# Client Incentives: parameters setting and activation

# TLDR

- Activating the Client Incentives contract  
- Setting the parameters such that the incentives are:
  - Auction clients: 5% of auction proceeds  
  - Governance clients: 5% of auction proceeds (split 2.5% for voting actions and 2.5% for proposing actions)  
- Funding the Rewards contract with 90 ETH to distribute rewards for the next \~6 months 

# Context

Client incentives adds a layer of usage-based, retroactive funding to Nouns' clients. It's intended as a partial substitute to the upfront lump sum client funding model we've solely relied on so far. It is likely not sufficient to be the entire budget for all clients but it should relieve some of the funding needs for existing clients as well as enabling new client experiments to earn ETH without the burden of having to pass a funding prop. 

In proposal [532](https://www.nouns.camp/proposals/532) the DAO logic and auction house contracts were upgraded to add the required features for Client Incentives. For more background on what Client Incentives are, as well as the contract changes, please see proposal [505](https://www.nouns.camp/proposals/505).

# Parameters

Two types of parameters are being configured in this proposal:

1. How much to reward clients as a percentage of Nouns auction proceeds.  
2. How often can the rewards be distributed. 

The former is the more important parameter to pay attention to, basically deciding how much of the auction proceeds should be budgeted towards clients.

The latter is a bit more technical and is meant to keep the auction revenue amounts used in the rewards calculation less volatile as well as reduce gas consumption.

# Auction bidding parameters

- auctionRewardBps: 500 (5%)
  - 5% of the auction’s winning bid amount will go to the client from which the winning bid originated.  
- minimumAuctionsBetweenUpdates: 7
  - 7 days must pass between auction rewards distribution. This is in order to batch the rewards and reduce the associated gas cost.  

# Voting & Proposal creation parameters

- votingRewardBps: 250 (2.5%)
  - 2.5% of auction revenue will be used to reward clients from which eligible proposal votes originated.  
- proposalRewardBps: 250 (2.5%)
  - 2.5% of auction revenue will be used to reward clients from which new eligible proposals were created.  
- proposalEligibilityQuorumBps: 1000 (10%):
  - Only proposals that get at least 10% For votes out of adjusted total supply (currently 562) will be eligible for both creation & voting rewards. This filter is used to discourage submitting “spam” proposals just for rewards.  
- numProposalsEnoughForReward: 10
  - At least 10 eligible proposals are needed in a rewards distribution batch.  
- minimumRewardPeriod: 30 days
  - Reward distribution can be called after 30 days even if there weren’t 10 eligible proposals.  

# Funding the rewards contract

We are asking to fund the rewards contract with 90 ETH which should be enough for 6 months given today’s auction prices (\~5 ETH) & a total of 10% allocated for rewards. Keep in mind nouns.wtf does not earn client incentives so this is likely a conservative estimate.

# How to participate

Anyone can participate by registering their client. The DAO needs to approve clients before they can withdraw their rewards. More detailed explanation can be found [here](https://mirror.xyz/verbsteam.eth/I5KgKbcJBjROn4KR_Ks9VcAuQXYUUHwkzGiX0gFbtME).

Outcome: EXECUTED