Possible governance for QuipuSwap

Inside the Ethereum ecosystem Uniswap is proved to be a simple and practical decentralized exchange with automatic market-making. By the time of writing ethereum work based on algo from Proof Of Work family algos, Tezos used an algorithm from PoS family. Thus it makes sense to provide a possibility to use the liquidity pool for staking inside the similar protocol for Tezos.

The main question remains how liquidity owners are going to elect the baker for liquidity delegation from Qupiswap protocol.

Possible governance for QuipuSwap

Governance consists of 2 votings:

1. Proposal voting
2. Veto

1. Proposal voting

Every token holder of QuipuSwap liquidity can propose and vote for the baker. The baker with the biggest amount of votes (in proportionality per one token) will get a delegation with 100% Tezos liquidity locked inside the liquidity pool.

The votes can be changed and recalled. If the voting leader is replaced — 100% Tezos liquidity will be delegated to a new leader.

2. Veto

A voter has an opportunity to veto the leader baker. Every voter can have veto authority. If 50%+1 tokens (calculated from voted tokens) exercise the veto: all proposal votes given to the current leader will be recalled and the second best baker will get the delegation and will become a new leader.

Automatic veto and watch towers

To prevent the baker’s malicious behaviour one assumes that the voter should set up the watch towers software — the software for monitoring the baker’s behavior with the punishment (veto) mechanism in case the baker violates 3 following rules:

Rule 1: the absence of the reward payment by a certain time/block

Rule 2: insufficient/overcharged payments

Rule 3: over-delegation; the baker must have no personal funds to provide delegation service for this amount of delegations

Smart contracts and access rights for watch towers

A watch tower can be provided as a service. Inside QuipuSwap smart contracts the token holder can grant access rights to exercise veto using other addresses.

The same functionality can be provided to regular votings, not only for veto and watch towers.

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