We would like to present an overview of our current governance model of DigixDAO. This will be a series of regular updates on DigixDAO governance. Do note that elements will change in the build process as they are refined moving forward.
In this very first Governance update, we will focus on the overall governance structure of DigixDAO and the roles of its key members. Details on the points and reward mechanism will follow in the next update.
Founders, Badge Holders (385 badges) and DGD Holders (2mio tokens) are decision makers of DigixDAO.
In order to participate in DigixDAO governance, the Badge Holders and DGD Holders would need to lock-up more than a minimum threshold of DGD tokens in that quarter and become Badge holding participants and participants respectively.
Participants’ power in decision making would be proportional to the number of DGD tokens locked-in.
DigixDAO Governance Timeline
DigixDAO operates in terms of quarters, which last for exactly 90 days, from t=0 to t=90 (t=90.001 is considered the next quarter).
From t=0 to t=10 is the Locking Phase, where:
- DGD Holders who have not “locked” their DGD can lock up their DGDs in a contract to become a participant in DigixDAO governance for that quarter.
- Participants in the previous quarter can:
— — Claim their rewards for the previous quarter
— — Withdraw some or all of their DGD balance that was locked in the previous quarter
— — Keep the DGD balance unchanged or top-up some more DGD
- At the end of this phase, each participant is deemed to have a Locked DGD Stake which is exactly equal to the amount of DGD locked in this phase.
From t=10 to t=90 is the Main Phase, where:
- Locked DGD cannot be withdrawn
- All the governance activities will take place
- DGD holders can also lock more DGD during this phase, at time t. However, the addition to Locked DGD Stake will be weighted accordingly to the time remaining in the quarter compared to the full duration of 80 days. To be more precise:
A proposal can be proposed by any Badge holding participant or participant. Every proposal has to go through a number of phases over the timeline, which are explained below. Participant votes during any kind of voting activity in any phase would be weighted by the Locked DGD Stake (or one-badge-one-vote in the Draft Phase), and marginally bumped by the Reputation Points (to be elaborated upon in the next update). A proposal is divided into multiple milestones, which makes it easier for participants to decide on their vote. Also, the introduction of milestones makes sure that funds are released in intervals only when previous milestones in that very proposal are achieved.
- Firstly, the potential proposer needs to pass KYC to prevent malicious proposals from being submitted
- The potential proposer can then start a proposal, which has an initial status of a pre-proposal. This participant will now be referred to as a proposer
- The proposer starts a new topic on the DigixDAO Forum to introduce their pre-proposal
- Any badge holding participant can endorse the pre-proposal
- Endorsement makes the pre-proposal an initial proposal, and takes it to the Draft Phase
- Participants can comment on the DigixDAO Forum’s proposal post to suggest improvements/modifications to the initial proposal
- Only Badge holding participants can vote in this phase. Votes are publicly viewable in this phase
- Proposer is free to make modifications to the proposal at any time before the voting produces a definite outcome
- Editing a proposal will nullify all votes, and badge holding participants have to re-vote. All participants can see the modification history of the initial proposal
- The initial proposal is considered PASSED and becomes a Vetted Proposal if and when:
— — The quorum* is >= a Minimum Draft Quorum (which would be determined by a similar formula as the Minimum quorum size formula below, with Badge as the unit instead of DGD Staked)
— — The quota** is >= a Minimum Draft Quota (which is tentatively just a constant)
- After the initial proposal is finalized by voting in the Draft Phase, it can no longer be modified anymore
- If passed, the initial proposal is a vetted proposal, and moves to the Voting Phase
* quorum is the amount of Locked DGD Stake in all the votes registered (quorum is a measure to make sure sufficient number of participants are involved in the decision making)
** quota is the percentage of the Locked DGD Stake in the YES votes compared to the quorum
- Badge holding participants and participants upvote (YES vote) or downvote (NO vote) the proposal during this phase.
- The voting is done by the commit-reveal scheme, and votes are thus invisible to other voters during the commit phase
- During the commit phase, voters can change their vote at any time
- A vote must be revealed to be counted. Only the last committed vote can be revealed.
- The vetted proposal is considered passed when:
— — The quorum is >= a Minimum Voting Quorum (which would be determined by the Minimum quorum size formula below)
— — The quota is >= a Minimum Voting Quota (which is tentatively just a constant)
- If passed, the funds for the first milestone are released
Interim Voting Phase
- This phase begins automatically after the deadline of a milestone and lasts for 10 days.
— — This phase can also be prematurely triggered by the proposer at any time before the deadline
- Participants assess the previous milestone’s work and vote to decide whether to release the next funding
— — Note that after the last milestone, the last “Interim Voting Phase” would be to decide whether to release the final rewards
- Again, the voting follows the commit-reveal phase, as well as the quorum-quota conditions to pass/fail
- If the vote passes, the next funding is released right after this Interim Voting Phase
- If the vote does not pass, the proposal’s funding is stopped and the proposal is considered closed.
- At any stage in the lifetime of a proposal, the Policy and Regulatory Legal Department (PRL Dept) can mark the proposal as illegal or invalid (on the legal front) and stop any further funding
- Only the Founders can set/unset certain addresses to be the PRL Dept
- The decision /opinion of the PRL Dept must be updated at least once before the first funding and in-between consecutive fundings
Minimum quorum size formula
(applicable to all voting phases, the parameter for each voting phase may be different):
x% is fixed for all proposals. It is the absolute minimum percent of Locked DGD Stake that need to vote on any proposal for voting to be valid.
The second portion is directly proportional to the funds required by the proposal, relative to the ETH holding of the DAO. The importance of this portion is adjusted by the Scaling Factor
This formula achieves the following effects we desire:
- A proposal who asks for n ETHs in quarter 100 will need a bigger quorum size (in terms of % of all Locked DGD Stake) than a proposal who asks for exactly n ETHs in quarter 1, because the remaining ETH in DAO is smaller.
- Even if a proposal asks for very minimal fund, it will still need at least a quorum size of x% of the total DGD Locked
- Proposals who ask for more funds will require a higher quorum.
This is a special class of proposals that can only be proposed by the Founders.
We envision that this will be used only for the following:
- To change significant parameters of DigixDAO as needed in order to maintain fairness in governance
- Calling an Emergency Dissolution vote
There will only be one voting phase, which lasts for 1 month: 3 weeks for committing votes and 1 week for revealing votes.
The Minimum quorum needed will be 70% of the Locked DGD Stake and the Minimum Quota will be 60%.
Our next updates will be focused on the point system for DigixDAO and the architecture consideration (voting to be on mainnet or side chain) needed to run DigixDAO governance. Thank you.