Except by Consent of the Governed
stablecoin holders and vault depositors need governance rights
too long, didn’t read
VOLT will be the only stablecoin whose users can veto unwanted changes to their protocol
okay, i’ll read it
Smart contracts are closest thing to an absolute guarantee of property rights ever produced by human ingenuity — unlike laws, there is no room for interpretation, only literal execution.
Yet, almost every decentralized financial application so far devised is structured like a shareholder corporation, where the governance token holders depend on a limited body of experts for practical decision making, and depositors have no say whatever in how the system is run.
Volt Protocol will be different by combining two principles:
- market governance, which means that wherever possible, system parameter changes should be responsive to market behaviors, not by vote
- checks and balances, such that when changes are made to the system by vote, all stakeholders have an ability to dissent or protect their own rights
This article is focused on the latter. Volt Protocol is developing a veto module that will allow VOLT stablecoin holders, or their delegates, to veto changes proposed by governance.
If VCON holders propose a selfish action like lowering the minimum surplus buffer size or onboarding a risky but high yield venue, VOLT holders will be able to reject this change.
VCON holders will also have a separate veto module, so that to pass a change, not only is a majority of VCON required, but that neither too many VCON or VOLT holders object.
Veto rights do create risk of deadlock, in which a hostile minority prevents necessary changes. Since the VOLT supply is capped in the early period, the quorum threshold can be set high enough to prevent this concern.
In a future version, an escalation process will be added such that if a proposal is initially vetoed, it can be submitted to a slower timelock with a higher veto threshold. For example:
- a fast timelock might have three days until proposals can be executed and require a quorum of 5% of the VOLT supply to veto
- a slow timelock might take two weeks until proposals can be exeucted and require 20% of the VOLT supply to veto
Attention is a scarce resource, and it’s unrealistic that most stablecoin holders will participate directly in governance. The goal of the veto module is that a minority who are paying attention and guarding their interests will benefit all VOLT users.
To support this goal, Volt Protocol is planning an incentivized VOLT delegate program. The program will likely begin after the initial veto module is complete. If this interests you, stop by our Discord or the community forum to discuss and keep track of updates.
We hope to see a general easing of the boundary between owner and user in cryptocapital systems over time. Read a closely related discussion in the LIDO forums for more on bicameral or dual governance in DeFi.
