Incentivizing effort from governance participants with retroactive rewards for good decisions

There is a general problem in DAOs of low participation in governance votes. Some DAO’s offer POAPs to Snapshot voters to encourage more voters, but while this increases the number of participants it does not necessarily increase the number of useful participants. What we want is a way to get people to apply more effort into their voting decisions, thus increasing the likelihood of a better outcome.

From reading discord chats there are certainly those who’s priority becomes obtaining the voting POAPs, with the expectation that this may be linked to further rewards in the future. This is likely to mean that they vote without maximizing the consideration of the proposal to be assessed, if your goal is the potential reward for having an ‘I vote’ sticker then who/what you vote for holds little importance. It is plausible that a significant fraction of the extra voters that POAP rewards elicit would fit this category, effectively farming the Snapshot votes rather than focusing time on deciding which option to select.

This problem seems conceptually similar to the attempts to gatekeep free tokens from Coinbase or Airdrops like Optimism behind short quizzes. The reward leads to users sharing answers or clicking multiple choice options quickly at random rather than taking the time to learn about the topic being presented.

My idea is to this is to mesh a kind of retroactive public goods funding into voting. If you’re not sure what Retroactive Public Goods Funding is then go listen to @karl on GreenPill:


To integrate this into DAO voting, rather than reward everyone who participated in a vote, the effects of the decision would be evaluated retroactively and only voters who made beneficial choices would be rewarded:

This simple sounding tweak would encourage even those purely motivated by potential financial gain to try to pick the best outcome, rather than just any option, however there is an obvious issue of how to evaluate whether a proposal had positive outcomes or not. The effects may be obfuscated due to other overlapping proposals, or may be evaluated differently due to the subjective nature of the outcome’s ‘positiveness’.

As I see it the two options would be to either require proposal writers to set their own evaluation metric, or to have a group evaluating the objective outcome. The latter option could not be a simple vote by the same cohort as people would most likely claim to believe the outcome matched the way they voted (i.e. you’d say it went badly if you voted no originally, regardless of any outcomes) therefore a separate electorate (in Optimism’s case this could possibly be the Citizen’s House) is probably necessary.

In the former method, a proposer would have an interesting balance of incentives when setting their evaluation metric for a proposal. They want the proposal to seem as inviting as possible and so would want to maximize their claimed outcomes, but the people voting for them only get the reward if the claim is met and so may be more likely to vote for proposals with more modest claims. This could lead to the proposers underpromising, thus making voters more likely to expect the rewards of the evaluation criteria being met.

Clearly this concept needs more development, but I believe this should be an area we consider experimenting with in the iterative process of Optimism governance. While I’ve initially considered this from the perspective of someone voting directly, it would be equally applicable to selection of delegates. If you delegate your vote to someone who makes bad decisions you won’t end up being rewarded as much as if you had delegated to someone who makes choices with better outcomes.

(incentivizing effort from governance participants — MinimalGravitas)

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Thank you for this. Will sleep on it and come back tomorrow with few thoughts.

Could you give an example of “passed and went well”, I get he pass part, proposal has cleared the quorum, but what does "went well and went badly " represent. Any example would would be great. Thanks.

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Sure, so I guess an extreme example would be the Lido governance question that’s currently being discussed regarding limiting themselves to some maximum percentage of the total staked ether on Ethereum:

For a little background, Lido have almost reached 1/3 of the total validators on the Beacon Chain. If they cross this threshold they could theoretically stop block finalization (which needs 2/3 of validators to attest to a block).

From Lido’s short term perspective they are incentivized to vote no and continue to accumulate as much of the stake as possible, as they take a portion of the block rewards as payment for the liquid staking service they provide.

On the other hand, much of the rest of the Ethereum community view a single entity having so much power as an attack on the network:

If Lido’s internal governance discussion turns into a proposal to be voted on, and someone voted to continue unfettered growth, and then Lido’s validators end up getting slashed by the Ethereum community then people who staked through Lido would likely lose a portion of their deposited ether. This would represent probably the most dramatic example of a ‘went badly’ outcome!


As for an example of a much simpler ‘went well’ outcome. Lets say a dApp votes on whether to use some funds to buy an advert on a podcast. In the advert a referral link is provided. The amount of new accounts accessing the dApp through that link can be monitored and if it meets a certain threshold by a certain time the outcome is resolved to ‘went well’.


Obviously the details of every part of this idea are just illustrative. I’m more just presenting the concept as something to be discussed than advocating for any of the specifics! I look forward to your feedback if you think any more about it!

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Thank you, that Lido example did help me to understand this. I am huge supporter of our “beacon chain health consultant” but lets come back to your idea.

If you delegate your vote to someone who makes bad decisions you won’t end up being rewarded as much as if you had delegated to someone who makes choices with better outcomes

Lets start from here, voting is a personal things, its an opinion, if you are voting against rest does not necessarily make your decision bad, its just that you see at things differently.

Now, lets take an example of our current delegate for reference, I can see who hold how much voting power and if i wait long enough I can also see where the current proposal is going, pass or not, so if reward is what i am eyeing for, I will go with the majority irrespective of what my opinions are, proposal will be passed and everyone will get the reward.

If I choose to express my view and vote “No”, I wont get the reward and so is the addresses delegating their votes to me. Now, lets look at this as an iterative process, as a user I will give my vote to a delegate who has max voting power because his decision will guide the path to final decision, repeat it couple of time and you will see few people holding all the voting power. Does it sound like silent bribing or peer pressured ?

You see where I am going with this, I dont want to hold or even rethink my decision because of some reward, I am willing do so if someone is presenting actual facts, data and report to prove their point and then i am willing to reconsider my decision.

makes choices with better outcomes

Now this is important, what is better outcome to you? Is it necessary that “better outcome” for you must be same for me and if its not, does it makes one of us bad decision maker? What is the definition of this? If I take example of Lido, I know putting the cap is good cause, its necessary for the security of settlement layer and also because Phiz explains things in simple word.

One thing might help, instead of showing voted percentage of “Yes/No”, show overall percentage, ie. percentage of voting cast on snapshot, second, voting power should also be not known. You make things public after the quorum or voting deadline has passed. This might work, what you think ?

it meets a certain threshold by a certain time the outcome is resolved to ‘went well’.

This is important and I agree with you but its should be connected with rewards.

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well now that I think about it, incentive will increase activity on voting. Not sure if it will add value, though. But if they are rewarding users for TVL so why not for voting ?

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I think this is an interesting concept that should be explored. I can definitely see some of the issues that may come up with peer pressure voting (really voting out of self interest for reward possibility). Obviously self interest makes it to where I never want a ‘no’ to succeed because no one receives possibility of rewards, so ‘yes’ become overweighted for self interested reasons. If I really don’t like the proposal and think it won’t do well I can vote ‘yes’ to try and get its passage (through peer pressure) and then at the last second change my vote to ‘no’ to bet on what I think is best outcome for me. Also those delegated votes that seem to vote well (receive rewards) would become higher powered because of voting well in the past and would probably create issues on governance. I think some of this could be mitigated by hiding vote results until finality (though yes still would overweighted). I’ve really never understood results being shown in real time as it creates peer pressure voting which is not the best system of governance. I like the idea but the gaming of it currently seems high. Keep in mind to that proposers could propose as just an attempt to receive rewards with an outcome that was easily achieved (long shot but could happen).

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Very interesting idea that I think would encourage more thoughtfulness in voting for sure, but it might also attract even more people to vote carelessly since a 50% chance is still worth the trouble of voting and if these rewards were codified into the rules, then all of the crypto media people would start directing their followers to vote since it would be relatively quick, free and a 50% chance of getting a reward.

Could correct voting be rewarded only once the voter achieves some threshold of correct votes? Let’s say that a reward only becomes available after they have made 10 correct votes? That could possibly weed out the POAP collectors due to the amount of correct voting and persistence required? Someone in the community would be aware of proposals to vote on whereas a disinterested voter would have to make a point to check for votes regularly and would also be committed sufficiently to the community to hold the OP token for an extended period of time.

An interesting aspect of this is the incentives created for delegators. Choosing a delegate is difficult for those that are not down the rabbit hole. If you don’t have a certain amount of knowledge, the delegate statements are all just a bunch of jargon – how to choose? If the delegator had a correctness score, then the delegator can choose their delegate based on the correctness of their votes in order to maximize the amount of rewards they receive after the delegate’s take of the rewards. This would incentivize delegators to select delegates that have the most positive impact on governance.

I wonder also whether it is possible to make a reward conditional on the voter also adding an articulate reason for their vote somewhere in a chat or perhaps if this functionality gets built on snapshot. This would require a moderator of some kind and I am not sure if that would be desirable or feasible, but a nominal correctness reward could be multiplied significantly if it was accompanied by a substantive comment about the proposal. The question is how to evaluate whether a comment is substantive.

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Thinking forward to voting on Phase 1 proposals has me thinking more about your idea @minimalgravitas. The quality and efficacy of Phase 1 proposals varies greatly. It takes effort to thoughtfully consider a proposal, let alone all of them. Whether the use of OP tokens in a given proposal has a sufficiently positive impact is probably quantifiable in retrospect. The more OP holders vote, the better. Even better if OP holders vote thoughtfully. There is a risk of OP holders rubber stamping all Phase 1 proposals, good or bad, into existence.

Why not incentivize OP holders to thoughtfully consider proposals by announcing before the vote that subsequently determined “correct” votes will be retroactively rewarded?

This would have the additional benefit of driving community engagement and increasing everyone’s understanding of the Optimism ecosystem and the protocols that operate within it.

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This is a great proposal in my opinion :slight_smile:

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Hey @MinimalGravitas this is an interesting idea.

By reading it I am a bit unclear on the “went well” and “went badly” outcomes. How are they determined? Who can judge this and how well is okay, and how bad is bad etc.? I can only imagine proposals that are so well formed that they have expected outcomes and KPIs and then are judged on said KPIs.

Incentivizing governance is imo a must. Gitcoin (I am a delegate there too) is doing that but only for people with a certain % of votes, called the steward council. That’s also another approach.

So far optimism has not had any on-chain votes which would cost ETH, but this will also probably happen at some point, if the DAO gets in control of a multisig. In that case delegates also need to pay gas of their own pocket for each vote. So gas rebates is also something I would discuss for having a healthy and sustainable governance process. You don’t want delegates counting pennies and not voting to not spend money :stuck_out_tongue:

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That’s actually a really good idea for a variation on Snapshot. I’ve never used it to set up a vote so I don’t know if it’s an option, you can be quite creative with the ‘strategies’ to determine who gets how much voting power, but I’ve never looked at how much the UI’s outputs can be customized. If that’s not an option then maybe it’s worth sending them a suggestion. If some people don’t have an opinion on a certain question then I’m sure some will just go with the majority.

Yea, this is clearly the biggest stumbling block. Some proposals will lend themselves for fairly straightforward self designated targets (e.g. ‘we will use this OP to pay devs to create x’ would just be resolved by checking if x had been created by the time defined) whereas others might be almost impossible to set up in that way… if you’re trying to incentivize new users to a dApp and you use OP to provide liquidity rewards, but also buy an advert on Bankless, and organically Optimism users start sharing how good your platform is on Reddit… then it’s plausible to determine how much of the growth was from which source.

I’m leaning towards maybe the success of a proposal being determined by a separate body, such as the Citizen House, ideally people who are not voting delegates and therefore wouldn’t have conflicting incentives… but I’m still not sure how that could work in reality.

That’s a really interesting point. Obviously a few previous correct decisions aren’t going to be indicative of future correct decisions, but over time the pattern might build up to be more reliable, and would at least give people something a bit more objective than just our commitment blurbs.

It might also be pretty useful for the delegates to review their own thoughts and evaluation techniques. I think one of the least practiced skills is that of analyzing our own epistemologies, in general people make decisions and maybe sometimes look back at if they were right or wrong, but then almost never put time into thinking about why we came to the wrong conclusions. Having a constant string of objective, retrospective evaluations of our decisions might actually be a really nice perk for delegates wanting to improve their thought processes.

How are Gitcoin doing it? I find thinking about governance and how it can be done better is probably one of the most fascinating parts of crypto at the moment, so I’ll really appreciate your incites on this (or even just links to stuff i can read!).

Thanks all for engaging with this idea. I’m hoping this will end up being a long and interesting discussion, even if the end result is that I’m just thinking too impractically about this and the ‘went well/went badly’ oracle just turns out to be an unworkable barrier.

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This is an interesting approach but like others, I find the “went well” and “went bad” outcomes a bit confusing. They seem a bit too “black and white” and it’s hard to understand whether some proposals have worked well because sometimes it can be a slow burner to see an impact.

Some proposals like the voting rounds we currently have now could possibly follow this mechanism but what about proposals that revolve around working groups or improvement processes? I imagine it would be much harder to evaluate those, let alone define the metrics for these proposals.

Retroactive incentives rewards for voting is an interesting mechanism but I see more issues than benefits. We need to incentivize governance and as you mentioned, many DAOs face an issue of voter participation. If we reward voters retroactively, it becomes more of a “side gig” since it does not pay their bills and across an entire DAO, it won’t amount to a high amount of OP. High-value contributions stem from having the time to deep dive and understand an ecosystem but will a retroactive system enable that here? It is much different from the retroactive public goods funding system.

Should the question be, how do we incentivize sustainable and long-term contributions to Optimisms’s governance ecosystem? I am not completely sure of the answer but I believe it will most likely overlap with some form of compensation, but I don’t see retroactive rewards being a fair system in this situation.

MakerDAO has its recognized delegate platform (we are a recognized delegate at MakerDAO) but only a select amount of delegates will be compensated for their work. They are compensated on a monthly basis for their work relative to the amount of MKR delegated and participation rate.

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This is a very Interesting idea and I think we need the entire OP collective’s brains on this one.

For this to work, it is important to have all the possible outcomes well-defined. What will these different outcomes look like?

  • “proposal passed and outcome good”,
  • “proposal rejected and outcome good”,
  • “proposal passed and outcome bad”,
  • “proposal rejected and outcome bad”

And how do we decide these? Should the proposer decide these? the Token house? the Citizen house? or a combination of these?

If only passed proposals are to be judged retrospectively, the delegates might be incentivised to vote yes for every proposal as it increases their chances of being rewarded. This can be countered by not just rewarding proposals which have passed but also for proposals which have been rejected and their outcomes averted/missed. This becomes even more difficult to decide and honestly I dont know how we could predict ‘what could have happened if we did otherwise’.

And also I think the rewards should be non-monetary and non-transferable. If it is non-transferable then there won’t be much value in it other than bragging rights. The non-transaferability can also act as an incentive for increase in valuable participation. So, if you want the reward you will have to vote yourself and make a good decision for the protocol. These could act as a form of soulbound tokens as well, increasing the credibility of the wallet.

Again this is a very interesting and promising idea, we need more iterations through this to find a optimal well-defined solution.

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