[1RC] 1inch Governance Participation & Delegation Incentive Program

2.1 General Proposals
1

Authors: Kene_StableLab & RoundElephant

Simple Summary

This proposal outlines an incentivization plan for 1INCH token-holders and stakers to partake in 1inch governance by voting on governance proposals or delegating their voting power to a delegate that will participate in those proposals.

Motivation

A key learning from the implementation of 1inch Fusion Mode is that with the right incentives, users will try to maximize their protocol incentives. For example, the ‘1inch Resolver Delegation Incentives’ program helped increase user activity resulting in 30M of the 150M 1INCH staked in the contracts being delegated to resolvers. Applying these learnings, this proposal intends to encourage active governance participation and delegation by rewarding active governance participants.

Specification

To be eligible for the program, participants must either participate in governance by voting on proposals or by delegating their governance power to a delegate who will vote on proposals on their behalf.

Staking Reward Calculation

The formula below will be used to calculate how these incentives will be distributed:

incentive_user=(UP_user/UP_total)*(boost_user) *incentive_total

Where:

  • incentive_user = the users individual monthly governance participation incentives
  • UP_user = the amount of UP due to st1INCH locked by the user
  • UP_total = total amount of st1INCH Unicorn Power delegated within governance
  • st1INCH_user/st1INCH_total = the user’s fraction of the total staked 1INCH
  • boost_user = the prorated sum of the staking boost multipliers for all of that month’s proposals (refer to Reward Examples).
    • 0.33x – Delegated st1INCH in Snapshot to a recognized delegate who voted on a Snapshot proposal
    • 0.67x – Voted directly on a Snapshot proposal
  • incentive_total = the monthly sum of 1INCH that the DAO has allocated to governance incentives

Reward Examples

To simplify the math, all examples use the following assumptions:

  • $300,000 of funds are diverted to 1INCH stakers from the 1inch DAO Treasury every year
  • 5,000,000 UP due to st1INCH (UP due to v1INCH is not eligible for incentives)
  • The user has 10,000 UP due to staked 1INCH
  • 1INCH trades at $0.25 (approximate current price of 1INCH)
  • Reward calculations are annualized

Example 1 – Maximum Boost

There were four (4) Snapshot proposals one month. A user has delegated their st1INCH UP (0.33) and participated directly in all four votes (0.67x) – total boost is 1.0x.

  • Annualized Incentive_user = 1200 1INCH

Example 2 – Minimum Boost

There were four (4) Snapshot proposals one month. A user has not delegated their st1INCH (0.0x), but they participate directly in two (2) governance votes (0.67x) – total boost is 0.33x.

  • Annualized Incentive_user = 400 1INCH

Implementation

  • If passed, $75,000 in USDC will be transferred to the DAO’s operations multisig (0x45e84e10e8E85c583C002A40007D10629EF80fAF) to fund the 3-month trial.
  • Use a public query from Dune to determine each participant’s eligibility
    • If not possible, use the Snapshot SQL to obtain the data
  • Use the public query to retroactively create monthly “snapshots” of the 1inch.eth and signaling.1inch.eth Snapshot vote participations
  • Build a tree using this data that will be used to distribute the $1INCH to users
  • Each month, the ops multisig will swap $25,000 for $1INCH and initiate the incentive distribution using the tree
  • Users will be able to claim the incentives directly via the smart contracts, however, this proposal signals to 1inch Foundation to implement this claim feature in the UI
  • Incentives will be distributed in the form of st1INCH added to the user’s stake
    • This has the benefit of auto-compounding the user’s governance power

Rationale

The incentive program will only apply to UP gained from st1INCH as there has historically been much higher turnout among v1INCH holders.

How long will this incentive program last?

The incentive program will run as a three-month trial period, after which the program will be reviewed and considered for renewal by the community. For this initial trial period, we propose budgeting $25,000 per month for three months. This brings the total amount spent during the trial period to $75,000.

Next Steps

If this proposal is approved it will signal to the 1inch Core Contributors to coordinate with Stablelab and get this program running.

Considerations

All funds allocated to this program will go toward participation incentives – not overhead. The program will function similarly to the previous gas refund program run by the 1inch Foundation, so the technical risks are minimal.

2

This proposal is still in the draft phase so we’d very much like to here the community’s feedback. The goal is to increase governance participation and further the decentralization of the 1inch protocol.

3

Thanks for the proposal. Since we have no source of stables at the moment, I suggest using the 1inch tokens which already exist in the treasury.

2 Likes
4

Thank you for your proposal.
I would like to have more explanation about Staking Reward Calculation.

  1. How the formula st1INCH_user/st1INCH_total = the user’s fraction of the total staked 1INCH is adapted to the formula
  2. Why is the gradient of 0.33x and 0.67x applied to boost_user?

I would appreciate any insight you can share on the above.