SEEDGov Delegate Thread

[SEEDGov]

Proposal: Introduce a 90% Maximum Allocation to Backers to Ensure Builders Retain Meaningful Rewards | RootstockCollective

Vote: FOR

Rationale: We voted in favor of this proposal; our rationale can be read in the corresponding dabate post:

@SEEDGov

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.