Aave tokenholders choose to assign their tokens’ voting power to delegates in AaveDAO for a variety of reasons. Often, delegates have specific expertise or points of view that AAVE tokenholders feel should be elevated within the DAO’s community governance. Moreover, voting on every proposal as a tokenholder is a time consuming process. AaveDAO averages several proposals both on- and off-chain a week. Delegating one’s tokens allows for a more passive governance experience - one doesn’t have to research each proposal and remember to vote on time. 

It also allows for a cheaper governance experience. If, as a tokenholder, you delegate your tokens’ voting power, you don’t have to pay gas fees for on-chain votes (i.e. Aave Improvement Proposals or “AIPs”).

But, what about the delegates? They are expected to vote on a majority if not all proposals, so gas-related expenses for AIPs can really add up. Indeed, if the voting window of a proposal coincides with another event in the Ethereum ecosystem that contributes to high gas fees, delegates are forced to either abdicate their duty to vote on a proposal or pay up. 

In May, Aave passed a proposal championed by Fig from Flipside Crypto to create a “Recognized Delegate” program within AaveDAO. To become a recognized delegate, a delegate is required to: 

1. Inform the community of their intention to become a delegate

2. Post a Delegate Platform on the Aave Governance forum

3. Read and acknowledge the Delegate Code of Conduct

4. Demonstrate a history of voting on more than five on-chain votes

5. Maintain on-chain voting participation rate above 80%

6. Report voting rationales

Among the core motivations behind this proposal was that it would lay the groundwork for instituting a gas rebate program for recognized delegates, i.e. reimbursement of delegates from the Aave treasury for voting-related gas expenses. 

The Proposal

[ARFC] Gas Rebate for Recognized Delegates is a proposal to officially implement the gas rebate program. A Temperature Check vote related to this proposal passed two months ago with overwhelming support: 568,031 votes in favor and 15 votes against. 

Authored by LBS BLockchain and Marc Zeller of the Aave Chan Initiative, the live proposal outlines the motivation for the initiative and spells out how it will be implemented. 

According to the proposal, with Ethereum gas fees on the rise, “rebating delegates for their participation offers several benefits”:

• Encourages more active engagement from the delegate community by eliminating the disincentive to vote, leading to better decision-making for Aave.

• Fosters a more diverse voter base, including student organizations, by reducing the barrier to entry for voting. This creates a more open and collaborative delegate ecosystem, driving participation.

• Helps retain top delegates to foster the growth of the Aave ecosystem. Aave should remain competitive with its peers (e.g., Maker) to attract and retain the best delegate talent. The fundamental cost of being an excellent Aave delegate should not result in a net cost to the delegate due to ever-increasing gas costs.

• Can be achieved at a relatively low cost. We also propose measures to reduce the administrative burden for Aave. 

As for the details of the proposal’s implementation, rebates will be issued quarterly with an ARFC “proposed to publish an AIP reimbursing gas fees spent by recognized delegates.”  Recognized delegates will be reimbursed with aWETH tokens and the size of the rebate will be determined by a script written by Aave contributor JosepBove, which tracks gas spent on voting by the wallets of recognized delegates. 

Governance Process

For proposals to pass within the Aave governance system, they must start in the forum, move to off-chain voting for a sentiment check (i.e. TEMP Check) on the idea, come back to the forum as an official Aave Request for Comment (ARFC), pass off-chain voting again, and then move to an official on-chain vote, if necessary, as an AIP (Aave Improvement Proposal). This proposal is currently in the ARFC phase and won’t need an AIP to become an official policy of Aave (though it will need an AIP to administer the rebate itself, as outlined in the proposal). 

A voter can vote For, Against, or Abstain with AAVE or stkAAVE (staked AAVE) delegated to them. The quorum is 320,000 AAVE (or stkAAVE). At time of publication, 471,000 AAVE (or stkAAVE) have been voted. Current vote totals for each option (For, Against, Abstain) are currently hidden until the vote is over. 

The vote will close on July 2, 2023 at 7:52am EST. 

Stakeholders

Proposer

The original proposer for the Temperature Check version of this proposal was The London Business School (LBS) Blockchain Society, in alliance with Flipside Governance (@fig), FranklinDAO (@PennBlockchain), the University of Michigan (@Michigan_Blockchain), and Columbia University (@BlockchainAtColumbia). 

The ARFC was introduced by LBS Blockchain and Marc Zeller of the Aave Chan Initiative (ACI) via ACI’s Skyward program. 

Supporters

Support for the proposal is widespread with many tokenholders and (perhaps, obviously) delegates voicing and voting their support. 

Opponents

No Aave stakeholders have voiced opposition to this proposal.

The Big Picture

This proposal was inspired by MakerDAO’s MIP61: Recognized Delegate Compensation, which implemented a similar rebate program for MakerDAO delegates. Thus, this proposal passing would put Aave on an equal footing with its peer DAOs in the DeFi space. As argued in the proposal language, this should help Aave “retain the best delegate talent” - a competitive advantage. 

Another angle to mention about this proposal is the appearance of a conflict of interest: this proposal was introduced by recognized delegates, will pass with the voting power of recognized delegates, and, when passed, will compensate recognized delegates. However, recognized delegates have voting power for the reasons laid out above: they are experts that make life easier for other tokenholders. Given that there was little stakeholder pushback in the forums over the course of the three months that this proposal has been discussed, it seems that the Aave community is not concerned about any potential conflicts of interest and supports the idea.