📙 Kinto Constitution
Kinto is an L2 rollup designed to accelerate the transition to an on-chain financial system. It features user-owned KYC, AML, and native account abstraction to solve the biggest blockers to mainstream adoption: security and user experience.
TLDR
- Kinto is now one of the most decentralized launches in crypto — with more than 16k members voting on the proto-governance proposals.
- Kinto Constitution and the creation of the Kinto DAO are approved. Kinto will be governed by a dual-layer governance system fully on-chain.
- The constitution establishes the different phases of governance, progressively transitioning to complete decentralization to achieve credible neutrality.
- First, a security council will be established to monitor, safeguard, and maintain the network.
- Then, the lower layer of governance will be introduced. Kinto token holders will control the treasury and all the fees the sequencer collects.
- Finally, the upper layer of governance will be introduced, and the network operation decisions will be decided by nine guardians or Nios elected annually by Kinto Token Holders.
With the conclusion of our Launch Program, Engen Kinto has onboarded 25k users into the Kinto network. As part of the Engen claiming process, more than 16k members have voted on the three proto-governance proposals. It is now one of the most decentralized networks ever launched in crypto.
The launch members have spoken, and an overwhelming majority has passed the following proposals:
You can see the results on our Tally portal here:
https://www.tally.xyz/gov/kinto-proto-governance
In this post, we will focus on the first proposal — the Kinto Constitution and Kinto DAO.
🏛 The Kinto DAO
The Kinto DAO, represented by the Kinto Foundation, aims to create a blockchain network that accelerates the transition to an on-chain financial system. Decentralized, non-custodial, and open to anyone who completes a KYC process.
The Kinto Constitution is a set of binding rules determining legitimate governance activity. This Constitution describes the procedures by which it may be amended and lays out the governance framework of the Kinto DAO and The Kinto Foundation.
We are going to summarize the most important parts of the constitution in this blogpost, but you can check it out in full here
Purpose
The Mission of the Kinto DAO is to accelerate the transition to an on-chain financial system. It combines user-owned Know Your Customer (KYC) processes, Anti-Money Laundering (AML) compliance, and native account abstraction to overcome the traditional barriers to mainstream adoption, security, and user experience. When interacting with the new on-chain financial system, Kinto users don’t need to worry about scams, hacks, or exploits.
Core Values
Security First
Kinto integrates mandatory KYC, AML, and smart contract wallets to mitigate risks associated with money laundering, illicit financing, and smart contract exploits and scams. The system’s safety should be weighed heavily when considering any protocol changes.
User Owned KYC
Kinto upholds the highest standards of privacy. User data is never stored by Kinto. Users choose from approved KYC providers to secure their personal information, which remains separate from their on-chain addresses. Data sharing occurs only under user authorization or explicit governance approval.
Decentralized and Permissionless
Despite its KYC features, Kinto is decentralized, open-source, and non-custodial. It empowers developers to create compliant financial applications within a user-governed framework. Any user who completes the KYC/AML verification can join the network.
Invisible Technology
Technology works best when it is invisible to the end user. By integrating native account abstraction directly at the chain level, Kinto removes the complexities of managing private keys, enabling access through simple, secure methods such as usernames, passwords, two-factor authentication, or mobile device keys.
Multi-chain Integration
Kinto believes in positive-sum games with other open blockchain ecosystems. The Kinto DAO will strive to integrate with the best products across the ecosystem, wherever they are. This constitution supports DeFi across the whole ecosystem, facilitating seamless integration with major DeFi protocols across ecosystems like Ethereum, Base, and Arbitrum.
Minimized Governance
Governance minimization is essential because it supports the primary value proposition of networks: credible neutrality. Minimizing governance tends to make protocols and networks credibly neutral. The less surface area to govern, the faster the network can operate. The community should strive to minimize processes and protocols that would bog down the community in endless governance conversations.
Governance Phases
This is how governance will work during every stage.
Phase 0: Proto-Governance (Before June 15th 2024)
Kinto’s launch program, Engen, was created so that the community could vote on and participate in discussing the DAO and token before they were even made.
Thanks to Kinto’s native sybil-resistant capabilities, Engen attracted more than 25,000 users. These founding members received Engen credits and can use them to discuss and ratify the constitution from day one.
Launching proto-governance through the $ENGEN credits allows launch program members to decide the network’s future.
During this period, founding members are voting on three key proposals:
- ENIP-1: Kinto Foundation & Constitution
- ENIP-2: Creation of the $K Token
- ENIP-3: Mining Program Launch
At this stage, a multi-sig comprised of core team members and close advisors can change the protocol parameters, upgrades, and perform rescue functions in case of an emergency.
Phase 1: Security-Council (From July 1st 2024)
Requirements: ENIP proposals are ratified and approved.
Once the constitution is ratified and the creation of the $K token is approved, the $K token will be launched and distributed to the community. The Treasury smart contract will be created, and on-chain governance will now own the Kinto DAO treasury.
At this stage, governance only owns the treasury of the network.
The Kinto Security Council will then take ownership over the other smart contracts.
The security council is a group of 8 signers of a Gnosis multi-sig wallet, which has powers to perform certain Emergency and Non-Emergency Actions, as delegated to it by the Kinto DAO and The Kinto Foundation, and is responsible for upholding this Kinto Constitution.
Emergency Actions
The Security Council has the power to execute any software upgrade or perform other required actions without delay to respond to a security emergency, should one arise (such actions, “Emergency Actions”). Performing any Emergency Action requires a majority approval from the Security Council. The Security Council may not use its power to perform Emergency Actions except in a true security emergency, such as a critical vulnerability.
After taking any Emergency Action, the Security Council must issue a full transparency report (at an appropriate time after the security emergency has passed) explaining what was done and why such action was justified.
Non-Emergency Actions
The Security Council may also approve and implement routine software upgrades, routine maintenance, and other parameter adjustments in a non-emergency setting (such actions, “Non-Emergency Actions”), which require a majority of signers to take effect.
The KintoDAO can curtail or eliminate the Security Council’s power to perform Non-Emergency Actions by approving and implementing a governance proposal.
Phase 2: Partial On-Chain Governance (Q3 2024)
Requirements: Stage 1 Rollup Achieved. First 9 Nios Elected.
Once the network proves stable over several months under changing market conditions, the rollup training wheels will be removed, and on-chain governance through a Governor smart contract will own the network.
In order to minimize technical and financial risk, the Kinto token can only be made transferable by a DAO proposal after the network has reached this phase.
At this point, the Security Council can only perform emergency actions. To execute an emergency action, the multi-sig must have at least 8 signers and a threshold of 75% or higher.
Kinto will launch a two-layer, fully on-chain governance system. First, $K holders elect Nios on-chain through the Kinto Governance Portal at governance.kinto.xyz using $K weighted voting.
The first Nio election is scheduled to begin in September 2024
- Nios will split into three cohorts: Core Cohort, First Cohort, and Second Cohort.
- The Kinto Foundation will select the Core Cohort of 3 Nios.
- $K holders will elect the remaining two cohorts — 6 Nios- on-chain through the Kinto Governance portal using $K weighted voting. This first election replaces the ‘First Cohort.’ The next election replaces the ‘Second Cohort,’ and so forth.
Once Stage 2 Rollup classification has been achieved, the next Nio cohort election will double in size and replace the Core Cohort. Governance will then move to its final state.
Phase 3: Full On-Chain Governance (TBD)
Requirements: Stage 2 Rollup Achieved. Core Cohort replaced
All training wheels are removed at this stage, and all code upgrades must go through on-chain governance.
After the core cohort has been replaced, Nios elections will now split into two cohorts; First Cohort will have five Nios, and the Second Cohort will comprise four Nios.
👹 The Governance Guardians — Nios
Nios are the network’s guardians and the solution to governance apathy. They are expected to be active and vote on all governance proposals. They will also likely discuss governance with other guardians and the broader community. Nios are minted as soul-bound NFTs, which allows them to operate quickly on behalf of the community.
Nios Election Process
Nio Elections can only begin upon the availability of an on-chain election process approved and installed by the Kinto DAO. The date chosen for the first election will form the basis for all future elections. Every election should begin six months after the previous one, and it will replace its respective cohort. All Nio members are expected to serve their terms until the election is complete and the new Nios are installed.
🌊 The Kinto Wave is coming
Kinto is the safety-first L2, the only L2 designed to accelerate the transition to an on-chain financial system. It features user-owned KYC, AML, and native account abstraction to solve the biggest blockers to mainstream adoption: security and user experience.
Users can deposit/withdraw at any time. Kinto is non-custodial, decentralized, and permissionless, yet it enforces a KYC verification in all participants.
We want to accelerate the transition to an on-chain financial system. A system that can match the guarantees of traditional finance, increase availability 24/7, enhance security, and decrease the friction and costs associated with conventional asset issuance.
If you share our vision for a secure, open, decentralized financial system, help us realize it.
Join us!
