Delegation of CLOUD voting power, possible mechanism

Sanctum Community (SanctumDAO)
1

As there aren’t much use cases for CLOUD yet or standard for creation of LSTs that involve the community I would like to suggest use of delegation.

For Institutional LSTs: Web3 firms hoping to launch LSTs court delegation from community members by offering incentives or they buy CLOUD and self-delegate, only the top institutional profiles delegated to come to a vote.

Individual LST: Delegating your tokens to someone’s personal sanctum profile shows confidence in that personality, allowing them to create their own LST without voting.

Delegation could also allow for transfer of voting power allowing a trusted personality to vote on your behalf (although I don’t think that would be a popular use case except in situations where people want to stake but can’t keep up with vote events for whatever reasons).

Advantages:

  1. It introduces a filter for low quality LSTs, allowing the community decide early if they want that LST without it coming to a vote (high quality vote events only=high quality launches).
  2. It creates another use case for Sanctum profiles, making even companies have them.
  3. It involves the community in LST creation right from the early stages, making it decentralized.
  4. Incentives offered for delegation by companies are a W for CLOUD holders at no cost to the team.
  5. Big reason for institutions/individuals looking to make LSTs hold CLOUD, so they can self-delegate.
  6. Individuals who want to passively stake as they can’t participate in vote events can still be involved in sanctum future, although active delegates earn more.
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2

I do like the idea on institutional LSTs to have self-delegstion authority while offering a benefit to the Sanctum ecosystem, the clear example that comes mind is ByBit-SOL LST. However, I don’t fully understand how there will be staking rewards for community member who delegate their voting rights.

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3

If someone delegates their voting power to someone else they share staking rewards (if there are any) with the person they delegated to. This way they don’t completely miss out on voting because they couldn’t keep up even though they’re willing to make the commitment of staking.

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I like this mechanism for the ones who want to be invloved but my not be able or have the time to do so.

1 Like