Context

Since Delegation has been enabled as a strategy on the Decentraland DAO Snapshot space, only 20% of circulating VP has been delegated. Delegation is currently considered one of the best strategies for improving the effectiveness of the governance mechanisms by progressively creating a team of highly engaged DAO representatives that are aware and have the context of the discussions and history of Decentraland to make better and more informed decisions. In the case of the Decentraland DAO, since there is no dedicated governance token, VP is generated from the project's utility token (MANA) and some of the project's native NFTs (LAND, ESTATE, NAMES, and some selected wearables). This makes the potential circulating VP in the DAO huge, as only 70M VP have been involved in the DAO at some point but if we only consider the MANA emission, there are more than 2.1B circulating in the market. This initiative proposes a mechanism for bringing more VP to the DAO by financially incentivizing big token holders to delegate their tokens to a matching pool that will distribute VP in a quadratic way to DAO Delegates taking as a signal the amount of VP and delegates that delegated VP to them from outside the matching pool.

The Problem

Less than 15% of the wallets that hold LAND and less than 1% of the wallets that hold MANA voted on the DAO. We need to find a way to incentivize big stakeholders of the Decentraland ecosystem to delegate their VP to a subset of users who nominate themselves as delegates. But the problem is that there is no incentive for these holders to lock their assets and delegate their VP, so this type of user decides not to engage in the DAO because they lack interest or time but they also don’t do anything to strengthen the decentralization aspect of the protocol, leaving a huge amount of Voting Power untapped and lowering the cost of performing a governance attack.

Proposed Solution

Definitions

Whales: Wallets with more than 100K VP that might or might not participate in the VP Matching Pool

VP Matching Pool: Pool of VP contributed by the Whales that gets distributed in a quadratic way to the Recognized Delegates and generates profits to the Whales that are part of it via a financial mechanism TBD.

Recognized Delegates: Known and trusted community members that nominated themselves as community Delegates.

Shadow Delegates:

Community Members: Wallets that do not qualify to participate in the VP Matching Pool but decide to delegate their VP to one Recognized Delegate.

Quadratic Delegation VP

This solution proposes creating a VP Matching Pool (In the fashion of a Matching Funding Pool for Quadratic Funding) that by a financial mechanism rewards with an interest rate the Whales who participate by stacking their tokens while distributing that VP in a quadratic way to a body of Recognized Delegates of the DAO. The amount of VP to delegate to each one of the delegates will be calculated using a quadratic formula. Here’s an example:

VP Matching Pool: 1,000,000 VP

Potential Issues