As you are aware we promised increased decentralization of governance in Zcoin’s roadmap.
This is important especially as cryptocurrency becomes more mainstream and privacy coins become more controversial as they prove to be a compelling alternative to physical cash which is already being phased out. A centralized development team that receives funding from the block reward is a target and it is best that we make plans to move past this and give governance to the community.
I truly believe this governance mechanism to be revolutionary especially for a project which is already deployed. This is my personal proposal and doesn’t represent the views of the core team.
- Zcoin can be destroyed irreversibly for a governance token. These coins just exit supply.
- This governance token will be single-use. Once you vote, it will be gone OR gone to the general DAO fund.
- One token one vote.
- Votes are only ‘used up’ on successful proposal so if a proposal doesn’t pass, the voting token can still be used so that people would be more willing to vote No to shoot down bad proposals.
- Governance tokens are used to vote on proposals that will have a minimum period to seek feedback (1.5-2 months?)
- Block reward for development will be placed under the governance of the DAO.
- There will be a fee that needs to be paid to put up proposals. This is to prevent spam and to make sure the proposals are serious.
- Votes are actual stake in the game. You are burning valuable coins for votes that you will never get back and reduces the supply of XZC
- Everyone has a say proportionate to their holdings but they have to be willing to destroy their money rather than passively just forever having the power to vote. This separates passive investors from people who actively care about the project (they are often different people).
- Having the governance token as single use prevents the governance token from being used speculatively and discourages people from slowly acquiring more and more governance tokens. It also ‘resets’ power since you cannot slowly hoard governance tokens to start bullying people around.
- The system is simple and easy to understand.
- Exchanges and custodians of Zcoin won’t be able to easily vote at no cost. We have all seen what happened to Steemit where exchange balances were used to vote validators in.
- This mechanism is not going to be immediate as we still need to figure out all the moving parts but if we get community support on this, we can probably start coding this next year after Lelantus v2.
With feedback from the forums and also in Telegram, some are not comfortable in ‘losing coins’ for voting. This is a possible alternative.
- Zcoin to be converted to Governance tokens
- Governance tokens are single use (should we allow them to re-use if failed proposal?)
- There is a way to get back your Zcoin out after you have successfully voted but there will be a long cool down period.
- Making a proposal costs a fixed amount of governance tokens that are destroyed for good.
- Imposes time opportunity cost rather than actual loss of coins.
- Encourages usage of the voting tokens rather than hoarding them since you only can get them back after you have ‘used’ them.
- Cool down locks up capital that can’t earn Znode rewards.
- Imposes real cost on proposals
Things to work on
- What minimum thresholds of votes required for a proposal to pass should be set to prevent people from making proposals to enrich themselves? Perhaps a threshold based on number of governance tokens there are.
- Would people be willing to vote if they’re going to lose coins? How do we incentivize this? Or can we have No or a separate Drop Proposal vote to cost less?
The best thing is that it is in theme with our concept of burning coins for privacy, now you can burn coins for governance!
Appreciate everyone’s thoughts on this. Note that this is still an early proposal with other details to be fleshed out but I’m personally very excited about this as I feel it ticks all the boxes of simplicity, alignment of incentives, fairness, maintaining privacy and decentralization.
Let’s not get too bogged down with the details first but would like to hear community feedback on the general idea of this proposal.