Today, Dollar Protocol is excited to announce the release of our Seigniorage Governor Alpha. This is a big milestone in the quest to build a truly decentralized algorithmic stablecoin.
The Seigniorage Governor Alpha is a fork of Compound’s very own Governor Alpha, which is one decentralized voting system that allows protocol owners and stakeholders to hold discussions, votes and amendments trustlessly over the blockchain.
Specifically, the Seigniorage Governor Alpha will have full control and ownership of all the smart contracts and the upgradeable proxies. This means that any user (with ≥ 1% of Share tokens) can make proposals to upgrade the proxies and improve Dollar Protocol.
The Share token will govern not only the current USDx stablecoin, but also future stablecoins such as EURx and YUANx.
The Seigniorage Governor Alpha will be rolled out in three phases.
1: Limited rollout (this will last for around 10 proposals).
2: Full functionality (w/o admin upgradeability)
3: Full rollout
During phase 1, the Seigniorage Governor Alpha will have the ability to control a select number of important protocol parameters. This will include initially dictating reward payout ratios (bonds vs LPs vs shares), setting the rebase lag, changing the rebase timing and frequencies.
More functionalities will be added in as governance evolves and grows.
After around 10 proposals have been voted on, we will allow the Seigniorage Governor Alpha to have full write access to existing functions. They cannot edit the proxies yet.
After successful completion of Phase 2, the ownership of all admin upgradeability proxies for all contracts will be given to the Seigniorage Governor Alpha. Phase 2 may last a few months before transitioning to Phase 3.
At this point, the protocol will be fully owned by the people.
It is important to know that any proposal at this stage to substantially alter the protocol will be inspected by the guardian (see below) and will require an audit.
Note: It is also a possibility that users want the protocol to be immutable. They can achieve this by voting to give up ownership of the admin upgradeability proxies by transferring ownership to 0x0000000000000000000000000000000000000000.
Quorum Amount / Proposal Threshold
The proposal threshold is set at 1% of the total supply of Seigniorage Share tokens. This is fixed.
The quorum needed for passing a proposal is adjustable via governance. Initially, it is set at 50% (which means a proposal needs 50% of the supply voting in the affirmative to pass). The idea is that as the protocol grows more decentralized and the market cap of Share grows, the quorum needed can be changed (up or down).
For reference, Compound.Finance uses a 4% threshold with a market cap of ~$700M. 4% buy-in is roughly worth $28M at the time of this writing.
👉 See Code
It is important to know that in the beginning, there will be Guardian of the protocol, which will the Dollar Protocol deployer address. The Guardian has the ability to cancel any transactions. This will *rarely* be used unless there are proposals that jeopardize the well being of the protocol. Proxies of proposals that jeopardize the well being of the protocol include a large number of small votes voting against a proposal with a few number of large votes.
The Guardian will eventually be transitioned to a community voted multi-sig with elected members who have the protocol’s best interests at heart. These members will be selected via a community vote.
Once the new multi-sig guardian determines its role is unnecessary it can call the “abdicate” function, which removes the guardian from the governor alpha.
There are already deployed contracts (forked logic from Yam) that redirect a percentage of positive rebase USD towards a community treasury. This can fund a decentralized development team.
Contract for USD Treasury: 0xC40859eFd6066c1B2Fb1Cc443b93bAfE4431a9c7
Verified Code Implementation: 0x6Eb1d493737A1D2aCAa7E6d1Dc126f09103DC48b#code
Users can call setRebaseMintPerc(uint256 rebaseMintPerc_) in dollarsPolicy.sol to set the rebase mint percentage. Currently, the value is set at 0, meaning the treasury is not being funded.
Governance has been a long time coming to Dollar Protocol. However, we are pleased to be handing control to the community. It is not only the right thing to do but necessary. Building sound money from the ground up is difficult and will require the best minds to govern it.
You can start delegating your Share tokens and voting today at https://dollarprotocol.com/#/governance today!
🔎 Seigniorage Governor Alpha: https://etherscan.io/address/0x031350d2d6b9c3a86d1a1b6d6c31a2296da722f0#code
🔎 Dollar Timelock: https://etherscan.io/address/0x031350d2d6b9c3a86d1a1b6d6c31a2296da722f0#code