DigixDAO Governance Model — Update #2

Point System

Participants are awarded with points for their contribution to the functioning of the DAO. These points are non-transferrable and tied to the address of the participant. There are two classes of points in the Digix DAO, namely, Quarter Points and Reputation Points.

At the end of a quarter, participants are rewarded from the pool of collected DGX transaction fees, based on their Locked DGD Stake, Quarter Point and Reputation Point. The exact formula for this would be discussed in subsequent updates.

Quarter Points

• Quarter Points are a direct measure of the participation of a DAO participant in a specific quarter
• These points will be awarded when participants do certain actions that contribute towards governance
• These points will be reset to 0 at the beginning of a new quarter

Reputation Points

• Reputation Points are a cumulative measure of how actively a participant has contributed to the governance across quarters
• At the end of each quarter, participants gain or lose Reputation:

— — If their Quarter Points are less than the Minimal Participation Point threshold:

— — If their Quarter Point is more than the Minimal Participation Point threshold:

• If an address already has some Reputation Points but does not participate in a quarter at all, his Reputation Points will be deducted a fixed amount:

However, the Reputation Point will be 0 if it is negative after the deduction.

• Participants also receive additional reputation points if their voting in the past turns out to be “correct” in the future

— — A “correct” vote is either:

— — — — A Yes vote for a proposal P in a voting round/interim voting round and proposal P gets past the next interim voting phase

— — — — A No vote for a proposal P in a voting round/interim voting round and proposal P does not get past the next interim voting phase

— — The additional Reputation Point is:

(Basically, p% bonus is awarded for the correct vote, in terms of Reputation Point)

— — In this way, we reward a participant who had made the right decisions in the past, hence incentivizing careful proposal vetting instead of spam voting.

* Maximum Reputation Deduction is the maximum reputation that will be deducted for any participant in a quarter, specifically in the case a participant has zero Quarter Points.

Note: There are a few parameters in this whole system, whose values would be carefully chosen at the start and could be changed by a Special Proposal:

• Minimal Participation Point
• Maximum Reputation Deduction
• Extra Punishment For Not Locking
• Reputation Per Extra Quarter Point
• p%