Evolving Algorand Governance

Governance
160

Context

  1. Current governance is open, however it’s not efficient enough:
    1. users or groups can’t make their own proposals
    2. it’s slow: 3-4 proposals / year
  2. Governance is the most important feature of the chain, not defi. Governance steer the blockchain.
  3. Putting more rewards into DeFi won’t make it better - we already have good grants. We need to pull more funds into Algorand if we want to grow the amount of projects.
  4. Putting more focus and rewards into DeFi rather than governance itself, is dangerous - it will steer the governance and incentives towards DeFi and could create unhealthy disproportions.
  5. Finally, blessing few DeFi projects with more incentives coming from the Algornad governance and security (Algo secures the blockchain) is, IMHO, a wrong approach. As @LinxFit and @HolisticNicole pointed, it can create conflict of interest.

Proposal: more efficient governance

Instead of having a model where we try to push more gov power and more rewards towards some blessed DeFi projects, I would propose more open and more direct governance:

  1. Creating public good pools - they will have continuous income from Algo inflation, and maybe from tx fees later on? This should reduce significantly passive Algo income. Moreover, we should reward more accounts who vote. So we can have the following scheme:
    • reduce overall Algo inflation
    • from the Algo inflation, put 60% into governance pools and 40% for Algo holders and governors. Active governors will receive significantly proportionally more (2x - 4x) Algo than passive holders. We can have few tiers to measure the governor activity.
    • the goal would be to have ~1-2% APY for passive holders.
    • all the parameters are subject to the governance and can be modified at any time.
  2. Take some learning from Cosmos governance: let anyone create a proposal (that would require a bond) to do something good.
  3. Create a committee (selected by governance, and lead by the Algorand Foundation) to to judge a proposal execution (for proposals which passed).

A proposal can be:

  • accepting an update (pull request) for the next go-algorand release
  • advocating next features
  • funding public goods
  • funding communities

Proposal must be well defined, with proper scope of work and payment schedule. Proposal to pass must have a minimum support (total number of votes).

Why this is superior?

  • we will have more direct impact
  • we won’t have a problem of having a blessed projects with more power
  • we separate chain security from the capitalistic approach of creating more incentives
  • Incetives should come form institutions and project funds, hopefully created by communities etc…
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