What is Tokamak DAO?
(1) What is Tokamak DAO <- Here
(2) Tokamak DAO smart contract
(3) DAO user interface and its use
- Decision-making model: Indirect vote
- Protocol upgrade: Soft fork vs Hard fork
- Committee, candidate and proposal resolution
- Additional reference 1 — Terms
After a long development, Tokamak DAO, a decentralized autonomous organization of the Tokamak Network, was launched. Tokamak DAO is defined as a smart contract system and autonomous organization built on a blockchain that allows holders of Tokamak Network token(TON) to directly participate in decision-making on major agendas that affect the ecosystem of Tokamak Network. Tokamak DAO allows the holders exert direct or indirect influence on almost all parts of Tokamak Network from crypto economics related issues like inflation, issuance, incineration, PowerTon, to technical issues such as staking and protocol upgrades. This post includes all the matters related to Tokamak DAO, from why we need DAO to actual usage with knowledge about its structure and operation mechanism. Along with the launch of Tokamak DAO, we expect to deliver accurate information to the participants of Tokamak Network ecosystem.
1. Purpose and significance of Tokamak DAO
1.1 Decision-making model : Indirect vote
Tokamak DAO can be defined as a decision-making body that can determine the key specifications of smart contracts of Tokamak Network. Specifically, users holding Tokamak Network Token(TON) delegate the tokens to trusted representatives, and the elected representatives form a committee. An agenda is made to be accepted or rejected based on consensus between committees.
This can be seen as a kind of indirect voting method in which the voting rights of the token are delegated to the representative, and in terms of the election method itself, the process of selecting the top 21 nodes of validators in the EOS blockchain, or the voter’s agent in the democratic system. It can be viewed as very similar to the National Assembly, which elects and carries out legislative activities.
1.2 Protocol upgrade : Soft fork vs Hard fork
Layer 2 can be seen as one of several decentralized applications (DApps) from the perspective of Layer 1 (Ethereum). The application that performs transaction processing and verification was created for the purpose of securing scalability. In this respect, the Tokamak network ecosystem itself can be viewed as one huge software (DApp).
All software evolves to accommodate different needs as users grow. It’s a process called update or upgrade. The software called Tokamak Network should also be upgraded appropriately according to the time and environment. DAO can be considered as the decision-making body that makes all the matters concerning the upgrade.
The important point here is why we introduced complex decision governance such as DAO for feature updates. From the conclusion, it is because unlike other general software, it has the unique characteristic of consensus that a public blockchain has.
Unlike other software, blockchain generally goes through a consensus process. If users don’t fully agree, two different versions of the software may exist at the same time. This is called a fork in blockchain Ethereum and Ethereum Classic, Bitcoin and Bitcoin Cash can be examples.
There are two ways of fork, soft fork and hard fork. Details about the conceptual differences between the two are not covered in this article (a reference attached). The important point is that Tokamak Network is choosing DAO, a majority vote model, as its governance model for software upgrades, which is more of a soft fork.
As an upgrade method, neither the soft fork nor the hard fork has a complete absolute advantage. Each has its own pros and cons. However, the reasons for choosing soft fork as a method of improving the Tokamak protocol are as follows.
- Even if a soft fork is selected, a hard fork is still possible (token snapshots, etc.).
- If ecosystem participants with minority opinions suffer due to the tyranny of the majority, they can leave the ecosystem at any time (token selling at free will).
- Token economy design of Tokamak is initially designed for the development team to have a strong influence, so it has similar characteristics to the hard fork, but later changes to a form where the characteristics of the soft fork are strengthened, and the advantages of both hard fork and the soft fork can be taken.
- Tokamak DAO encompasses the advantages of both the hard fork and the soft fork. Initially, it has similar characteristics to a hard fork, but it was designed to gradually transform into a soft fork. In the early stages of protocol development, there are many development improvements, so the influence of the development team can be high.
Agenda is a kind of proposal that contains suggestions to improve the protocol of Tokamak Network. Anyone can come up with an agenda, and the committee decides on the agenda.
Agendas have two types, A and B. Type A are agendas related to staking, inflation, and the use of the tokens DAO holds (17.5 million TON). Type B is a collection of engineering agendas related to upgrading smart contracts of Tokamak Network, such as the staking smart contract and the setting of permissions between the contracts. Group A agendas mainly deal with economic issues, while Group B agendas mainly deal with smart contract systems.
Type A agendas are expected to be created through the process of forming public opinion in the Tokamak community, and Type B’s agendas are expected to be mainly created by the Tokamak development team.
A certain amount of TON is required to create an agenda in case of a DoS attack that causes a lot of unnecessary agendas, making it impossible to handle important agendas. The initial cost is set at 100 TON, and even adjusting this cost can be proposed as an agenda.
1.4 Committee, Candidate and Agenda Resolution
A committee is a group that has the power to vote for or against previously established agendas. In order to occupy a committee seat, you must first be a candidate, and among them, you must be delegated (supported) with a significant amount of TON. To be precise, a candidate who has staked or delegated the most TON can take a seat, and more precisely, if more TON are delegated than the existing committee member, the new candidate can occupy the seat by Challenging.
To be a candidate, you need to stake a minimum of TON. The initial setting is 1,000 TON, and the token will not be returned unless the setting value is changed. However, interest incurred from these staked TON can be received permanently. The amount of tokens that must be staked to become a candidate can also be adjusted through an agenda.
You have to pay at least 100 TON to create an agenda. Once an agenda is created, it is announced for a certain period of time from the date of creation of the agenda making it a public agenda for anyone. This period is called the Minimum Notice Period, and at the end of this notice period, an agenda committee is formed. Members of the agenda committee will be confirmed as members of the DAO Committee at the end of the Minimum Notice Period.
The members of the Agenda Committee and DAO Committee may vary from time to time. This is because the members of the DAO Committee may change in real time depending on the amount of TON delegated and/or staked. But the Agenda Committee will be confirmed when the Minimum Notice Period is over. DAO committee member changes after confirming the Agenda Committee can be an example. The detailed logic related to this can be found in the next post <All about Tokamak DAO (2) — Smart Contract>.
Additional reference 1 — Terms
- Tokamak DAO: A smart contract that makes decisions on the main agendas of Tokamak network.
- Agenda: Proposals on changes to policies and variables affecting the Tokamak Network ecosystem.
- Agenda propose cost: The amount of TON that must be paid (burned) to create an agenda.
- Operator: The entity that creates and verifies the layer 2 blockchain. In particular, the operator in DAO is mainly the operator who creates the layer 2 block.
- DAO committee: An operator who can exercise voting rights on an agenda.
- Committee member: Each operator on the committee.
- Committee slot: A committee slot can be empty or occupied by someone. In order to occupy a seat, a larger amount of TON must be staked/committed than the existing committee member.
- Agenda member: A group of operators who can vote on the agenda after the agenda minimum notice period has elapsed. As soon as the minimum notice period of the agenda is over, members of the DAO Committee are immediately appointed as the agenda members.
- DAO Reward: Operators commissioned to the DAO Committee can receive a certain amount of TON of activity subsidies as long as they maintain their membership. The source of the TON is covered from the portion deducted from the portion of the TON issued additionally through staking.
- Challenge: If a slot is empty the Dao Committee or someone has staked/delegated a greater number of TON than the existing members, he/she can challenge the slot and take it.
- Maximum slot: The maximum number of operators that can belong to the DAO Committee.
- Quorum: The minimum number of votes in favor that must be received from agenda members in order for the agenda to be resolved.
- Passed and rejected: Agendas approved by more than the quorum are passed, and those that fail to fill the quorum are rejected.
- Yes / No / Abstain: Agenda members may exercise a vote of yes, no, or abstain on the agenda. Only votes in favor are recognized as the quorum for the agenda to be passed.
- Minimum notice period for agenda: The period of time between agenda creation and the agenda member formation. The agenda member is not confirmed until the agenda minimum notice period expires, and the members of the DAO committee are appointed as agenda members of the agenda at the end of the notice period.
- Voting period for agenda: After being commissioned, agenda members must vote on the basis of their pros and cons within the agenda voting period. The vote will be withdrawn if not voted within the voting period.
- Candidate, Operator: All candidates are operators, but not all operators are candidates. The operator is the entity responsible for the production and verification of the block of the layer 2 blockchain, and shares the TON seigniorage that occurs during the layer 2 block creation process by delegating the token from TON holder. Candidate is a special type of operator, and because it creates and commits an empty block, it does not produce and verify the block, but it is the same in that it can receive additional issuance tokens by delegating tokens, and also participates in Tokamak’s governance. In order for an ordinary layer 2 operator to become a candidate, a separate registration process is required.
- Supporters, delegators, and stakers: Supporters, delegators, and stakers are the same in that they delegate their own TON to a specific operator. The delegate can regularly receive newly issued TON in proportion to the delegated token quantity, and this quantity is also the same. However, the reason why this is expressed in various terms is because what TON holder as a delegation needs to think about is slightly different. The delegation of TON as a supporter aims to find the candidates who can make the best decisions for the ecosystem. For the TON delegate or staker, it is more important whether the operator is reliable enough to produce the correct block.