---
tags: Sovryn
---
# Governance Brainstorming

title: Governance Brainstorming
author: Ponjinge
discussions-to: Sovryn Discord
status: In discussion
type: Meta
category: Governance
created: 2020-10-14
requires: N/A
replaces: N/A

## Simple Summary

## Resources
https://medium.com/@Vlad_Zamfir/against-on-chain-governance-a4ceacd040ca
https://vitalik.ca/general/2017/12/17/voting.html
https://vitalik.ca/general/2018/03/28/plutocracy.html
https://vitalik.ca/general/2018/08/07/99_fault_tolerant.html
https://medium.com/giveth/conviction-voting-a-novel-continuous-decision-making-alternative-to-governance-aa746cfb9475
https://bzx.network/blog/introducing-bzxdao
https://www.jofreeman.com/joreen/tyranny.htm#Top
https://medium.com/compound-finance/expanding-compound-governance-ce13fcd4fe36
https://medium.com/compound-finance/compound-governance-5531f524cf68
https://hackmd.io/R7SAHT1kTw6ni6eaYheVvg (HIP 8 Ham Protocol)

## Governance Problems

**Participation (extremely low):**
smaller fish abstain from voting

**Shadow voters:**
votes cast by a token holder with no economic stake in the protocol through the use of flash loans to abuse governance (can be at virtually no cost in the worst case using one single atomic transaction)

**Plutocracy:**
-identity servers as a deterrent in voting as the cost of identification or KYC can significantly raise the amount required for trying to pull of sybil attacks, if quadratic voting was ever put in place
-risk of collusion with linear voting to drain the funds

**Cartels and Bribes:**
(in a representative democracy governance model) elected multi sig key holders can either obey one of two equilibriums, Nash (where everyone competes against each other) or Cournot’s (collusion) , Cournot is the most profitable long term, therefor it can appear spontaneously at any given time

## Compound's Governance
#### Rationale
Create financial infrastructure that apps and devs can rely on forever, removing the largest single point of failure that is the team. Making the protocol indestructible and open that can evolve by itself.

### How it functions:
1% of COMP required for proposals = executable code
All proposals are subject to a 3 day voting period, requires a majority and at least 400 000 votes for a proposal , it is then queued in a timelock for 2 days before implementation

This gov framework can be subject to change by voting to replace it using governance
Extremely simple and straightforward both in concept and in code.

## Bzx DAO
#### Rationale
Governance is regarded as not only hard, but potentially impossible
**For them it means:**
-Restricted mutability = only though consensus, with no arbitrary actions permitted
-Inexorability = unstoppable/uncensorable
-Self-perpetuance

### Three main branches:
#### The Legislative:
3 representatives
-voted by token holders (can change vote anytime) using staking to nominate
-makes proposals, that must still pass by a majority vote
-approves upgrades and critical parameters of governance

#### The executive:
2 Leads of core developers
-lifetime role (replaced by vote and agreement of executives themselves)
-serves to simply check on legislative (no legislative power)
-power of veto

#### The judicial:
The smart contract

### Economy of Staking :
in order to earn fee sharing rewards, token holders must deposit their funds in governance and stake to a representative . -> get rewards through generation of protocol fees

Encourages participation and also makes it so that you stake to a representative that is qualified and knowledgeable and is active and has high visibility in the community

## Comparison

## Thoughts
After witnessing the many shortcomings of many fully decentralised governance protocols, that have attempted to define hard limits on what their governance can do, I am reminded of the words of Vitalik Buterin on the subject of governance and the idea of having what he called “digital constitutions” protecting certain core aspects of a project. A point made by him which I still consider relevant to this very day:
> In general, the idea of having norms about protocol properties, and having these norms serve the function of one of the coordination flags, is a very good one. This allows us to enshrine core properties of a protocol that we consider to be very important and valuable, and make them more difficult to change. […] Basically any meaningful norm is actually quite hard to express in its entirety; this is part of the complexity of value problem. This is true even for something as seemingly unambiguous as the 21 million coin limit. Sure, one can add a line of code saying assert total_supply <= 21000000, and put a comment around it saying "do not remove at all costs", but there are plenty of roundabout ways of doing the same thing. For example, one could imagine a soft fork that adds a mandatory transaction fee this is proportional to coin value * time since the coins were last sent, and this is equivalent to demurrage, which is equivalent to deflation. One could also implement another currency, called Bjtcoin, with 21 million new units, and add a feature where if a bitcoin transaction is sent the miner can intercept it and claim the bitcoin, instead giving the recipient bjtcoin; this would rapidly force bitcoins and bjtcoins to be fungible with each other, increasing the "total supply" to 42 million without ever tripping up that line of code. "Softer" norms like not interfering with application state are even harder to enforce.

### Solution, Supervised Governance:

When we consider the idea of having a governance model in which a group of elite have the power to reign in the power of voters, we must be warry of the possible dangers that could occur in said model. Ignoring the possible workarounds described earlier, the governance code of a protocol will define Hard limits to what governance can do, limiting governance to certain roles and a certain place in the protocol.

In a model where a group of elites (being community ambassadors or the core dev team and sometimes a mix of both) detain powers that serve executive roles of governance, this group is able to define and modify at will, Soft limits to what governance is able to do.

This is mostly seen in the forms of giving these members the right to veto proposals that they consider malicious or out of line. In Bzx’s model, the actual governance is done by voting for representatives that are considered the most capable to make decisions and that have a very active role in the community, these representatives serve a legislative role of making proposals and approving them also. These two methods can help against participation issues regularly seen in DeFi, when voters are not well informed enough about issues to be incentivised to vote, by allowing them to simply vote for the representative in which they believe in, voting is rendered simpler and easier. Furthermore, vetoing can be a legitimate defence against plutocracy. Albeit are still problems with this way of governance, luckily Vitalik is here once again on the subject:

> However, I am also not willing to go the other way and say that coin voting, or other explicit on-chain voting-like schemes, have no place in governance whatsoever. The leading alternative seems to be core developer consensus, however the failure mode of a system being controlled by "ivory tower intellectuals" who care more about abstract philosophies and solutions that sound technically impressive over and above real day-to-day concerns like user experience and transaction fees is, in my view, also a real threat to be taken seriously […] In blockchain governance, it seems like this is the only way forward as well. The approach for blockchain governance that I advocate is "multifactorial consensus", where different coordination flags and different mechanisms and groups are polled, and the ultimate decision depends on the collective result of all of these mechanisms together. These coordination flags may include:

> • The roadmap (ie. the set of ideas broadcasted earlier on in the project's history about the direction the project would be going)

> • Consensus among the dominant core development teams

> • Coin holder votes

> • User votes, through some kind of sybil-resistant polling system

> • Established norms (eg. non-interference with applications, the 21 million coin limit)

> I would argue that it is very useful for coin voting to be one of several coordination institutions deciding whether or not a given change gets implemented. It is an imperfect and unrepresentative signal, but it is a Sybil-resistant one - if you see 10 million ETH voting for a given proposal, you cannot dismiss that by simply saying "oh, that's just hired Russian trolls with fake social media accounts". It is also a signal that is sufficiently disjoint from the core development team that if needed it can serve as a check on it. However, as described above, there are very good reasons why it should not be the only coordination institution.

### Note:
governance can be done like this in many ways, after extensive research, it is my belief that any kind governance implemented for Sovryn should differentiate between the desires of the devs and the desires of the voters. Either having a model where core team members hold a supervisory position to make sure that no malicious protocols are passed, or having this but also an elected group of devoted Sovryn thinkers and community members (that can also be devs, just not the same ones) that serve a legislative role representing the people, with the idea of bringing together the brightest minds in the space to converse and share ideas whilst still representing the will of the people.
I also pondered upon the idea of the executive being able to dissolve the legislative branch, but that would introduce a whole new world of problems, history has shown that this is a bad idea, with the French 4th Republic having 24 governments formed in only 9 years in which some lasted only a day.

### Making a sybil proof voting system
https://medium.com/giveth/conviction-voting-a-novel-continuous-decision-making-alternative-to-governance-aa746cfb9475

## Decision

## Copyright
Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).