[2603] Introduce a 90% Maximum Allocation to Backers to Ensure Builders Retain Meaningful Rewards

Collective Rewards
1

Overview

RootstockCollective is evolving its rewards system to better align incentives between builders, backers, and long-term ecosystem value for the good of the community.

Builders who attract backing and contribute to the ecosystem should retain a meaningful share of the rewards they help generate.

To support this, we propose introducing a maximum allocation to backers of 90%, ensuring that builders always retain a portion of rewards when they receive backing.

Why are we doing this?

As the Collective grows, it is important that reward mechanisms reflect both capital support and builder contribution.

Today, builders can allocate up to 100% of rewards to backers, which can:

  • Prioritise short-term competition for backing

  • Reduce the link between builder contribution and rewards retained

By ensuring builders retain a meaningful share of rewards:

  • Builders remain incentivised to build, contribute, and engage

  • Rewards better reflect value creation, not just capital attraction, supporting a healthier and more sustainable staking ecosystem over time.

  • The system moves toward a more balanced and sustainable incentive model

This helps create a more balanced incentive system where both builders and backers are aligned around long-term value creation.

This reinforces a simple principle:

Builders who create value and attract support should share in the rewards generated.

What is being proposed?

We propose to:

  • Introduce a maximum allocation to backers in Collective Rewards, set to 90%

This means:

  • Builders can allocate up to 90% of rewards to backers

  • Builders will retain at least 10% of rewards

How does it work?

The mechanism is already implemented at the protocol level.

This proposal does not introduce a new mechanism, but instead proposes to set and use this parameter via governance.

  • Builders choose how much of their rewards to allocate to backers

  • The system enforces a maximum of 90%

  • Any remaining rewards are retained by the builder

This proposal establishes the initial value (90%) for the maximum allocation to backers. Any future changes to this parameter can be made via another governance proposal.

Why 90%?

Setting the maximum at 90%:

  • Maintains strong flexibility for builders to attract backing

  • Ensures builders always retain a meaningful share of rewards

  • Introduces a clear and simple baseline for incentive alignment

This is intentionally a light-touch starting point, allowing the Collective to:

  • Observe behaviour

  • Gather feedback

  • Iterate over time if needed

Benefits to the Collective

  • Ensures builders retain meaningful rewards when they receive backing

  • Strengthens alignment between contribution and incentives

  • Encourages more sustainable builder behaviour

  • Reinforces a culture where value creation is rewarded

Future Evolution

This proposal establishes a foundation for future improvements.

Over time, the Collective may:

  • Adjust the maximum allocation via another governance proposal

  • Introduce dynamic mechanisms (e.g. based on contribution score)

  • Further align rewards with engagement and performance

Conclusion

Introducing a maximum allocation to backers is a simple but important step toward a more balanced and sustainable incentive system.

By setting a 90% maximum allocation, the Collective:

  • Ensures builders retain meaningful rewards

  • Aligns incentives with value creation

  • Prepares the ecosystem for the next phase of reward evolution

6 Likes
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nice guardrail that builds on the original white papers.

1 Like
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First of all, I’d like to thank Tamara for bringing this topic forward, as I believe it touches one of the most sensitive aspects of the Collective today.

In my view, the current incentive structure creates misaligned dynamics between builders and backers. It encourages a form of competition among builders that is not healthy — competing on how much of their rewards they are willing to allocate to backers. This ultimately comes at the expense of builders and weakens the connection between contribution and reward.

This is one of the aspects I find most problematic in the current voting and incentive model of the DAO, and addressing it should be a central priority — especially from a builder’s perspective.

Backing decisions should be driven primarily by the value a protocol brings — either directly to the backer or to the broader ecosystem, which ultimately benefits backers as well. When incentives are structured in a way that prioritizes reward allocation over real value creation, it introduces distortions that are not desirable for the long-term health of the ecosystem.

For that reason, I don’t think setting a 90% cap is the right approach. While it is a step in the right direction, it still allows this dynamic to persist.

Instead, I believe a fixed and lower allocation — around 50%, applied equally to all builders — would be a more appropriate approach. This would reduce incentive-driven competition and better align all participants around real value creation and long-term sustainability.

1 Like
4

I’m trying to better understand how prevalent this issue actually is in practice.

Do we have any sense (even directional) of how allocations have looked across funded projects so far? For example, whether high backer shares (e.g. >80–90%) are common or more of an edge case.

It would help contextualize whether a fixed cap is addressing a widespread pattern or a smaller subset of situations. This information will also help with the objective that the Collective observe and iterate on over time if needed.

Thanks!

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I think Tamara mentions, or at least the inference is that this is an incremental step, setting this to 90% is an indication of the new guardrail and helps move in the direction that you are keen on @Manu .

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Fixed cap is adjustable - so yes its fixed, but only until the next adjustment. Fully dynamic mechanisms are also certainly possible if that was beneficial - to reward the high quality builders as @Manu also mentions - those creating value should be aligned to the best rewards - baby steps.

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We support this proposal. While at first glance it may appear to limit builder freedom, particularly if a builder wishes to allocate more than 90% of their rewards to backers, a deeper analysis from an incentive alignment perspective suggests otherwise.

Allowing, as is currently the case, up to 100% of rewards to be allocated to backers may creates misaligned incentives, as it drives a competitive dynamic in which builders may be pushed to offer increasingly higher percentages to attract backing. This can lead them to give up the entirety of the rewards they help generate, even against their actual preferences, simply to remain competitive and secure support. This incentives misalignment could, in practical term, limit their freedom.

In this context, setting a 90% cap on reward allocation to backers appears to be a reasonable and well-balanced solution. It helps structure competition for backing by preventing a race to 100%, while ensuring that builders retain at least 10% of the value they generate.

In this way, incentives are not removed or undermined, but rather improved and structured: competition will continue to exist as it does today, but within a more balanced framework that protects builders while still allowing for a strong rewards allocation to backers.

This a first step toward moving away from the current 100%, it makes sense to start with 90%, see how the community responds, and adjust it again in the future if necessary.

1 Like
SEEDGov Delegate Thread
8

That makes sense on the mechanism side, and agree iteration is important.

I was more trying to understand the current state though — specifically how common these high backer allocations are in practice. Without that baseline and data, it’s a bit hard to gauge whether introducing this constraint now is proportionate, in spite of the possibility of iterating further.