Hop Protocol

Simple Summary Over the past year, Hop DAO trialed delegate compensation to participate in Hop DAO Governance actively. This is a proposal to extend the Hop Delegate Incentivization Program for another 6-month period while integrating the feedback from community members to this new cycle.

The main proposed changes are for delegate compensation to have a 2.5x multiplier at the end of the formula to increase overall incentives for delegates, to add a gas rebate fund for delegate on-chain voting (capped at $500/month to be paid in HOP), and finally for delegate rewards to vest for a 6-month period. While the rewards will be earned monthly, the rewards will be locked for a subsequent 6-month period. To clarify, if you earn rewards in March, the rewards for that month will be locked until September. If you earn rewards in April, the rewards for that month will be locked until October.

Motivation Through the delegate incentivization trial over the past year, delegates have been incentivized to actively participate in Hop DAO Governance by taking part in discussions on the forum, voting on proposals and ensuring to share their rationale for voting a particular way. This program has created a healthy culture of governance-related engagement in the Hop DAO.

Renewing this Hop Delegate Incentivization trial will ensure that the quality of Hop DAO does not decline.

This Incentivization Program will retain the delegate talent that the Hop DAO has attracted; its continued existence will allow future delegates to join the Hop DAO and allocate resources to improving the Hop Protocol.

How did the program work? Delegates are required to vote on proposals and communicate their rationale for voting in their delegate thread on the Hop DAO Forum. Under the current Delegate Compensation Program, delegates are compensated using a formula where delegate incentives increase with the amount of HOP delegated, but in a decreasing fashion. This means that a small delegate will receive a greater incentive per voting weight than a large delegate, but a larger delegate will receive more.

Delegates utilize a previously shared Dune Querry to ascertain their lowest level of Hop for that month and use the visualization graph to ascertain the incentives they are due according to their lowest amount of Hop for that month. Finally, delegates would self-report under a thread dedicated to reporting delegate eligibility each month. The following information would be required of a delegate. Vote participation percent = (Number of proposals voted upon ÷ all proposals) * 100 Communication participation percentage = Number of proposals referenced with voting position and reasoning for that position ÷ all proposals) * 100 Lowest Amount of Hop for the period Incentives to be paid out.

Current Proposed Changes to the Program

1. The previous delegate incentive program amendment in the paragraph below (multiplier based on participation periods) has been replaced with a new multiplier. The new multiplier is 2.5x to be calculated at the end of the formula. The formula for delegate incentives is: I = ((log(h)-4.55) *3500) *2.5 Where: I = Incentives to be received h = lowest level of HOP delegated that month

2. There will now be a gas rebate fund capped at $500/month (to be paid in HOP tokens) to compensate delegates for their on-chain voting expenses related to Hop DAO. Each delegate is responsible for sharing a detailed spreadsheet with each voting transaction with the DAO to qualify for the gas rebate program.

3. Rewards will vest for a subsequent 6-month period to further align delegates with the DAO.

Previous Changes to the Program Sequel to the feedback provided in the previous proposal, the following changes were implemented in the previous renewal proposal. There shall be a new formula used to calculate incentives. Where: I = Incentives to be received h = lowest level of HOP delegated that month M = Multiplier based on consecutive participation periods To calculate the multiplier (M), we can use the following formula: M = 1 + (0.1 * P) Where: P = Number of consecutive completed 6-month participation periods (capped at a certain value, e.g., 5) This multiplier starts at 1 for new delegates and increases by 0.1 for each consecutive completed 6-month participation period, capped at a certain value (e.g., 1.5 after five periods). The Participation rate would be removed; therefore, new delegates who reach the 90,000 threshold could join as delegates at any time. The incentive formula would be amended to include a Multiplier based on consecutive participation periods. The primary import of these changes is that new delegates can join Hop Governance at any time, while old delegates are incentivized to continue participating. There is no opt-in or opt-out mechanism. Delegates will have to self-report to receive compensation.

Specification This proposal requests for the Hop Delegate Incentivization Program to be renewed for another six months; the program will retain all the guidelines and procedures laid down by the original proposal 18 2, its subsequent amendment 11 and amendment in previous renewal 1.

Next Steps. If this proposal passes, the Hop DAO Delegate Incentivization Program will continue for another six months.