The Governance Steering Council
Overview of the Governance Steering Council
If you’re not familiar with Element’s governance system, we recommend you first read An Introduction to Element’s Governance Model, and Element Governance: A Technical Architecture Overview.
The Governance Steering Council (GSC) is a key feature of the Council Governance framework and will be one of the main mechanisms by which the community will govern the Element Protocol as it decentralizes.
Over the past few years, we’ve seen many advances in governance enabled by blockchain technology, such as on and off-chain voting, various forms of delegation, governance security modules, and much more. At the same time, there are aspects of TradGov that work successfully and have been battle-tested for generations. This can in part be attributed to the fact that decisions are made by stakeholder-vetted, incentivized, and trusted representatives rather than through the direct democracy of all stakeholders.
Both of these considerations are what motivated us to propose this GSC model: we believe that by combining the best of both worlds, we can create a better system for governing DAOs.
In the same manner that boards operate in corporate governance systems, the GSC members will have the proper incentives to stay well informed, take a data-driven approach in their decision-making process, and be aligned with their delegated stakeholders. Also, similarly to a board of directors, the GSC will have authorities and responsibilities to both support and make decisions for the DAO. But unlike corporate models, the GSC members will be a group of representatives that the users of the Element Protocol elect in a decentralized fashion. A position on the GSC will be determined by a delegation threshold that runs on a continuous, rolling basis. Therefore the GSC will be open to anyone who obtains enough delegated votes to pass a defined threshold.
But the board analogy is, of course, limited. The GSC will not function as a board, and will not have a centralized authority that a traditional governance model would. And although it will be incentivized to act properly, be aligned with delegated stakeholders, and be able to propose votes on-chain, the GSC will not have the authority to pass those votes immediately without the input and support of the governance community. In short, the GSC model will have the incentive principles, but not the authority role, that is performed by traditional boards in existing structures.
Ultimately, we believe that scaling governance is not necessarily just about getting more participation or more direct democratic control of the system, but about scaling the number of decisions that can occur per period of time, given that decisions are representative of the Element community. The GSC will help mitigate the need for individual voters to actively participate in governance and only require their attention when it really matters, thus reducing the risk of community members feeling voter fatigue and apathy.
GSC: Tackling the Governance Challenges in DeFi
The GSC helps solve and mitigate some of the critical challenges in the decentralized governance landscape today:
Lack of Governance Participation
Governance participants typically have little interest in participating in governance daily, weekly, or even monthly. For this same reason, many on-chain decentralized governance system participants suffer from voter fatigue and voter apathy which can be detrimental to a healthy governance system.
Under this assumption, we believe that DAOs should not be built on the expectation that all community members want to vote on every change the system needs to continue to operate successfully. With the Council protocol, governance members may select representatives with whom they most align, but can also still vote, provide input, and share sentiments when they want to.
With the Council protocol, governance members may select representatives with whom they most align, but can also still vote, provide input, and share sentiments when they want to.
The Council protocol alleviates the lack of community participation by allowing the governance community members to delegate their voting power and enable the GSC to coordinate and manage the governance process, directly propose votes on-chain, manage grants and allocate from the treasury budget up to a specific limit. These limits can be changed by the community at any point, so that the Council’s powers can be restricted at any time.
Plutarchy, Governance Attacks and Activist Investors
In many governance systems today, plutarchy and governance attacks are possible because current governance systems purely operate under the “one token equals one vote” methodology. This means that people with the largest number of tokens (aka whales) have more voting power and can significantly impact the outcome of different proposals.
The Council Protocol framework achieves a better balance. Even though votes can override the GSC members at any time, these votes also empower the GSC to execute specific actions on behalf of the community, using its flattened representative democracy, in which each GSC member has one vote.
Even though votes can override the GSC members at any time, these votes also empower the GSC to execute specific actions on behalf of the community, using its flattened representative democracy
Lastly, by having an active group of delegates that act on behalf of their delegators, the GSC can prevent illegitimate (garbage) proposals that, for example, look to benefit a specific group. Even better, it can deter such proposals from being submitted in the first place.
The Council delegation mechanism was designed so that governance participants can freely choose any individual delegate they feel would best represent them. This creates a positive feedback loop in the system, in which both delegates and/or GSC members are continuously incentivized to vie for additional vote delegation and to work hard to stay aligned and relate to the general sentiments of the community.
This creates a positive feedback loop in the system, in which both delegates and/or GSC members are continuously incentivized to vie for additional vote delegation and to work hard to stay aligned and relate to the general sentiments of the community.
In a nutshell, the GSC members are incentivized by design to make the best decisions for those whom they represent. Otherwise, they lose their delegated votes to another delegate. If a GSC member fails to maintain or accrue a certain threshold of delegated votes, it would signal that member’s disconnect to the general community’s sentiment.
As mentioned earlier, the GSC will be comprised of a group of representatives elected through delegation by the Element community. The GSC membership is open to anyone and can be earned by gaining enough delegated votes to pass a defined threshold. But, as mentioned above, this membership is determined on a continuous, rolling basis. In a way, this acts as if the GSC members are elected in real-time by the governance community, reflecting the most current state of political dynamics.
The GSC’s Role in the Voting Process
The GSC will have the ability to propose votes directly on-chain without the typical proposal threshold that all governance members will be subject to. This authority is enabled through the custom GSC voting vault, which gives one vote to each GSC member. And, since the GSC will have significant voting power delegated to it, the GSC may also propose votes with their own delegated power through the main core voting contract. However, it is important to note that, because of the minimum voting period, the GSC cannot make proposals directly on-chain and then pass them immediately without the input and support of the governance community. This failsafe prevents potential abuse by the GSC.
Possible GSC Responsibilities
- Governance Management — Managing off-chain governance process, helping prospective governance contributors format their proposals, and helping coordinate with the community for when a vote is to be held.
- On-chain voting — The GSC can propose on-chain votes directly without meeting the minimum votes requirement (aka spam threshold).
- Transparency & Engagement with the Community — Engage with the Element community to understand its goals, and help drive its vision by leveraging tools such as Discord and Commonwealth; hosting Community Calls; publishing monthly governance updates, and engaging one-on-one with the most active community members.
- Treasury Management — Asset management, budgeting, facilitating grants programs, interacting with grant teams, evaluating their progress, and renewing grants.
- Continuously Thinking About Protocol Improvements, Partnerships, and DAO Structures — Coordinating integrations, DAO2DAO partnerships, funding for routine deployment, and operating expenses, and thinking about how the community should start forming DAO teams to help keep the DAO running successfully.
- Security Maintenance — Run bug bounties, manage whitehat disclosures, and use limited emergency powers to protect protocol users.
GSC Member Compensation
Many delegation systems in different DeFi governance systems assume that the voters or contributors will work voluntarily in good faith. But, the reality is that having such a role is hard work, and there are only so many hours in a day that a person can volunteer their work for free. Thus, it would be in the community’s best interest to consider a compensation plan for their work. As with the rest of the proposals above, this is a suggestion only.
The GSC FAQ
Why join the GSC?
Why is working on the GSC worth the time?
- Build the future of fixed income and structured products
- Power and responsibility to make difficult and complex decisions
- Possible Compensation
Election/campaign style for getting people to support your vision and thoughts
- Promote yourself and your vision for the Element Protocol to get delegated votes
How to join the GSC and maintain your membership? 👀
Start by having a presence in Discord
- Whether that is providing feedback on the protocol or frontend, talking about governance concepts, helping onboard users by answering their questions, among other valuable contributions to the community.
Maintain high levels of delegated votes
- Once governance goes live, you will need to maintain a high level of delegated votes to become a GSC member.
What will you work on as a member of the GSC?
What will the GSC members care about?
- Coordinate and discuss protocol improvements
- Spending the treasury by funding grants or contributors
- Funding new product features or one-off projects
- Security audits and research
- Treasury management
- Governance improvements and experimentation
- Onboarding DAO teams to focus on the specific operational roles of the DAO
Dialogue between the GSC and the Element Community
Venues for communication between GSC members and voters
- Element Discord Community
- Element Forum (Coming soon)
- Monthly Town Halls
If you’re interested in learning more about the GSC and its role in governing the Element Protocol, please make sure to keep an eye on our Twitter and Discord channels.
In the coming days and weeks, we will be unveiling more details regarding the GSC and how to start campaigning yourself as a delegate and possible GSC member. More importantly, we will soon open up the forums for interested community members to start campaigning!
So, in summary, if you are interested in becoming a member of the GSC, get ready for the campaign trail. Don’t forget that anyone can become a member of the GSC as long as they meet a certain threshold of votes. Whether you’ve been a long-time Element user or are just getting started, you have the opportunity to campaign to get votes delegated to you and grab a seat at the wheel to help guide the future of the Element protocol.
If, in the meantime, you can’t wait to know more and are dying to start putting your strategy in place, don’t hesitate to join our Discord and ask questions. We’re excited about the future of governance and want to hear from you!