Our new Threshold Network will offer the best of what the Keep and NuCypher networks offer today. As our communities continue to merge, we’ll need a single community DAO to govern the new network.
There are two major constituencies in the Threshold Network: active stakers and token holders. Both NuCypher and Keep governance today privilege active stakers at the expense of the voices of other token holders.
We’d like to propose a bicameral DAO with an elected multisig council to govern the new network, addressing both groups of stakeholders and better aligning all participants. The DAO, based on Compound’s GovernorBravo, will give the bulk of governance power to active stakers, with the exceptions of
- treasury management,
- token issuance,
- governance system changes,
- staking rewards management.
This design follows the principle that no party should be trusted to “vote themselves a salary” and implements meaningful checks on power within each portion of the network’s governance. Stakers are the best positioned party in the network to approve contract upgrades and other changes relevant to applications on the network, and are required to be highly engaged to mitigate slashing and other concerns. All token holders, including stakers, LPs on AMMs , CDP holders, and anyone with committed asset exposure, should maintain the “power of the purse".
The goal of this system is to enable the combined Threshold community to propose, vote on and implement changes that support and improve the upgraded network.
This DAO will be implemented using two instances of GovernorBravo and a separate multisig council.
For those unfamiliar, GovernorBravo is the latest iteration of Compound’s DAO, used to power Uniswap and a number of other projects in the space. Documentation for the contracts can be found here.
Token holder DAO
The first instance of GovernorBravo will be the token holder section of the DAO.
T holders will be able to add proposals on-chain, delegate votes, and execute proposals. If possible, GovernorBravo will be modified to include governance power for T LPs and other wrapped variants that have alignment with the project.
The token holder DAO will manage the treasury, and be the owner of the T token contract. The token holder DAO will have the power to deploy the treasury, and mint additional T tokens. Its minting powers can be restricted, enforcing a hard limit on any inflation.
The second instance of GovernorBravo will be the staker DAO.
The staker DAO will have two major modifications over GovernorBravo as deployed today
- Voting will be based on staking weight
- StakerDAO upgrades can be vetoed by the token holder DAO.
We are proposing a nine seat multisig council that retains the power to manage per application staking rewards on the new network. This is a critical governance role on the upgraded network, and delegating this responsibility to an elected council services the upgraded network and combined community in many ways. First, it sets up our governance system in a manner that avoids continuous community friction between parties with competing application level interests on the network. Second, individual accountability for critical network wide decisions is better upheld when executed on a council than an entire token holder constituency. Simply stated - our community needs to ensure these decisions are made in a responsible and transparent manner. Under this proposal the community council will meet quarterly to make per application rewards adjustments on the upgraded network.
The inaugural Threshold Network council should hold fair representation from both existing communities. Thus, we propose that the Keep community elects 4 members and the NuCypher community elects 4 members. The final seat will be determined by an appointment or vote by the Keep and NuCypher teams.
Terms for the multisig council will last for one year with elected members expected to be contributing members of the upgraded network community for the duration of their term. Second term elections will take place before the inaugural term ends. If a council member decides to step down, a by-election for the seat may be considered by the community. There is no term limit for council members.
The multisig council is controlled by the token holder DAO and council members can be removed early subject to a DAO vote if necessary. For example, if a council member fails to fulfill their duties, acts in a manner that harms the network or is inconsistent with the wishes of the community, they can be removed via a DAO proposal prior to their term ending.
How a proposal becomes a law
Step One - Temperature Check
A T community member posts a potential proposal on the T governance forums. Community members who post the initial proposal are then encouraged to get active in Meta governance discussions within the community on forums and in Discord to earn support for the proposal. There is no minimum token threshold required to create a new proposal, but the community reserves the right to moderate the forums for the purpose of reducing proposal spam if it becomes an issue.
Step Two - Proposal Creation
After a proposal has earned enough interest from the T community, it is moved to an official DAO proposal. The proposal enters a two day review period before voting officially begins. Meta governance is again encouraged via discussion on the T forums and on Discord.
Step Three - Vote Period
Once a proposal is created, it remains open to voters for 10 days. If the proposal passes the vote threshold it moves onto step four. If it does not pass this step the proposal is over and will not be executed. The creators and supporters of the proposal may bring a modified proposal forward again if the community decides it is sufficiently different from the originally submitted proposal and has garnered additional support.
Vote threshold - a community discussion.
Quorum - a community discussion.
Step Four - Execution
Once a proposal passes, it can be executed. Proposals are executed by the particular GovernorBravo instance hosting them.
Keep and NuCypher are community driven projects and this will continue with the upgraded network. This proposal is a first iteration of the governance system for the upgraded network. We encourage community members to review, ask questions, discuss and add ideas in the thread below so that together we can build an even stronger proposal ahead of a mutual community vote to implement the new DAO.