governance?

Transcript

[Music] okay well um we're going to get started with um you know give me give me your favorite example of actually working governance in the space today and like like something that act like not a concept but something that's out in the wild is there one and what's your favorite um I guess I can start I would say one that's been proven already it's dual governance by L that one I think it's something that like okay okay the Dual governance is actually someone is a type of governance that is actually working already implemented tested Lindy and like hashtag record of actually working and

not just like being some tech that you can actually use um that's definely one that is very simple and that fits almost all the protocols and that out there I guess another one is probably like I mean I'm biased but I think like is like a good example of like it hasn't been captured maybe in a way that like many other governance systems have been of like um Bad actors or or or almost Bad actors sort of like coming in and engaging in your space way too much and sort of like getting too much mind share and too many tokens and everything else decent example yeah in terms of favorite I mean yeah there's a lot CU everyone's kind of doing some sort of voting with groups of people but maker has a functional one that's really good to highlight because

they've been very resilient in terms of having a good process for delegates in terms of its approach to transparency and processes which not really hasn't really been applied anywhere else in terms of execution delegates and basically the entire process Rafa because because you jumped in late for you the question is a bit different which of the like like who is wrong and why hey guys there's a lot of energy outside and it feels a little bit quiet in here so I feel like we should get a little a couple of the different hot takes coming in now unfortunately since I missed the

question you'll have to enlighten me about the context so the question was like what is your favorite example of functioning governance system out there and we have light governance lios dual governance ens maker pulled together bam hot take no but seriously like like let let's let's talk about this um uh the when we think about governance systems and you think about the evaluation criteria um you got to ask yourself like what like if any of the governing systems are actually achieving the objective that they set out to be now I was having a conversation a couple weeks ago about the fact that if you if you think about governance you need to think about it if it's actually a valuable

asset so if you ripped up the governance out of any any of the entities that we just described here does the entity actually continue to succeed and more importantly would it succeed better if the governance was not visible now I don't know what the answer to that question necessarily looks like because I haven't done enough research on Lio or ens or who maker or maker I think maker would probably work better without the governance but that that's a maybe don't record that um now but I think for example pool together the governance system for permission and P per permissionless pool deployment and participation pull together can't exist

without that actual piece of participation so the the way that I think about it is like when you're designing a governance system it shouldn't be an addendum that actually holds your value to the ecosystem or your Northstar back it needs to be an addendum that actually multiplies the value and accelerates your path to actually achieving it so that's my answer I it's interesting like I I'm kind of scared of that you know that to me is like oh we should all be using salana and like don't worry about centralization until until you need to worry about it like I think that every token based you know protocol D would probably be better at a being more efficient if they didn't have a token

right if they didn't have governance however however like like you know ens of this example right of like would it be more productive without a doubt well I think probably not cuz it was a pretty small team was like four or five people and now it's like four or 500 you know these different service providers but like there's still the idea of like the upgrading of the smart contracts and also will the last 100 years so like you know there's a real pragmatic question here which is even if the value isn't provided like right now like is actually the community and the Dow a requirement for the long-term sustainability of the ecosystem like decentralization ain't cheap like and it it's like if you're actually just looking to uh Max profit you know that's why meme coins don't launch with Dows like guys like it's not

necessary for the pump you know neither necessary for the dump right so and that's that's that's an instrumental part because you need to rotate into other stuff right so what makes you think Emeral Dows well what makes you think that maker wouldn't necessarily do better with that like could do better without a doubt well the question for maker for me is actually who holds the power in terms of the voting and like if you look at Run's for example endgame plan was there actually an option was it like what was that actually an option and like I I think the answer and um I'd love to talk to the maker folks here but um at least at

that level of governance I actually don't think there was an option it was like we're doing this then what's your point on saying that without the doubt it would be more efficient if it's actually the same I think in general though it provides some safety safeguards but other doubts like the the big purple lender um I mean at the end of the day they're mostly multi and delegated to friends and family and so even you know things that are sitting on the snapshots or sitting on a multi but they're never executed because it requires approval of the internal like development teams which I think that maker will say able to survive losing a lot of its technical

ability like the the tech team effectively not releasing a lot of features which I think I don't know if it would have worked if they didn't have this Dow even if it's Consolidated with within some delegates yeah I yeah I agree okay well speaking of maker you know they started with delegate governance and then you know we we're supposed to be at the frontier of things and then everybody was like that kind of works let's just do the same thing so so is delegate governance the best we can do or is it just the best we can do today or is it just like a shortcut for for projects that don't necessarily want to decentralize I mean I think it was like

the only option and then everyone you if you're a small protocol or token with like a $10 million valuation like who gives a [ __ ] right like do some experiments run the Gambit you know do 100 different experiments but then even if you do those EXP experiments like maybe people don't take note of them right it's like oh it's a small thing you know just a little test we shouldn't take it too seriously and then you look at all these large protocols that have raised at hundreds of millions or billions of dollars of valuation and like the risk is just huge you know like why would they experiment at all and I think well 's you know looking at doing with some of the council based structure is like very very impressive one because it's a cool experiment but two because they're a [ __ ] huge protocol and

they're willing to like put that risk on the line and so I think like it's definitely my perspective at least it's definitely not the best system it was that we made it you know whatever five years ago and everyone's like okay this looks good like let's just keep spamming it over and over again for me I wouldn't say that delegation itself is bad it's like how do you use it the thing is like you can have DS that are multibody like that have several components that you attach to them and delegation or like the delegation system is just one part of it and you have to use it for specific things but like you wouldn't use delegations for like a super technical protocol upgrade and you want all your token holders to know if that protocol upgrade is going to be safe or not like that that's useless but there

are points where delegate like delegates actually can have the check and balances for the protocol to move forward in certain directions so it's it's not that delegations are good or bad is like how you use them and they Feit a specific thing and then you have other methodologies that fit for other purposes like gauges for example are really good for distrib Distributing rewards um and I it works way better than theeg ations for that but G just don't work for normal proposals that you would do like for most most projects so it's like how you use delegations rather than like delegations good or bad I I think it's worthwhile to ask ourselves like why did Del like how how we got here right like you know you got

tokens you had a bunch of people who were voting because we were thinking about democracy and then we were like oh [ __ ] direct democracy doesn't actually work I guess there's a reason why the US and every other Nation uses representative democracy and we like assign people and we're like okay cool let's do that but at the end of the day like delegation is basically like um like we figured out how to carve uh one of the like uh the tip of an arrow with stone and we're like is this the end game I'm like well definitely not but that you know we we just got to the the first type of technology to be able to participate in governance now I I do think that we

did we did kind of move backwards in some ways because if you think about delegation delegation and uh direct democracy participation through voting so let's couple those specifically together are one of many consensus mechanisms and we're in blockchain where the entire research is based on what are great consensus mechanisms and we kind of threw away a a lot of the work on all the different types of consensus mechanisms and just went back to to voting with delegation so I guess my answer is um it if it makes sense why we got here um also regulation pressure you know um trademark the that there's not a

lot of other options but the but I do think that it's a bit of a lack of imagination on our part um to actually just look at the research that has been done and look at the consensus mechanisms that exist and ask ourselves okay why are we using delegation with direct direct democracy as a primary uh consensus mechanism is it just because we actually don't govern the protocol at all and the protocol upgrades are actually managed by a multisig in most situations and the fact that we're just voting on where to send tokens well I guess like maybe but it it feels like we're you yeah we're taking a hammer and we're saying oh my God this is incredible we have a hammer and it's on

chain let's let's Hammer everything and that's a little bit how I feel about it I mean in general delegation is it's an immediate fix for the big issue of users not interacting with your Dow you know voer apathy and low voter turnout is a killer for Dows the problem though happens with delegation that there's no accountability especially because it's permanent uh it's great to see a6c and all these other big firms uh delegate to schools but then you get this issue where compound has a ton delegated to Michigan and a bunch of different universities and they are in the summer so they're

not in school not paying attention to anything and then Humpty decides to take over compound and no one's there to do anything other than Michael from open Zeppelin that actually pay attention to the doubt one guy but billions of dollars at the line so yeah we need more accountability in that regard and I think the tally guys are doing some really cool stuff um Aragon is kind of helping uh with the separation I heard a tiny bit uh like 10 minutes ago um but yeah overall like it's a great step to reducing the voter apathy and getting people voting but then yeah General voting does not work especially when you're talking about complex derivatives and just to follow up on that

I do you guys not find it absurd that you can just take over a dow with like a single vote like I'm just like it feels like pretty weird like the level of we like oh everybody is voting so it's safe we have a high level delegation and then suddenly when you like you know take the mask off of it it's like oh like if everybody is on holiday and you pass that one proposal like guess you getting a nice fat bonus like where do we go from here I mean if you get to that point where just one person can un unilaterally own the Dow then you're not a th and like you're not even a multi

seek at that point you are definitely doing something wrong like what I'm trying to say is like it's theault is on everyone else there that is supposed to be doing some check and balances before summer and they haven't done it yeah but why did we design a system where that outcome was even possible totally but I think it's only possible for like [ __ ] Dows right like compound like you calling compound a [ __ ] Dow absolutely yeah yeah yeah I mean 100% I am you know for sure I mean it's that's surfaced it with the attack right shows it's a [ __ ] down you know but certainly like um they just early why is everyone forking it if it's a Shido because it was the you know they wrote the code initially that everyone wanted to Fork it's a great lending engine the the

governor Alpha can use work but that's it was an experiment right like they did an experiment caught on you know and that like made it meaningful and made it go but you know then they sort of let that experiment play out too long and didn't keep like tending to the Garden of the experiment and then it sort of like became this thing that one person gave a [ __ ] about and then gets attacked for however many million dollars and so I think it is all you know I don't know if that's just the you know building the system that means that one person could attack it if it's really decentralized then maybe that's the case but or if it's too decentralized and no one gives a [ __ ] about it then maybe that's the case you know but I think for the most

of them we have more defensibility than that I would say though like what you're saying is like you're are using the wrong methodologies for your doubt like they didn't ad adapt enough as time came up like there are governance methodologies that don't require your voters to go every single time and vote every single week on every single thing and for the ours that are smaller they should be using other methodologies that are not just pure token voting with delegation because that doesn't work for them and there are many out there like government for example it is scales really good there are some point you might want to decentralize some other sections but initially the court team putting out the proposals and token

holders videoing it does make a lot of sense and solves a lot of the problems that we were mentioning before yeah and know Pilon in terms of the problems that we have is that even the people that emerge as uh delegates the teams and companies some of you may be here today um the that that emerged from them weren't necessar uh quote unquote the people who have an incentive align to actually Steward the protocol itself and instead have an in incentive alignment to actually extract as quickly as possible empty the tokens and like run off with the cash so that you have runway for the next five years so or cash out fully would also retire but like the you know I I think in in terms of the problems that I see is like

yeah delegation kind of makes sense to do we actually have the right people doing delegation and participating in this I think the answer is no for the most part three like did we design the right system correctly anyways to protect from the potential outcomes I think the answer is no and I think the answer is no for basically all the Dows that exist today and four why are we designing a system that we know decays over time and introduces additional risks and then pretend like that system is going to be like a 50 or 100 year like solution to this problem and prevent actually modularity and and participation on it it feels honestly the entire system seems insane to me right now well like like one one of the

common themes here is is the lack of accountability and I think one of the cooler things that maker delegation has it that it expires every 12 months so delegates have to go back to token holders and ask for new delegation which is granted rudimentary but it is some accountability why why are we not doing that elsewhere and like we have basically delegates grandfathered in at the Ico time and it becomes in essence a multii with like extra steps which is funny because that's also what when optimism came out with their governance right it was like this has a year it's going to blow up a year later and we're going to completely redesign the system right and then like 12 months happened and they were like no it seems

pretty good actually you know it's perfect and I think that like make a governance I don't think I think there's a lot to be learned and I don't think they did many things that many things right especially ear on but one of the things I think is really cool is that sort of like every year we're going to refresh this right you must red delegate again and some of the stuff that like I think Agora and tally and probably some Wonderland maybe two are sort of pushing forward is like that idea of being a to bake that into the contracts right like the delegation only lasts for 12 months or we can press a button and it resets delegation or like because the idea that like fire eyes has five different addresses one for each protocol and we can't update it cuz the multi is too old you know like these and

we don't want to delegate in this prod but we don't have a choice anymore like all of these problems I think are like Universal across the space and like literally a button that resets delegation would solve that yeah the term that I use internally is like forced attrition like guys if you're not hanging out with us and you don't have incentives aligned like maybe there's a better ecosystem for you out there not here now one thing that I will mention though is like is this type of like even delegation uh rotation are we actually challenging ourselves enough that that or is this simply a Band-Aid like kind of Panacea to like the problem which is that comes with delegation to start with and I don't know also delegation kind of works for the short term so just

caveat also like delegation comes from the governance standard for tokens which is your votes and like that's a standard that was made four years ago with technology from four years ago CH like design for main net it doesn't work nowadays like I don't know why no one is actually talking about how that how bad the standard is for nowadays needs and many projects are launching normal delegation you're saying without exp expiry or proposal types or uh you needing to request that delegation before because they are just taking the standard and using it and the standard the standard sucks it's really bad but no one wants not no one is there to change that uh

because it requires support from the whole Community uh for example for polygon which uh we launched recently that has a split delegation and it requires you to be a delegate before like to announce yourself and it also expires after a year so like there is a lot of innovation that is happening around that but the problem is like if you are looking up for a standard there is no standard that tells you how to do delegation properly nowadays rather the opposite yeah and on that point like that you have also a significant problem the you have one moment to grab attention and do delegation that's during the air drop there's a there's a peak and then everybody leaves and that like you have a a second problem with

like the forc attrition even if you have forc attrition sure I can reset everyone's delegation like after the year How likely are you going to get the same Community then to Red delegate and the answer is very you know unlikely slim chance there so like yes I agree on the force attrition and then you have that other problem which is is there at any point how do you get community re-engagement to actually participate in that process which I think is like incentives right is like another airdrop another airdrop to all you know like and and for two different tokens that exist that that fire eyes is interested in is think about like how they can run those kind of programs or

it's like have you delegated effectively over the past you know in number of years yes have you delegated at all if no then delegate during this one month you know and have you delegated to a [ __ ] delegate if yes you know red delegate to a new one over this month and you sort of have like a delegate incentive month some of those flow through to the delegates but the majority of the rewards flow through the delegat tours and like it's actually if you think about um doubling the current votable Supply and most major Dows right it's actually very cost efficient to do this right you sort of spend like a couple of million dollars in tokens and you can give like a you know 5% right you know 2% 5% 10% Roi in tokens for participating in the system and it's actually not as long you know presumably

you're not going to do that for the all of the supply but as long as you know like doubling most of the votable suppliers for allow these protocols a couple of million bucks will get it done you know one of the things that that comes to mind with this conversation about incentives as also how can you actually bake and redelegation in which I consider is important you want to refresh and you want to maintain like fresh eyes and fresh criticism and fresh participation into the actual proposals which are already already Distributing funds so maybe a way to think about this is like if you have incentive programs regardless of what they are whether it's you your third airdrop um or your fourth one or if it's specifically like a program then like maybe at the point of you being able to participate in that

incentive program as an end user then you have uh governance as part of the experience um of those specific proposal programs yeah adding on that everyone talks about like if delegates should be paid or not it's a fair question they're doing their job so like why not but I've got thoughts yeah it's fair uh what I would add to that is like the same way that delegates want to get paid so should users get paid to delegate to someone and bribes are a perfect way to do that and with bribes you can ensure that users will actually delegate to whomever they see fit because they have an incentive to do so and delegates if

they get paid they should in my opinion at least they should be paying as well for the users that they're delegating to and that solves all of the problem of like how do you get delegations to happen over time through bries where where are the bries coming from well they can come from either minting the token or they can come from protocol fees uh whatever but obviously they need to come from somewhere yeah cuz I think that I like the idea of being able to incentivize voters but I don't want to incentivize voters if I'm going to increase their voting power and all I'm gifting them is more voting power and a tax liability protocol fees right protocol Fe and if you are not there probably you should think if like that's

the governor mechanism that you need maybe going something more centralized in the beginning like the coure team makes up the proposals and then token holders vow that's a good way to work until you have protocol fees that can subsidize those bries but I also think that like um if you're giving them incentive there's a tax liability right the tax liability exists either way if you get 100 Grand is payment for being delegate or 100 Grand in tokens you have a tax liability right there could be a third option where you can like bump up their voting power without actually I think that as well is cool but I think that like the idea of getting tokens like makes sense right like a lot of these big delegates and some of them maybe for good reason but a lot of the like delegates don't even have many

tokens right and sort of like some of these program that are coming across different Dows where it's like you know you're part of a working group so you get some vested tokens over two years or you're you know major delegate so you get some tokens to participate like I think it does make sense you know because to be rewarding them in the governance token now maybe they sell a fuckload of them right and there's like good considerations there around what percent are you saying pay the delegates yeah well and the delegators you know like both and the delegates who pay the users going back to maker I believe they they do that for them and if you dock one of the delegates you know they get kicked out so um something that you know we discussed with you and your brother uh was that um because I

prepared a question for him but you you'll take it I hope uh it was like the biggest like you know one of the biggest challenges there is is you know those delegates that we default to often don't have skin in the game right it's like oh this person is a big delegate in that Community where they care maybe or whatever and like let let can you help us get them to this other community where they they don't have any skin in the game like is that something that we can solve for is that something we should be solving for um we should I mean as Builders we should try to solve as many opportunities as we can if it's meaningfully possible but the skin in

the game problem yeah like people vote for the wrong thing cuz they're tired they're mad they don't like maker or they don't like a or they don't like this protocol they don't like I don't know CK or l2s and like they they vote against certain dogmas because they don't like them but they lose a lot of money and I think that if we don't have both financial and reputational Stakes uh for them to lose like we can't really build properly Rafa I remember you mentioning uh earlier that all delegates should actually be Builders within the ecosystem can you unpack yes I want to get a show of hands how many people in this room believe

delegates should get paid a monthly stien for participating in governance that's a lot of people I do not believe that but I may be convinced later on because a lot of people believe it now the the way that I think about this is that when when delegates are participating what actually are they getting paid for and what assets are actually being delivered to them so you can break that that question like are they getting tokens are they liquidating those tokens to pay rent and pay for food question number one that's like basically are you paying USD or are you paying lock tokens I

think it's important to understand like what we're actually paying them for are you paying them for incentive alignment or are you paying them because they need to pay rent and and buy food that's number one and number two is you got to ask yourself what are you actually paying for now governance engagement per se to be able to review submit proposals participate is one type of job now when you pay people to do that what do you get professional administrators professional administrators you get the same thing that happens in the banking industry in the insurance industry and in a bunch of other places which is you get a lot of middle managers whose sole incentive is

to maintain the bureaucratic state of the governance system itself now that doesn't mean that delegates do not provide value it's a question about incentive alignment now my perspective is we should be paying people in our ecosystem delegates or not to actually contribute to the growth of the ecosystem and I think we should be extremely generous and extremely um like focused on paying for the growth of the ecosystems in which you're participating in and governance particip ation should not be the primary objective actually the incentive should be flipped backwards I should want to participate in governance as it's needed and as it influences the system but not

as a primary objective that's my perspective but obviously you know I don't have tokens to delegate and to vote so you know people may pass whatever proposal they want but it seems like you see we shouldn't do it but then we should do it but just as a secondary thing no I said we shouldn't pay directly a monthly stipend to participate in governance the unless it's maybe uh increasing incentive alignment over over the time but I think what we should be paying for the the the question to me and I think this is an important debate I don't know what the answer to that question is does is the activity in governance actually worth paying for as a strategic path towards

growing the ecosystem and I don't know I don't know if that answer is yes but but I think that like you know my first question would be how many time you know how much time have you spent being a delegate you know a lot yeah and for which protocols for optimism to begin with but optimism of PID like I do Forum posts I spent like years in Discord I participated in cabin and Forefront I was a contributor like like the I read proposals I write proposals like I know that it takes effort but the question still is at like where do the funds actually go and like why are we Distributing those funds yeah and I think there's like two separate sides to it right the one side is sort

of the capture the bureaucracy capture and I think like many you know like does anyone work for stable lab in the room okay good oh okay well sorry you know like I think stable lab you know are an example of like I'm very conscious of the way that they're leaning into governance right because almost every proposal was like oh I think delegates should get paid I think delegates should get more delegation and I'm very conscious of like certain a hand of like d that are leaning into that and I'm worried that bl's going to happen right I'm not worried about that for Dows that I'm a leader in because I would not allow you to rent seek in that way right and so the first answer about the bureaucracy I think it's like daa d dependent and the second answer is that like I think I agree with your synopsis

is that like d contributors that are meaningfully moving the project forward should be paid and that bees or not first and they need to get paid first and could be a delegate or could not yeah yeah agree so um something that actually mentioned you mentioned earlier James was like oh maybe we've defaulted to delegation because of some like legal considerations and like in essence delegates are a meat shield for the team right like you set up that governance and like it's not a security because we have governance and voting and like like maybe they're getting paid for like assuming a lot of legal risk that is taken off the team but then we should be solving the legal risk problem so like every every time that someone tells me

we should pay the delegates because X problem I say solve the X problem oh we should pay delegates because they are only doing Administration and they're not actually building how can we get delegates to actually build to be builders in the ecosystem how can we get them to actually manage and build in the in the ecosystem with us like oh it's legal risk how can we resolve the legal risk for for the for the delegates themselves this is I think where uh by the way most people don't agree with me on this including some people that I work very closely with but the but the or maybe agree half-heartedly I don't know I'm not 100% sure maybe we'll have some beers later this week but I I guess

the the question that I like to challenge a room and I'm being extremely like direct with this is when you're paying delegates ask why and then ask if you can't solve that second layer problem because I think there are better ways to produce growth for the ecosystem and it's a same reason why you know most labs and devs organizations prioritize paying for product development and developers first um on that I would say someone reviewing a proposal doesn't add any value directly to the pro disagree they they do add value they they add critique I think it's valuable just we shouldn't just pay too much for it I'm saying reading though so reading definitely

doesn't provide any value like I didn't some like comments into it normally again not that much and what they should be doing is like pushing the like the protocol they're building on top and if they put proposals should be on like how to make that better but like not so much into like just reviewing each other's work because like that's way too many people doing too many redundance in things yeah except except yeah so let's let's break down to Value right like where does a value chain start and where does it end I think it starts and stops on a proposal and everything else is just fluff on you know please autocorrect my stuff run it through CH PT like but it but it also like human wisdom in a

proposal assessment process is valuable I think that's true but the problem to me is it's really hard to pay fairly for human wisdom like it's it's a really hard problem to solve when you get hired into a company you don't don't get paid to be a human wisdom assessment you get paid to produce a specific outcome hyper capitalist you know have you heard of management Consultants because they get paid for human I was a Management Consultant which is probably why I have such hard critique about this like that but but I think that that wisdom is valuable but I don't think but paying for wisdom produces does not produce

wisdom like when you pay for wisdom you attract people who are not wise people who are wise are incentivized based on the value of the ecosystem and the inspiration that you provide them and the question is how can you how can you get those people who are inspired who believe who want to provide that wisdom to your EOS those people you make them like yeah exactly you make them when proposals and processes is there's the right incentive and the wrong incentive wrong incentive as it is today is too generic you know you can completely suseo update the entire protocol and that can destroy everything so now one idea dividing and Conquer uh setting up different guard oils for

different pieces of whatever protocol it is if it's Defi and you're talking lending adding collaterals uh changing oracles ltvs you know price fluctuations there's a lot like there's a ton of things that you shouldn't potentially change through the Dow and so having the right incentives so if you vote for the wrong thing well it's clear it's much easier to say LTV is wrong because it costs bad loans slash those people than it is to say the grant went to this gaming company and it's still waiting to produce a game you're going to slash me for being a delegate I'm doing all this free work and now I'm going to get slashed well you wouldn't get slashed everyone that delegated also would get

slashed okay so you pass it the they're slashing down to those that delegated to me yeah exting right I would say coming back to the that fix a lot of problems really quick you know that right but maybe no proposals would get ped and it would also centralize it would centralize the absolute [ __ ] out of Delegation right because it's like anyone that if you ever and I don't think I like the idea but I think in practice it never works right because you sort of like create these really per perverse games where like I don't want to delegate to you if I think you have an opinion outside of the box right which I think like maybe is good for some of short-term like efficiency but I think like long-term you know similar to before like long-term decentralization capture I think it's like scary for that

I'm like James courage courage everyone so I would I would say that it comes back to what you were saying of getting the right people not taking the whole decisions but like helping take those decisions and those people are people that are already believing in you or that believe in the project or believe in the tech or whatever it is that they believe in particular so you already have those people building on top of your system and they should get paid for building EXA system they should be paid for building in that system but you already have them and they have the stake in the project so you don't need to pay them they just will take their

correct decisions because they have the incentive for the projects or for whatever what reason they are in the project I that's that's another thing that's a good observation which is like when we when we think about the reward and where like incentives are aligned like it's the direct payments on a monthly basis to delegates is not the only solution to provide wealth opportunities and like opportunities for for for creating businesses to people who participate in the ecosystem and I think we sometimes shortcut it it's easier to pass a proposal to say hey give people like whatever amount of tokens on a monthly basis than it is to create a dynamic economy where people

can participate and bu build businesses on it's the second requires product Market fit and we know that what the current status of that is in this market there's a cool one to point out with a where um they don't run their own uh rewards it's really delegated to a delegator uh so the ACI and they are actually doing everything and there's warning signs on all over their s saying that it's not managed by them it's managed by this entity that's separate from aavs whatever you think about that fun games but naming uh it's planned by them and it's aired Dr by Merkel and that gives them Prestige and I think that's another way to reward delegators where they're able

to control key pieces of the protocol that's right with a timed commitment so it's not forever but now they control part of the things and they get to make a name for themselves but it does kind of scare me right because if you're just doing it for class courage James courage I think if if you're doing it just for clout you know like and you're like oh I'm part of the I decide where the IV incentives go right you think Mr chainman is doing this for clout I think that uh many of the IV decision making cils are done in unique ways you know but I think that like you know the way that those incentives are distributed if I'm not getting paid and I'm the one deciding who gets incentives you know the buddy buddy that comes up to me and his screen to buys me some drinks yeah

well and maybe not even direct bribing right but just like social knowledge of who my social graph is you know I think maybe if we can start paying some of these organizations that contributing the right way then maybe you can also set like quite strong bounds here of like you know if anytime there are incentives that go to this project and you have some financial interest or you even know the founder of this project you have to disclose it right like disclosures amongst um delegates in general have been piss poor you know there's very very few examples optimism have done a couple there's been a couple of different examples there but like endows more generally like conflicts of interest are never discuss which you know I'm into cuz great I can just have my hand in every bucket but I think actually having more discussion around

that is like yeah but yes and I'll add to that which is one of the keep one one of the things that you're mentioning is the fact that control is a type of asset that is can be used as a reward it's the and I think this again we go back to how do we reward people who are helping growing the ecosystem tokens is one of many levers and sometimes it feels like the conversation flattens to that level instead of actually um responsibilities accountabilities control over pieces of the ecosystem or Del you know delegated control of specific parts and again I think we all owe ourselves to really

push in terms of what our imagination can be when we're ask for a simple proposal that does X ask Y and say like you know does a better econ Dynamic economy on the egosystem solve for this because if it does then maybe it's a Band-Aid maybe you should still do it and you should still solve the bigger problem about like creating an economy and coming back to what we were saying before like it's because you're using delegates in the in a manner that it shouldn't be used like delegates should be used for things in particular and maybe the governance shouldn't exist you know well no it should it's just like for the right things and like what's you talk going to do the thing is like when you delegate to someone you

like if that person is that is doing marketing he's going to take the wrong decision when judge judging anything technical so you like it doesn't matter if that person is actually Super Wise and smart in whatever in marketing they're voting for a technical upgrade in the protocol so their their opinion doesn't which brings it to the next question which is we've designed one layer Global consensus mechanism which is you know direct voting via delegates on every piece assuming no specialization and assuming that the same consensus mechanism should be apply to every single facet of uh of the ecosystems I think that's a very dumb assumption um it is where we are right

now but it it come on guys like we there's probably far better things to do here and the amount of decisions that need to be made at a global consensus level not even think about specialization whether the consensus mechanis mechanism should be the same stuff that you should decide at a global level is probably like almost nothing like it's it's super thin like but we right now the entire stack needs to go through governance which is weird so we okay so I was going to say like you can have several processes in your da in the way like you can split your da into several um governance is this the Aragon pitch I'm not naming anything but yes I

I was I was think could like lift it like this and then you could be like yeah yeah like you can have S stages and each of them is tailor for a specific knowledge type and that would improve delegations a lot so so I mean although you killed my read to earn pitch in a second earlier uh you you you you had the first take so you know what what you're most excited in the next 12 to 18 months um I want to extend it to the the rest of the panelists as well like like in 30 seconds what what is each of you excited about in terms of like governance or governance delegate innovation in the next 12 to 18 months I would start with uh fixing

tokenomics for these projects in the sense like if you don't have the right tokenomics for your for your project there is no way there's no way that any kind of governance helps you mean like burning your token cuz you know like I couldn't claim my Aragon tokens right and now they're all burnt I was in changai now I just deleted them uh yeah any other takes on what what what new and exciting is coming in next 12 20 months on the governance front well I like the governance side uh more on the security side so basically a lot of these reaking providers were finally going to figure out how to give them money and have more money Stak ideally

eth and other tokens that can sustain and maintain value um and I that should hopefully enable us to remove a lot of the at least emergency multi and other kind of risk models that don't frankly don't need a whole company to be contracted out to manage your Landing protocol but it can definitely apply in a lot of other areas so overall like reaking kind of replacing multisig damn both of the answers were like token answers right like how do we fix governance and delegation and yours is like tokenomics which I don't really understand and this is like just stake more and it'll fix it and I'm not super not convinced in either of those

realities helping you know the governance of Delegation space he said what you're most excited about now's going to fix governance still being a downer man sorry the question was just genuinely what I'm excited about I mean like there's a lot of things I'm excited about but relevant to governance I think like what 's doing with like the councils and like the endorsements is like sick right like that is at least and actually what ZK sink is doing around uh mint caps right and token mechanics token mechanics and like you know ra like being up to bake in inflation right so for those that don't know the way that you can toomics right that's what you're saying yeah okay yes toy I can't Aragon saying tokenomics to me right now I cannot I just deleted all of my Aragon tokens and you got a bunch

of money for that no I didn't cuz I was I was in changai what do you mean you had a hold okay let me tell you what I'm excited about I'm excited about the fact that we're having these conversations and the fact that we're getting far more articulate about criticism in terms of governance systems I think the that we are in my opinion we're maturing you know a lot of people that came into this industry like four years ago had no background and didn't understand what democracy meant including myself um and we're getting quite smart in terms of that thank you Chad gbt about how the US government is structured and whether we should do the same thing now one thing that I'll mention so token mechanics is one um the and can talk about ZK sync token mechanics check out our docs

they're cool um but I I do think that we're going to get regulatory Clarity quite soon and I think what that means is potentially the return of the Ico um and most importantly it might actually expand the amount of um governance mechanics and governance consensus mechanisms that we'll feel comfortable participating in um one example in terms of regulatory Clarity MAA in Europe already allows zik sing Association to basically prevent an uky da type of situation with the delegate voting that type of stuff is maybe less silent and a little bit more boring but I think it's going to unlock a lot of technical um uh

progress on a bunch of so you're excited for the legal stuff I'm excited for the legal stuff all I heard is IOS are coming back iOS are back baby you here first one more question and we open it to the audience so all goes well 5 years on the line like is it token holders voting on everything is are all delegates AI agents like what what does onchain governance look like I think it's possible that AIS will play a more prominent role in data uh and voting but mostly data like aggregating all the information looking at and generating reports saying you know the last 20% of the votes cost this or voting for this

specific delegate who proposed it did that like there's a lot of information that you can gather that either you would require paying and incentivizing somebody to generate a report or ideally automating that process for people since all the data is already on chain it's there so people can make very informed Decisions by using AI rather than the ai's voting for you which some people might look at AI agents today and say the AI will do everything for me but we kind of we'll do informed decision with the information given if I have to challenge that I would say that it's already very challenging for me to participate in governance or even by reading the summaries of the proposals

right now and if I look the future in like five years with so many up chains coming there is no way that even having summaries from the AI I will be able to vote on them so adding that to what's happening right now in farcaster with these agents going on like doing Tracy stuff selling tokens whatever I would I would see possibly a future where delegates they just really train an an AI agent that goes around all the th and that's the votes for them based on their convictions yeah I mean I think I'm much closer to that side of the fence that like um I see AI tooling as a way for me and my team to get up to speed on like current topics I think the reason that we're trust and maybe like delegate

systems in five years time are very different and like they work in a completely different way but I think for right now the reason I have delegation is because it's me that's been trusted with it and just like giving that up to a bot is like maybe some like bot PVP landscape about like proposal editing you know in like 20 years time and that's how prop SEO but proposal SEO yeah yeah exactly maybe that's like some ing game but I think in five years time I'll still be the one pressing vote okay Rafa you want to give an answer in what's happening in 5 years and then we open it to the audience um I I think I think in the next five years things that I'd like to happen and that I'm GNA manifest um so I want to see a lot more autonomous

contract deployment like we shouldn't be looking at transfers from a treasury from point A from Alice to Bob that [ __ ] is old we should stop with it it doesn't work we should be we should be deploying autonomous contracts number one and number two if we are not able to have real people in the real world get getting benefit from new tools for democracy we have failed and like the I I think the whole purpose of dows was to provide a new Pathway to rethink what Dem what democracy and governance looks like in a digital landscape where it's no longer based on Geographic maps

of where you live but based on interest graphs if we can't do that in the next 5 years with all the toon of innovation that we have I would be severely disappointed because it's basically meant that we've kept this n Niche none of us got product Market fit our businesses are basically like you know million doll revenues and it's a bit of a a small group of people sitting around a circle together telling each other how great their tooling is which is very close to where we are right now so I I'd like to see us really move forward move the ball forward a little bit awesome thank you uh now we can I mean if anyone in the audience has some questions we can hello uh came for the

panel when I saw that what's next for delegate governance because there's been some discussions around uh ranked uh ranked delegation in in a few few groups have been on Telegram and I curious if any of you heard of the idea found it interesting have any critiques or thoughts on that the core of the idea is that instead of delegating to one person I delegate to a list so I say it's James then Ivan then first one is me if I vote counts me but then if Ian votes he the third one his vote counts if no one voted above but let's say the second votes after like Higher One on the list gets the vote so it'd be like more sure to have participation does that sound interesting um it's really interesting

for those projects who are doing more like staking mechanisms in the sense that let's say that you are one of the founders and you have more tokens than everyone else which happens in the beginning so if you are to delegate your whole stake that's a that's a very heavy delegation basically that means that you are giving away the control or a lot of the control over the of over the th to someone else and you don't really want to do that so it's very critical when you have stake positions in a doubt to be able to do split delegation toward several accounts just so you are able to not to give whole control over the that to someone else but like to a group of people that can take decisions better so split delegation and ranked

delegation are different this is like sort of closer to more like liquid democracy stuff you know sort of a one step down that path which is that like if I don't vote then like automatically you know my delegation goes to someone else I think th my perspective is like those type of experiments are really nice and I think like experimenting more in that realm is cool um I think experimenting in that realm with these already large scale billion dollar protocols is probably unnecessary I think we can do it somewhere else um and I think that it probably in the current form of Delegation it actually probably decentralizes power more you know cuz in like those people that aren't voting just all of their power just flows to one actor um but I think the split you know splitting delegation across multiple people is maybe like a first

step down that but I think experimentation is sick I think we can fit one or two more questions there one in the back Spencer I hope your question is good I bet it will be I believe I believe too oh [ __ ] uh on the topic of delegate um compensation uh oh yeah um I guess a quick comment and then I'm just curious how it would um how you how you would react to it so strikes me that there's two things that

we're asking from delegates one is coming up with good stuff that advances the ecosystem and the other is protecting against bad stuff that's going to harm the ecosystem and the kind of like security model or sort of the information model of those are are very different it takes one good idea to move the ecosystem forward it takes a lot of people paying attention to prevent one bad idea from um harming the ecosystem are is there anything there is there is is there anything that asymmetry that allows us to pay delegates or pay for those two different things in some way that's better than what we're doing today I I totally agree we should be paying people for security

Now whe whether your security model is based on delegation and then if you're paying delegates for security that's a different payment than paying for governance participation is how I think about it they're they're just different different things now I also think it's highly inefficient to pay a lot of people if your security model depends on a lot of people paying attention for a long period of time so if it's about system security I would also say yes you know maybe it's a maybe it's a good use of funds and are there better ways that we can innovate security that don't require um that that can that where those funds can be allocated where we're

not dependent on attention because attention paying for attention is a losing game and the the the auctioning process for that attention is going to get even more intense over the like forever what I would question is like if it's not only for efficiency but like paying delegates for security I would argue that is not even SEC it's not secure it does a little bit I'm not saying that it doesn't but relying on delegates to pick up all the proposals on technical proposals to see if they are safe or not I would argue that's a bad idea and you should have something that is more focus on tailor to pick up those issues and that's probably notates and

you should definitely be paying a security Council or a veto Council or an anti- capture Council like all of these things like are specific jobs with specific like requirements that to me makes sense um we can slash those then we can definitely slash those yeah yeah I'm in support of that yeah I think uh separating that security and like modularizing governance is much better model although complicated cuz you know everything is already deployed and how do you upgrade it um but if you're able to have generic ideas that you vote on like brand guidelines sure put up a vote but if you are voting on a new collateral maybe that's two layers down

and those two layers down there's a few more checks and balances a maybe a little bit of slashing and maybe some Rewards uh I think the coolest one uh is Bey uh Bey Finance they do yield farming and they set up their incentive model to give 10% of the um all of the earnings that the Dow makes to whoever deploys the Vault that's pretty neat because now yeah yeah exactly that that's the type of thing that gets me really excited about seeing that interplay between the contribution to the ecosystem and then the value of that cont contribution flowing back to the people who are like driving that forward mhm yeah cuz at the end of the day you're incentive I mean

if you're a very active guy and you keep up with base and you launch every single pool eror drum launches and it does well you're going to be making a lot of cash longterm you did a lot of work yeah okay final question anyone here L hello um Rafa you mentioned um oh having you mentioned having people that are Builders be the ones that participate in governance in this ecosystems right like if you produce certain value if you have a product that is uh growing the ecosystem supporting like bringing more people in more users then those are the type of people that

you would want to have participating in governance but I don't know about you but I've talked to a lot of builders in different ecosystems and they care zero about governance they are more focused on on pushing their products finding product Market fit getting users they don't really want to participate in governance there's been several failed attempts of pulling them into governance so how do you put that into like how do you reconcile that where they are actually not in like not only not incentivized because they actually get the money to do that they get the tokens from the protocols but their interest is in getting to product Market fit yeah and I agree which is why we have a

problem with delegated governance and the fact that people need to participate in it keep going yeah so like so yes I agree with you number one number two like I also think it's important to untangle the Assumption the the Builder is not necessarily the one that needs to participate in governance it's the Builder aligned person that actually like is that is aligned with them so that value flows it's in the interest it's in the it should be I mean I would say the Builder should want governance to protect the ecosystem therefore the Builder should invest in governance in some way whether it's attention whether it's resourcing if you think about ZK chains on ZK sync I expect them to

participate in the underlying protocol governance because if they fail at that then their ZK chain gets compromised so yeah I expect them to invest in that but I think the directionality of the investment is slightly different the ecos people should be rewarded for ecosystem growth and the people who benefit from the ecosyst growth should want to participate in governance anyways that's it is interesting like the ecosystem participation and like being a builder and sort of like the scope of what you're describing when you say that cuz like I'm thinking about my role in a lot of these DS and I'm like I'm a [ __ ] Builder like I'm here at every e Global hackathon judging and telling them to build on these cool chains and pushing decentralization but like I haven't built anything on any of

this [ __ ] so like do I qualify you know and then and I think the first question we we'll have to have a couple subjetive subjective yeah exactly depends which ecosystem and the second well and the second piece on the which ecosystem is that like um arbitr tried to do this in a big way of encouraging all of the big delegates to be projects right now they are the most Builders of the arbitrum ecosystems as all the coins and the projects deployed on top of it and that has led to Absolute chaos you know inside of arbitrum like one of the biggest reasons they've been so prone to money attack is because all of the large delegates are these like absolute Builders right and so I think both from one being like the subjective nature of like what is building and the other side

being if you over index for these buildings too much then it's really bad and this is like another example of like you know there are jobs to be done like you want trusted parties you want credibly neutral delegates in the mix of the discussion you don't want either or you want like a diversity of it I I think and and I also the and you know delegate governance produces problems which is like it's a lot of stuff that we're talking about here it doesn't mean that it's all bad by the way it produces like a lot of good stuff too it just it also produces problems and I think when we start getting into the nitty-gritty of like why are we paying people for governance a lot of these problems

actually Bubble Up which I think we should try to resolve one by one it it's a long list thank you all it's been an absolute pleasure to moderate this panel and now it's time for beers beer time [Applause] well I told them we end the day with a really great panel thank you guys thank you sir guys please don't leave yet because we have an important announcement so I event thank you everyone well and it was a long day full of Talks panel thank you for

thank you to the speakers sponsors and I would like to invite Kura marit from [Applause] koua yes yeah uh thank you everybody for coming and uh yeah it's great to see like this kind of like events because uh like I didn't expect at first when I was talking to kandu about like holding like this event and we didn't expect it to be this big and uh it turns out hey a lot of a lot more people is interested in

governance and that's make me really happy and uh and yeah I don't have much to say and uh yeah thank you for coming and welcome to Bangkok uh yeah it's my it's where I'm B it and welcome everybody and now we are be and music waiting for us in the whole one so and you can go there and relax because the day yes so uh I order there some beer some tii beer yeah so yes thank you thank you everyone and see you I hope you I hope we can repeat it in next year maybe the governance say and well and see you around on in Deon