1. Executive Summary
This proposal introduces Delegate Rewards V2, a redesigned incentive framework for Lazy Summer DAO’s Reward Framework Qualified Delegate (RFQD) program. Recognizing that the current framework (SIP5.6) has demonstrated a structural misalignment between treasury spend and governance workload, this proposal replaces it with a Dual-Pool system anchored to a fixed maximum quarterly budget of $4,200 USD ($1,400 USD monthly).
To protect quorum stability and elevate contribution quality, the monthly budget features an 85% baseline allocation ($1,200) strictly rewarding delegates who maintain at least an 80% onchain voting participation rate, alongside a 15% allocation ($200) reserved exclusively for the top 3 delegates driving high-value forum discussions as measured by the Peer Recognition Score (PRS). Finally, to align delegate incentives with the long-term economic health of the protocol, mitigate sell pressure, and reduce administrative strain, all funds will be managed by a dedicated Quarterly-Funded Safe Multisig and distributed following a monthly governance approval vote (tracked under future SIP3.Y.Z proposals).
2. Motivation
The delegate compensation system formalized in SIP5.6 served Lazy Summer DAO well during its early governance phase. As the protocol’s complexity has grown—with DAO-managed vaults, expanded risk frameworks, and increasing governance throughput—the structural weaknesses of a static retainer model have become measurable and well-documented.
2.1 The Data Case for Reform
- Inverted Pay-to-Workload Ratio: In June 2025, the DAO processed 1 proposal and paid out approximately 152,000 SUMR—the second-highest monthly total of the year. In May 2025, the DAO processed 14 proposals and paid only ~126,500 SUMR. Treasury spend had a negative correlation with governance workload.
- Rising Fixed Cost Baseline: As the delegate set grew from 14 members (March) to 23 (December), the treasury baseline crept from ~118k to ~165k SUMR per month, driven by headcount rather than governance output.
2.2 Treasury Constraint
The design of this framework was ultimately dictated by our current financial constraints. As of March 5, 2026, the Lazy Summer treasury holds a total balance of ~$298k USD. However, it is heavily weighted in SUMR (93.4%), with light stablecoin (2.8%) and ETH (3.8%) balances.
While forum discussions initially suggested a $1,500/month payout for high-value contributors, the DAO agreed this must serve as a long-term “north star.” Implementing that model today would require ~$25,000/month, which creates an unsustainable sell-side pressure given our lean stablecoin runway. Consequently, all V2 framework decisions have been heavily optimized to fit within our current fiscal constraints.
3. Goals and Objectives
To directly address the issues outlined above, Delegate Rewards V2 was designed with three primary objectives:
| Goal | How this framework addresses it |
|---|---|
| Quorum Stability | Pool A heavily weighted to make voting participation financially attractive |
| Contribution Quality | Pool B rewards top PRS scorers; pre-vote forum engagement > post-vote |
| Treasury Sustainability | Fixed quarterly budget cap; structured monthly payouts; quarterly reporting |
4. Proposed Framework Specifications
To execute the goals outlined above, the V2 Delegate Reward Framework will operate under the following parameters:
4.1 The Quarterly Budget Cap
All delegate rewards will be drawn from a fixed quarterly SUMR budget, denominated in USD to provide predictability and recalculated at the start of each month. The budget for this framework is capped at $4,200 USD equivalent per quarter (distributed as $1,400 USD per month).
4.2 The Pricing Mechanism & Buffer
To protect both delegates and the treasury from SUMR price volatility, payouts are calculated at the start of each month using a 20-Day TWAP, trimming the first and last 5 days of the month to minimize volatility and manipulation.
A conditional 10% buffer, funded from multi-sig operations costs outside the $1,400 budget, is added to cover potential price drops between the calculation date and the actual payout execution. If the token price holds steady, delegates receive a small bonus; if it drops by up to 10%, their baseline USD compensation remains fully protected.
Example: A 20-day TWAP of $0.20 converts the $1,400 budget to 7,000 SUMR; with the 10% buffer, the total payout becomes 7,700 SUMR.
4.3 The Dual-Pool Split
The $1,400 monthly budget is divided into two distinct pools. This 85/15 split deliberately prioritizes quorum stability under a lean budget, while ensuring the contribution pool remains concentrated enough to be financially meaningful.
- Pool A — Voting Baseline (85% / ~$1,200/month): Rewards consistent onchain participation. Making this pool highly attractive ensures quorum remains stable even as the delegate set grows.
- Pool B — Contributions (15% / ~$200/month): Rewards high-value forum contributions that shape outcomes before the voting phase (forum analysis, proposal feedback, and thoughtful contributions) via the PRS leaderboard.
4.4 Baseline Eligibility (Pool A) To unlock Pool A rewards, a delegate must achieve a minimum 80% voting participation rate across all onchain proposals within the calendar month. This is a strict, binary outcome with no partial credit:
| Tier | Participation Rate | Outcome |
|---|---|---|
| Standard | 80–100% | Qualifies for the full Pool A reward. |
| Ineligible | < 80% | No reward. Half-effort does not qualify. |
- Rationale: The 80% floor secures quorum while providing a realistic buffer for missed proposals, balancing the protocol’s need for stability with the explicit part-time nature of the delegate role.
Voting Power Threshold: To ensure the program attracts high-value contributors rather than becoming a low-effort yield source, the minimum delegated voting power required to qualify as a Qualified Delegate is locked at 1M SUMR.
On Core Team Eligibility: Core team members are eligible for rewards, but are expected to adhere to a formal “Honor System / Opt-Out” clause, self-assessing if their operational role gives them an informational advantage and opting out accordingly.
4.5 PRS Utilization (Pool B Payouts)
The $200 Contribution Pool is highly concentrated to incentivize deep protocol work (e.g., forum analysis, proposal feedbacks, thoughtful forum contributions). To ensure the reward is financially impactful and creates healthy competition, it will be split exclusively among the top 3 highest-scoring delegates on the monthly Peer Recognition Score (PRS) leaderboard as follows: 1st Place = 50% ($100), 2nd Place = 30% ($60), 3rd Place = 20% ($40).
The PRS Eligibility Floor: To protect the contribution pool from forum farming, delegates must meet a strict eligibility floor to appear on the PRS leaderboard in any given month:
- Voting Prerequisite: Active governance participation is mandatory. A delegate must successfully meet the Pool A baseline (voting on at least 80% of proposals) to be eligible for Pool B rewards.
- Peer Validation: To receive a PRS score, a delegate must have at least three (3) forum contributions that receive recognition (likes or direct validation) from two or more other Qualified Delegates.
The Peer Recognition Score (PRS)
Contribution quality will be measured through the Peer Recognition Score (PRS) which is an objective way to measure forum contribution using likes. To distinguish high-value insights from standard noise, the system weighs validation through likes based on reputation, meaning an endorsement from a delegate carries significantly more weight than a random like.
For full details on PRS, please check this link: Summer Forum Peer Recognition Score
5. Success Metrics & Reporting
5.1 Monthly Qualification Audit: At the end of each month, eligibility is assessed. Jensei will track and confirm onchain voting participation rates (supported by Labs), while Curia will finalize and report the off-chain PRS leaderboard.
5.2 Quarterly KPI Report: Curia will publish a quarterly report covering:
- Governance Stability: Quorum consistency, actual increase in active voting power, increase in voting power.
- Forum Contribution: Amount of comments, amount of proposals month by month.
- Decentralization Growth: Increase in active delegates, Nakamoto coefficient.
- Protocol Impact: TVL growth, New yield sources added.
- Monthly Top Contributors.
6. Governance & Implementation Timeline
| Phase | Dates | Milestone / Action |
|---|---|---|
| Week 0 | Feb 5 | Forum thread discussions initiated; delegates provided data exposing current model flaws, which were explored further in community calls. |
| Week 1 | Feb 9–13 | Core Delegate Incentive Working Group (DIWG) formed; hosted Workshop Part 1 to explore tensions and options. |
| Week 2 | Feb 16–20 | Hosted Workshop Part 2; secured foundational consensus on the budget cap, baseline voting, and Dual-Pool structure. |
| Week 3 | Feb 23–27 | Published the Transparency Hub and updated the Miro board to track framework designs. |
| Week 4-5 | Mar 2–13 | Drafted the V1 SIP skeleton and published to the forum as an open RFC to gather delegate feedback. |
| Week 6-7 | Mar 16–27 | Extended DIWG review to integrate delegate feedback and lock in final execution mechanics (Multisig, TWAP, Sunset Clause). |
| Week 8 | Mar 30–Apr 3 | (Current Phase) Finalized SIP 5.23 published to the forum for final community review. |
| Week 9 | Apr 6–10 | Active voting week. |
| Launch | Mid-April | Official implementation for Q2. |
7. Framework Review & Sunset Clause
To avoid the inertia problem of V1, where a broken system persists despite the data, this framework includes a strict quarterly checkpoint. The DIWG will automatically trigger a formal framework review (and potential sunset) if either of the following thresholds are breached in the Quarterly KPI Report:
- Low Governance Throughput: Fewer than 4 proposals go to a vote in a single quarter.
- Low Delegate Participation: Pool A utilization falls below 60% of Qualified Delegates.
Sunset Execution Mechanics: If a sunset is triggered, the framework will enter a wind-down state:
- Unspent Funds: Any remaining SUMR in the Delegate Rewards Multisig will be immediately returned to the main DAO Treasury.
- Ongoing Obligations: The final month’s earned rewards and Curia’s final data reporting retainer will be paid out before the remaining funds are returned.
- Reinstatement: The framework will remain suspended until a new, revised Delegate Rewards SIP is submitted and approved via an onchain DAO vote.
8. Costs
8.1 PRS and Data Provider Compensation
Curia will serve as the dedicated Data Provider for the V2 framework. Responsibilities include maintaining the PRS data pipeline, dashboard, and publishing the quarterly report. For managing this operational and technical overhead, Curia will receive a lean retainer of $420 USD per quarter (representing exactly 10% of the total quarterly delegate payout budget, ensuring administrative costs remain strictly capped).
8.2 Technical Execution & Distribution Costs
A lean budget for gas and signer stipends for the Safe Multisig will be introduced prior to the formal onchain vote.
9. Specification & Onchain Execution
If this SIP passes successfully, it will authorize the following immediate onchain actions to initiate the V2 Framework:
- Deploy the Delegate Rewards Safe Multisig: A new Safe will be deployed with a 3-of-5 signature threshold.
- Signer Selection & Rotation: Signers consist of active DAO contributors and delegates. If a signer becomes inactive or wishes to step down, the remaining signers will coordinate with the DAO to nominate and rotate in a new signer to maintain the 5-person set.
- Initial Signers:
- Jensei:
0x746bb7befd31d9052bb8eba7d5dd74c9acf54c6d - Curia:
0x17296956b4E07Ff8931E4ff4eA06709FaB70b879 - Brian Adams | Sixty:
0xc2971FE806CE4438dA09e21fC7be7FB121Cf7e13 - Eren Targ:
0x6860036343886107dF9995Bd57e8945be8Cb69b7 - Raphael_Anode:
0x8795C17d02AF912C3586D03228e0165e9fdDE526
- Jensei:
- Transfer the Q2 Budget: Transfer the Q2 equivalent of $4,620 USD in SUMR (The $4,200 quarterly budget + $420 for the 10% volatility/gas buffer) from the DAO Treasury directly to the newly deployed Delegate Rewards Safe Multisig.
- Transfer the Data Retainer: Transfer the Q2 retainer of $420 USD in SUMR directly to Curia Lab (
0x17296956b4E07Ff8931E4ff4eA06709FaB70b879) for Data and KPI reporting.
10. Call to Action
This is the finalized SIP draft based on the RFC consensus. Delegates and community members are invited to:
- Review the final parameters and the newly added Sunset Clause.
- Prepare for the upcoming Governance vote.
Tagging @Recognized_Delegates and @jensei