[RFC] Compensation for Delegates

General Discussion Ideas
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Hey all,

As we get closer to the end of the first 3 months since the launch of the Lazy Summer Protocol, of which it has been governed by SUMR token holders and delegates, I think this is a good time to agree an compensation plan for delegates for the work they have, and will hopefully continue to provide to the Lazy Summer Protocol.

Disclaimer: I am not a delegate (either through this account or any other), and will not be earning anything from any approved proposals.

Some background

Before the protocol launched and during development of the protocol, we put down some rough numbers of where we think the community SUMR token allocation could be spent, and I believe a sensible value, is around 2.5% of the community allocation - representing around 0.88% of the total supply.

For that amount to last around 3 years, that would equate to around 7,990 SUMR tokens per day - at the $250M assumed FDV value within the Summer.fi app, that is around $60k per month, between the delegates.

Approaches to compensation

I think there are many different ways that this could be designed, and the reason I am opening this RFC up now is to bring in ideas and experience of a variety different people that may have seen this done well and poorly, and even those who may have different approaches completly.

From my point of view, I think there are a couple of obvious options to consider;

  • Comp based on amount delegated (uncapped), and then how active you were (e.g. a % of votes activley particpated in or the decay function)
  • Comp based on amount delegated, but capped for example at a specific amount SUMR delegated - say 10 or 20M or something, and then based on how active you were.
  • Regardless of amount delegated, just an even split → although this is open to attack, possibly have to be a recognised delegate in the forum and make X comments/posts a month or something to qualify.

I am sure there are many other ways this could be done. I would propose we try and find a solution within the next few weeks, we could even run a number of scenarios to calculate the sample payouts for the first three months and decide - but I do think it’s important we have a clear and transparent way for compensating delegates for the work they do.

One other consideration to make might be how this is voted on, if done by delegated amount - it could be seen as Bias towards the biggest delegates, although they run the risk of being de-delegated. At the same time, if we simply count how many unique votes for each option - it could be open to abuse. Unless we did a poll in the forum with only people that are a certain level (already a member) when it opens. I will leave this with @jensei to provide input to.

Tagging @Recognized_Delegates in particular for their input.

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I’ve seen this model a few times, and think its good. You could introduce different Tiers for amount delegated - lets say 3 different Tiers, and payment structure for each Tier. Tier 1 = >10 million delegated, Tier 2 = 1-9.9 million, and Tier 3 <1 million delegated. Then add a criteria of if they voted 70% of the time, and maybe a small bonus if they hit 100% of the votes.

I’ve also seen the first option used for Delegate Compensation.

I think running some numbers of these two should be explored?

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Thanks for kicking this off, @chrisb—really appreciate both the initiative and the framing.

A few thoughts from my side:

Governance is already proving to be non-trivial: evaluating ARKs, engaging on parameterization, proposing new vault structures, and supporting contributors. The depth and cadence of work will only increase, and it’s important we reward those who show up consistently and thoughtfully.

Without alignment here, we risk turning governance into a passive, rubber-stamping process. Therefore, I suggest we aim for compensation that is:

  • Merit-based: Participation matters. Voting + forum input should be rewarded meaningfully.
  • Non-plutocratic: Delegate size shouldn’t be the sole determinant of payout — otherwise we reinforce centralization, even though I see your point about de-delegation.
  • Simple, transparent, repeatable: We need something lightweight to implement, especially early on.

Initial Suggestion:

here I agree with @MasterMojo

  • Tier 1: >10M SUMR delegated
  • Tier 2: 1M–9.9M
  • Tier 3: <1M

Each tier could have a base stipend and a participation multiplier applied to it.

Participation Component:

  • 70%+ voting participation as a baseline requirement for comp
  • Activity Bonus: multiplier for 100% voting engagement
  • Optional: light-weight forum activity bonus (e.g. 1 post-comment/month), and maybe a soft cap per delegate.

We should run some sample simulations retroactively for Feb–April to sanity-check this, similarly to what @chrisb suggested.

I agree that how this decision is ratified matters. So, here I’d suggest:

  • Starting with a non-binding forum poll, restricted to forum members at least TL1 or above / allowlist specific users (recognized delegates).
  • Then move to a formal SIP once a leading model has broad consensus

Would appreciate other @Recognized_Delegates thoughts on this. Let’s aim to close out the framework in May so comp can start flowing shortly after.

—jensei

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First. Thanks to @chrisb for bringing up that topic. I have seen first-hand that I had to de-prioritize some Summer work, which I would have loved to do, for other, paid work.
This is just the reality of running a business or living in a world where I want to provide for my family.
Delegate compensation absolutely can and does make it possible for dedicated members of the community to spend their time where their heart is. Which is great.

We at StableLab have seen dozens of delegation schemes and designed our fair share. For a really good overview I highly recommend checking out our delegation handbook, where you can find multiple case studies and comparisons.

TL;DR:

Delegate compensation ranges from $3K - $10K per month per delegate in most DAOs with good activity levels. as @jensei pointed out: this is already the case here, and is not going anywhere. Automation will be a key lever, but will take its time.

Eligibility is measured in a variety of ways. Some takeaways:

  • High voting participation is a must (think 85% plus). Delegate’s first duty is to keep quorum high and increase governance security. No way to do that, if you don’t vote.
  • Publishing rationales for voting is another key metric. Without rationales delegators don’t know why a delegate voted and there can be no accountabiltiy. A few DAOs require 90%+ of all votes cast must contain a rationale.
  • Activity on the forum is often measured. This can be hard to do, and quality is always subjective, making this an easily gamed metric. Especially in times of LLMs. KarmaHQ does a decent enough job here, but is an external chokepoint.
  • Proposal activity (proposals put forward and/or successfully seen through) can be a good metric, but actually most DAOs need the right proposals, not a higher number of proposals, so I advise against this.

In Uniswap we helped design the criteria for compensation: Uniswap Delegate Reward Initiative - Cycle 3 - Requests for Comment - Uniswap Governance

This is a mixture of participation (in gov calls, on the forum, making proposals) and voting, basically.

So where can Summer DAO start?

I suggest starting simple and then re-evaluating the criteria every quarter. We’d be happy to facilitate that, if there’s buy-in (please let me know, I can then spin this into a proposal. As the biggest delegate currently, we would do that as part of our duties here).

  • Three tier delegate system, as suggested by @MasterMojo.
    – Currently 7 delegates have more than 10M $SUMR delegate, only 4 between 1M and 9.9M and 2500 below 1M.
    – We suggest doing Tier 1 > 35M (5 delegates) | Tier 2 34.9M - 100K (11 delegates) | Tier 3 99.9K - 10K (25 delegates) | Tier 4 <10K
  • Voting on more than 80% of all proposals and rationales for 90% of all votes to qualify for participation
  • Participation: Minimum 3 replies on the forum per month (this is super crude. we definitely need to improve this)
  • multiplier for standout activity (up to 3x comp for Tier 3, 2x for Tier 2 and 1.5x for Tier 1, more on this below)
  • no comp for Tier 4 delegates.

The multiplier is especially important. Delegation tends to be extremely sticky, making it hard for active, but new delegates to get enough to reach higher tiers.
Imo this could be amended by allowing each delegate to cast a vote (maybe with a quadratic damper?? comments welcome) for other delegates only, commending them for their stand out activity. A “none of the above” option should also be included. This can be done on Jokerace, for instance. Setup is minimal and can be copied over month to month (or quarter to quarter?)

Here’s a sheet with some token amounts for delegation (with a potential buffer for a multiplier), anyone interested can play around with: Lazy Summer DAO delegate compensation calculator - Google Sheets

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From the sheet I linked. This is how the monthly delegate compensation would work out:

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The top delegate per tier as per the Jokerace vote each month would get the bonus multiplier.

The competition would select delegates by number of votes and distribute the total 19,500 $SUMR per month available until they are filled.

So if no Tier 1 delegate is in the top N then more Tier 2 or even more Tier 3 delegates can get bonuses.

Another possibility would be to just divide the 19,500 $SUMR (let’s say 20k since we have some room) and divide it by number of votes and distribute to the top 5 or so from the contest.

Again, this is for discussion purposes, but would a fun element to this and allow delegates to express their appreciation of the work of others. Something that no other DAO has done yet, and I think would be awesome.

One more point for discussion: paying in $SUMR is great, because recipients get more skin in the game. But it could also create some selling pressure. Something to watch and possibly adjust.

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Thanks @rspa_StableLab for the comprehensive input — this level of experience-backed context is exactly what’s needed to help us shape a fair, sustainable delegate compensation model for the Lazy Summer DAO.

A few things really stand out:

The emphasis on high voting participation and rationale transparency resonates strongly. These are foundational to both quorum health and accountability, and I’d support setting that 85%+ voting threshold.

Funnily enough, I have contacted KarmaHQ to explore dashboards and how we can get added there. At the same time we already started internally exploring Dune dashboards for the DAO as well!

Great example! thak your for sharing it.

The tiered approach with a multiplier is a smart way to balance consistency with merit. The idea that newer, high-performing delegates in lower tiers can be recognized is great — otherwise we risk ossifying power structures due to delegation inertia.

The monthly or quarterly delegate recognition mechanic (e.g. via Jokerace) is creative and lightweight way to signal contributions while limiting sybil/gaming risk. Definitely worth exploring. Experimentation is key here!

I’d suggest we consider pairing this model with some public tracking or dashboards (e.g. voting record + rationale % + forum activity, as well as some broader DAO relevant dashboards), so expectations and accountability are clear for everyone — including those considering future delegation.

I’d love to collaborate further and thanks again for pushing this forward in such a constructive, thoughtful way.

–jensei

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Personally I am a fan of keeping it simple. Any additional rules need bookkeeping, and checking which can be a cost in of itself. The proposal from @rspa_StableLab is not too elaborate, so I’m fine with it for now if that is what the rest wants, but at the same time it cannot be explained in 2 sentences.

I think having a simple log distribution of SUMR compensation is more fair as it doesn’t have the arbitrary jumps in compensation like in the tier based model.

I like having a way to appreciate helpful behavior through voting, but imo that could be to any community member, not just delegates. In my view it could help especially if growth initiatives are promoted in such a way.

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