From Idea to On-Chain: Journey of a TrueFi Gov Proposal
As TrueFi becomes increasingly owned and managed by its community, learn to drive changes to the protocol by following this guide
TrueFi has always been shaped by its community, and following the unanimous Snapshot vote to launch on-chain voting, is now officially in the hands of stkTRU holders and one step closer to becoming a publicly owned & operated financial utility for global lending.
Now, with a formal governance process that removes the TrustToken team as an intermediary to protocol design decisions, the stage is set for the community to drive its shared vision for TrueFi through discussion, consensus-building, and working group contributions — all supported by a foundation and board acting for the best interest of TrueFi users.
In this blog, you’ll learn the mechanics for joining TrueFi as a contributor and participating in governance motions both on and off-chain. By the end of the post, we hope you’re confident in taking an idea all the way to a Tally vote — but for any questions not answered here, or to find proposals ready for your contributions, join our Discord.
In Summary: On-Chain Governance
On-chain governance moves the control of the TrueFi protocol away from the centralized business entity of its founding team and into the hands of stkTRU holders. This is accomplished by using public and token-gated discussion paired with binding on-chain voting — currently the most simple and reliable standard for decentralization.
The journey to full decentralization is a long one, and on-chain governance is seen as just the first of multiple steps to setting a fully community-owned TrueFi up for success. Though the journey of decentralization continues, and a truly community-driven TrueFi effectively operated by its DAO is still in its earliest stages, a good understanding of protocol governance is key to becoming an effective contributor.
Step One: Discuss in Discord
TrueFi’s governance process often starts in Discord, a text and voice chat app popular among Web3 communities. Home to thousands of TrueFi members, regular public Town Halls, and some of the best TrueFi alpha anywhere, the best of this Discord community is token-gated to verified stkTRU holders.
Since stkTRU is the governing token of TrueFiDAO, verifying staked TRU in Discord using Collab.Land is required to access TrueFi’s official DAO channels and working committees, where much of the important work driving TrueFi forward happens.
What is stkTRU?
Staked TRU or “stkTRU” represents a TRU token that has been staked on app.truefi.io/stake. stkTRU holders contribute to the security of the TrueFi ecosystem by assuring the protocol against defaults in exchange for incentives and protocol fees. Because stkTRU aligns users’ incentives with the protocol’s long-term performance, it’s our belief users who stake their tokens in the TrueFi protocol should have the greatest influence on its direction.
Verifying your stkTRU and joining the TrueFiDAO is straightforward. In Discord, use the integrated Collab.Land bot in the #verify-stktru channel.
The graphic below outlines the process step-by-step. You will never be asked for your private key, neither during the verification process nor at any time in the TrueFi Discord.
TrueFi DAO Committees and Working Groups
Within the DAO you’ll find a number of working groups we call committees: autonomous groups of contributors tied together by their conviction in TrueFi (and their TRU holdings) collectively acting in the best interest of TrueFi, within a specific area, with defined decision-making powers and, in some cases, dedicated funding.
The motivation behind establishing the first DAO committees is to offer a home for contributors to have certain discussions and make concrete contributions based on their talents and interests, while also growing the transparency of business being done on TrueFi’s behalf.
All verified TrueFi DAO members can view all public committee discussions, but only those who have joined the specific committee will be able to participate in that working group’s business.
The First DAO Committees
While these starting committees are simply a good faith effort of following the best practices of other DAOs we admire while considering TrueFi’s unique needs (such as the need for an underwriting group for DAO pools), committees may be added or removed, and their scope of work may change based on the needs of the DAO.
Allocations Committee — Considers new borrowers and loans and sets the methodology for borrowing on TrueFi for DAO-managed pools.
Policy Committee — Designs and discusses governance, legal, and structural changes to TrueFi.
Dev Committee — Oversees the technical architecture of the protocol, including smart contract development and security, with power to keep the protocol safe from potentially harmful upgrades.
Treasury Committee — Manages and makes disbursements from the TrueFi DAO treasury.
Tokenomics Committee — Responsible for the design of the economics, utility, and analysis of the TRU and stkTRU tokens.
Partnerships Committee — Sources and manages win-win relationships with prospective TrueFi collaborators.
Marketing Committee — Promotes, educates and informs the public and our existing community about TrueFi.
It is in these working groups that new ideas are discussed to build consensus and refine the idea before a formal proposal, such as changes to tokenomics or substantial treasury allocations.
Once an idea is firmed up in the DAO working groups, it makes its way to the TrueFi forum.
Step Two: Propose in the TrueFi Forum
The TrueFi forum is the hub for TrueFi proposals, built on the Discourse app. It serves as a public home for reasonably well-scoped proposal that are then discussed critically and at some length, to guarantee all ideas that eventually impact TrueFi are as considered as possible.
Most proposals, like the addition of new portfolio managers or borrowers, as well as treasury funding requests, follow certain recommended templates. It’s advise each proposal detail start with a summary of the proposal, offer some background on how the proposal was generated, detail any important considerations for discussion, and finally outline the implication of approving or rejecting the proposal.
Each proposal is subject to a three to five day discussion period culminating in a non-binding poll, usually “For” or “Against.” If a favoring vote, the idea heads to the next stop in the governance journey, Snapshot.
Step Three: Signal on Snapshot
Anyone with a forum account can vote on forum polling, while Snapshot polling counts votes based on the stkTRU balance of a holder’s wallet. Creating a proposal on Snapshot requires a minimum of 10K TRU.
The length of a Snapshot vote is between three and five days, giving ample time to gather votes. Snapshot votes require a quorum of 15% of stkTRU circulating supply. If the vote signals a positive result, an stkTRU holder can create an on-chain proposal that contains transaction details for the desired outcome.
Of course, anyone can skip these steps and go directly to an on-chain proposal, but the community will likely disfavor these proposals as they have not been thoroughly vetted.
Proposals with no on-chain component, such as changes to the board serving the TrueFi Foundation, will not need to move to on-chain voting. Instead, the Snapshot vote will be regarded as the final, binding outcome.
Step Four: Vote On-Chain
Forum and most Snapshot polls are non-binding, while on-chain proposals fully execute if approved. After creating an on-chain proposal, all stkTRU holders are allowed to vote to execute the transaction payload. While anyone can complete the first three steps of a proposal’s governance process, specific parameters are required for the on-chain vote.
Creating an On-Chain Proposal
On-chain voting is handled using OpenZeppelin standard Governor smart contracts and the Tally front end. To prevent governance attacks, problematic code merges, and pure negligence, the TrueFi governance process is supported by several controls at both the smart contract and operational levels.
Submission of a proposal to a binding on-chain vote will require the author to hold a minimum of 100,000 stkTRU. After naming the proposal and providing needed context for voters, actions for the proposal will execute by entering the contract address and inputting the calldata data.
For an on-chain proposal to pass, it must meet a minimum quorum vote of 15% of all outstanding stkTRU tokens and a final approval threshold of more than 50% of votes cast.
Voting Delegation
Conducted in Tally, voting delegation delegates the entire balance of one’s stkTRU wallet to a designated account. If additional TRU is staked, the entire balance will still be delegated to that account. A user needs only to delegate once or re-delegate to another voter if they change their mind.
What is delegation?
Participating in governance requires commitment to remaining informed and engaged. For this reason, stkTRU holders can delegate the voting power of their tokens to a community member who has explicitly volunteered to play an active role in governance, and whose platform they align with. These volunteers are called delegates.
When you delegate your voting power, you retain 100% ownership of your tokens and can use them however you want. You may change your delegate selection at any time.
What does delegation mean for my tokens?
When you delegate the voting power of your tokens, you retain 100% ownership of the token itself. There are no changes to the way you use or hold the token.
Who should I choose as a delegate?
You can choose anyone who you believe will participate in governance and can represent what you want this ecosystem to become.
You can see each delegate’s statement of interest by clicking on their tile. You may also delegate to any address using the input field to the top-left.
You can explore some of today’s delegates on the forum here.
How do I change this later?
Delegation is always in your control. You can return to this page at any time to change your delegate selection, or to re-delegate voting power to yourself, using Tally.
An example of vote delegation can be seen at this link.
If a proposal passes, the transaction is queued in a Timelock smart contract which allows for automatic on-chain execution after two days.
Veto Power of the DAO Board
The DAO Board is elected by the DAO members to serve as the TrueFi Foundation’s Board of Directors. These individuals will serve terms set by the DAO members and will be responsible for managing the DAO’s off-chain responsibilities. The DAO Board will control the DAO Board Multi-Sig that can be used to veto governance proposals during the 2-day timelock window. Vetoed proposals can always be amended and re-submitted after collaboration with the DAO Board.
The full governance process from the initial idea in Discord to an on-chain vote is estimated to take 1–2 weeks from start to finish.
Closing Thoughts
The launch of on-chain governance marks a huge milestone in TrueFi’s journey to full decentralization. By moving control into the hands of our users, TrueFi’s composable lending infrastructure is robust and resilient, making it one step closer to becoming a trillion-dollar open-source protocol.
Are you interested in supporting the development of the TrueFiDAO and helping shape a vision for its future? Head over to the DAOs Discord and get your idea on-chain.
