As a decentralized blockchain platform, Agoric boasts an active on-chain governance system: a process for community-owned decision-making. It empowers those who hold and stake BLD, Agoric’s native token, to have a say in Agoric’s future development, initiatives to be funded via its community fund, and applications to be built on top.
Agoric’s governance process is similar to the one embraced by other Cosmos blockchains, though it comes with its specifics. Striving to streamline Agoric’s on-chain governance and educate newcomers to the community, DCF has drafted a short how-to guide. We’d also like to use this opportunity to introduce CosGov, a DCF grantee building a governance tool for the Cosmos ecosystem.
Fundamentals of Blockchain Governance
Governance in the context of blockchain systems is characterized as inherently decentralized, permissionless, and transparent. Its main objective is to involve as large a part of the community as possible in the process of pushing the project’s development in the most favorable direction. Thus, every community member is welcome and even encouraged to participate.
Accordingly, blockchain governance consists of several phases. For an idea to be implemented on-chain, whether that is a parameter change, a community fund spending, or a new dApp launch, it is usually expressed as a proposal first and submitted for discussion. Once the deliberations have ended, the proposal can be put to vote by token holders or stakers. If passed, the voting results can serve either as a signal of community preference, or as the basis for enacting protocol modifications.
Agoric Blockchain Governance
Everything described above is valid for the Agoric chain, although as every other blockchain, it also comes with its pre-defined governance parameters and rules. Let’s break down what’s specific about Agoric’s case.
Community Discussion
A governance proposal usually starts with a community discussion. It may concern various topics, and it could be initiated by any community member or a group of members.
Where does it take place? Community discussions are traditionally published on the Agoric Discourse. However, ideas and proposals are also being constantly discussed on Discord, Telegram, or other places where the Agoric community members interact.
Timeframe: Although it is not explicitly formalized, it is recommended that any governance proposal on Agoric stays open for discussion for at least 10 days, before being put to vote.
Types of Proposals and Votes
The type of proposal would depend on the goals it is trying to achieve. What do we mean by that? Some changes may only be implemented via a network upgrade, and thus, require more development work, whereas others entail simpler cosmetic changes. Thus, Agoric supports several types of proposals. They are:
- Text (Signaling) Proposal
- Community Fund Proposal
- CoreEval Proposal
- Parameter Change Proposal
- Software Upgrade Proposal
- Text (Signaling) Proposals
Signaling proposals are used to make an on-chain record of support or agreement on a certain topic or idea. Text proposals do not contain any code and do not directly cause any changes to the Agoric chain.
Signaling proposals are a great way to take an official, public poll of community sentiment before investing more resources into a project. A dev team interested in a feature might have a better idea of how their work will be received by the community, and whether the community would actually be interested in what they want to develop or push through.
If a signaling proposal is passed, then it indicates that the community wants to proceed with allocating resources to pursue the proposed change, upgrade, or addition. If not, then the proposal champion would need to continue the discussion in the forum or submit a new version of the proposal. Whether a proposal passes or fails, it provides valuable information about the community’s inclinations. It also boosts the community’s confidence and alignment with the direction of development. Because the results of signaling proposals remain on-chain and are easily accessible to anyone, they are also a good way to formalize community opinions.
- Community Fund Spend Proposal
This is a governance proposal that arranges spending funds from the Agoric community pool. Historically, discussions submitted in that category concerned proposals on the Community Fund Policy and the budget allocated to Inter Protocol’s Economic Committee.
Usually, the number of BLD to be transferred from the community pool and the receiving address are both encoded in the proposal. If a community-spend proposal passes successfully, the transfer is executed immediately after the voting period ends.
- CoreEval Proposal
CoreEval is an Agoric extension to Cosmos SDK Governance to propose that one or more Hardened JavaScript scripts execute with privilege. This type of proposal is used for deploying new smart contacts and dApps, or adding new features to existing Agoric applications. A successful CoreEval vote inflicts automatic code execution, and that’s why it’s recommended that such proposals are deployed first on testnet, and then on the Agoric mainnet.
Having in mind the automatic execution of CoreEvals, and that dApps are typically built by third-party developers, the Agoric team has come up with the Mainnet 2 Deployment Checklist. It aims to make sure that all new contracts meet a pre-defined set of requirements before being deployed. The checklist includes items owned by both the reference partner and Agoric OpCo, consisting in pre-launch preparations, reviewing, and ensuring the deployment readiness.
In the past, CoreEval proposals have been used to onboard USDC and USDT to Inter protocol as Parity Stability Module (PSM) collaterals, and stATOM and stkATOM as vaults collaterals. A CoreEval was submitted to address some high-value bug fixes and upgrade Inter Protocol’s VaultFactory contract, as well as to update Smart wallet to support NFTs.
- Parameter Change Proposal
This is a governance proposal to change chain configuration parameters, as each chain has a different set of parameters open to governance amendments. If a parameter-change proposal is successful, the change takes effect immediately upon completion of the voting period.
Parameters are what govern many aspects of the chain’s behavior. As circumstances and attitudes change, a vote if often required in order to edit a parameter to bring the chain’s behavior in line with community opinion.
However, because parameters dictate the ways in which the chain operates, changing them can have an impact beyond what is immediately obvious. For example, at first glance, the reduction of the unstaking period seems to only concern how quickly delegators can liquidate their assets. In reality, it might have a much greater impact on the overall security of the network. This is one of the reasons that having a thorough discussion before going on-chain is so important: talking through the impacts of a proposal is a great way to avoid unintended effects.
- Software Upgrade Proposal
Software upgrade proposals signal that an Agoric release with new features, bug fixes, and various other improvements is available and ready for production deployment. Although the development team tasked with stewarding the Agoric chain is the one releasing new protocol versions, it is the validators who submit the software upgrade proposals to mainnet. Most often, a validator also participates in the new release’s testing.
Voting and Voting Parameters
Once the discussion period is over, the voting phase can start. Yet, there are a number of requirements, or voting parameters, that need to be met first. Such parameters exist in all blockchain governance systems and are fairly similar across Cosmos chains.
- Deposit
With the aim of preventing spam, the proposal champion is asked to deposit a certain amount of native tokens in order to publish a voting proposal. As long as the proposal is not considered a spam, that deposit is given back after the start of the voting period. In the case of Agoric, the minimum amount that needs to be deposited is 5,000 BLD, and it is locked for a minimum of 2 days.
- Voting period
Getting people engaged with governance matters is traditionally a serious challenge for all blockchain protocols. The community who have the time to consistently keep track of a project’s development and every new idea put to vote is consistently narrow. With the aim of attracting a larger portion of community members, and thus ensuring the legitimacy of the vote, a voting period of minimum 3 days is required.
- Voting Options
Of course, community members can vote with ‘Yes’ or ‘No’, and approve or reject a proposal, respectively. Though, Cosmos voters, including Agoric ones, have a few more options:
- Abstain: that vote signals that the voter is engaged with the outcome, but does not feel strongly enough about either approving or rejecting it;
- No with veto: that vote signals that the whole premise of the proposal is being rejected. It indicates a much stronger opposition to the presented idea than a simple ‘No’ vote. In some cases, a ‘No’ vote may suggest that the proposal needs optimizing or minor tweaks, after which it can be put to vote again. On the other hand, a ‘No with veto’ vote means that the community opposes the suggestion altogether.
The ‘No with veto’ option serves one more purpose: it provides a mechanism for minority holders to reject a proposal they deem unfavorable or detrimental to the protocol itself. If one third of the total voting power, i.e., all staked BLD, excluding the ‘Abstain’ votes, opt for ‘No with veto’, a proposal cannot pass.
An important remark here is that a No-with-veto outcome results in the voting deposit getting burned. If a proposal gets vetoed, it would most likely be considered harmful for the community, so that measure is put in place in order to disincentivize such initiatives.
- Quorum and Threshold
Similarly to legislative elections, for instance, the legitimacy of a blockchain governance process would be questioned if only a small percentage of the potential voters have expressed their will. Thus, Agoric has put in place a quorum of 33.40%, meaning that if less than one third of all BLD stakers have participated, a proposal cannot pass.
33.40% is also the threshold for a proposal to be vetoed, whereas an approval naturally requires at least half of all votes to be affirmative.
Where to vote: Stakers and validators can vote by connecting their wallets through the Ping.pub’s Agoric dashboard, or directly in Keplr, Leap, and Comsostation wallets.
Where to monitor votes: The Nodes Guru Explorer and Mintscan are both useful monitoring tools.
DCF Introducing CosGov: Cosmos Governance Made Easy
Carrying out our mission to support and help expand the Agoric and Cosmos ecosystems, DCF has provided a grant for the development of a unified Cosmos Proposal Builder. It is a pleasure for us to reveal CosGov, a Cosmos network tool offering a straightforward interface for publishing governance proposals.
CosGov was established with the mission of equipping all Cosmos network advocates with a simple web UI for launching on-chain proposals. Thanks to the financial help provided by the DCF, CosGov currently supports Agoric and Inter Protocol, although its functionalities can be easily extended to other Cosmos chains.
At the moment, Agoric community members can use CosGov to publish various types of proposals. They can initiate Text, CoreEval, Parameter Change, and Community Pool Spend proposals, both on Agoric mainnet and testnets. Additionally, they can make direct changes to Inter Protocol’s Parity Stability Module (PSM) and Vaults mechanisms, by proposing to onboard new collateral assets.
How does it work? Here’s a walkthrough:
- Choose between Agoric and Inter Protocol, depending on the type of proposal you want to publish;
- Select a network (testnet or mainnet);
- Connect a wallet, if not automatically connected;
- Select a proposal type to create;
- Verify your wallet has the deposit amount available;
- Add the required information and links to community discussions;
- Submit the governance proposal.
Governance is an essential component of every blockchain ecosystem, but as everything else in Web3, the process of on-chain decision-making continues to evolve. We at DCF are committed to supporting every initiative that makes governance easier, more transparent and straightforward for the community. We are eager to see more Cosmos protocols and ecosystems recognizing CosGov as an efficient governance and community-building tool, and offering it as a public good to their respective communities.
For more on Agoric, check out our previous blog post Agoric Orchestration API: The Key to Cross-Chain Interoperability for the Entire Crypto Space
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