Developers Forum for XinFin XDC Network

Ritesh kakkad
Ritesh kakkad

Posted on

DaoFin Draft: Decentralizing XDC’s Ecosystem Development

Introduction

Blockchain is synonymous with decentralization. But while the XDC Network is and always has been a decentralized network, with hundreds of validators from all four corners of the globe participating in consensus, ecosystem development was for a while spearheaded by various groups of key stakeholders and community leaders.

This was necessary, for a time. Tokens—that is, voting power—had to be distributed ever more widely before genuinely democratic governance could become a real possibility. Only if XDC changed hands again and again would whales become few and small enough to mitigate the risk of a plutocracy masquerading as a democracy. Moreover, before accepting responsibility for ecosystem development, the community had to grow, not only in size, but also in maturity, loyalty, and knowledge. Finally, it was necessary to think through, with great care, what form a DAO on XDC should take. But now, at long last, all of the above conditions have been met: the pool of potential voters is big and diverse enough; the community is ready; and we, for our part, have devised a highly sophisticated, original, hybrid DAO, tailored to the XDC community, which should be free from the defects that continue to plague other DAOs. Since, for all of these reasons, the time has come to take the next, big step toward the decentralization of ecosystem development on XDC, we would like to submit the following plan to the community for review.

Beginning today, February 15th, there will be a 30 day community and public comment period, during which we hope that you—the community—will share your positive and negative feedback with us on XDC.dev. After the public comment period ends, on March 15th, we will take another 30 days to revise the plan in light of the feedback we’ve received, before sharing a final draft with the community on May 1st for 15 days and implementing the plan and launching the proprietary or available on-chain voting dApp shortly thereafter. The community is welcome, at this stage, to provide feedback on features they’d like to see in the dApp as well.

Please note, finally, that there are a number of important details that we can’t be sure of prior to testing and dry runs of the voting system, which will be necessary to gauge the quantity and quality of participation we can expect to see when the voting dApp is live. All such things, which remain TBD, have been affixed with an asterix (*).

DaoFin

10B XDC was originally allocated to the XDC ecosystem development fund. Every year, 250M of that 10B XDC unlocks to support the network.

Going forward, the unlocked funds will be distributed with the advice and guidance of the community in an increasingly decentralized, democratic way.

During 2023, 90M XDC will be set aside for core protocol development and support. The remaining 160M XDC, however, will be released quarterly, in tranches of 40M, to fund projects deemed worthy of support by the community.

From 2024 on, the community will bear responsibility for distributing the full 250M XDC—again, quarterly, in tranches of 62.5M.

Checks and Balances
Governing bodies, like the Ethereum Foundation, in which small panels of experts and community leaders assess proposals have the distinct advantage of being able to make highly informed decisions on the basis of in-depth knowledge of the relevant fields and careful consideration of their strategic priorities. However, they lack transparency and, since only a small number of people can participate in them, they fall short of the democratic ideals necessary for decentralization.

At the same time, simple majoritarian governance structures in which “1 token = 1 vote” have failed time and time again to empower communities to act in their best interest: their treasuries have been drained and/or their communities left disenfranchised. Such majoritarian governance structures are subject to manipulation on the part of exchanges, large capital funds, including VCs, and bad actors who acquire tokens to increase their voting power only to dump them immediately after achieving their goals. These allegedly pure democracies are usually, in fact, plutocracies.

Attempts have been made to mitigate the risk of manipulation, on the one hand, and to combine expertise with democratic governance, on the other, by allowing voters to delegate their voting power to a small panel of loyal experts. But while better than the alternatives, nothing prevents whales from colluding to vote their own delegates into power. Furthermore, such “representative” governance structures have the tendency to devolve into a small panel of experts, acting without sufficient transparency or accountability, owing to the voter apathy they presuppose and even cultivate in the community more broadly.

Given the deep structural problems plaguing most, if not all, DAOs currently in existence, a new kind of DAO is needed.

Additionally, when creating a DAO to develop the XDC ecosystem further, we are not starting from square one. The XDC community already exists, as a whole with various parts: sub-communities, constituencies, and interest groups. A DAO on XDC must therefore take into account the already existing constituencies–like the 250 or so masternode holders, on the one hand, and the numberless XDC holders, on the other–without under- or over-representing any of them.

Thus, like modern constitutional governments, DaoFin (as we are provisionally calling it) relies on a system of divided government or checks and balances to limit the risk of manipulation, all the while rewarding large stakeholders with their fair share of governance and incorporating a deliberative body, ultimately responsible to the community, to ensure that the process remains sufficiently thoughtful, diligent, and rules-based throughout.

Accordingly, in DaoFin, there will be three governing bodies or branches of government:

The Masternode Senate, where each masternode address will have 1 vote.

The People’s House, where addresses staking XDC in the governance pool will have voting power proportional to their token holdings (“1 token = 1 vote”).

Voters will be able to stake 100,000, 250,000, 500,000, or 1,000,000 XDC in the governance pool.

XDC staked in the governance pool will eventually earn rewards proportional to the stake paid out from the ecosystem development fund. Specifics about the rewards will be determined after testing of the voting dApp has established the levels of participation that we can expect to see.

To incentivize participation and increase voter turnout, participating regularly in elections and keeping the XDC locked in the governance pool will further increase the share of rewards stakers can receive, leading in effect to “a raise” for good behavior. Failure to participate in an election or removing XDC from the pool, on the other hand, will result in losing the raises earned over time, setting the reward-multiplier back to square one.

The Judiciary Committee, where 5* highly dedicated community leaders will have 1 vote each.

For the time being, the Committee will be a diverse group made up of tried-and-true community members, without any conflicts of interest, specially appointed by the Founders. In the future, as the decentralization process unfolds, the Committee will be voted in by the Senate and the House in annual elections, using quadratic voting to determine the winners.

In addition to the 5 core members, there will be 2* alternates on standby prepared to step up in the event that one or more members of the Committee is unable or unwilling to participate.

All members should KYC and be doxed to the Masternode Senate and the Founders, where they will also make financial disclosures to the Founders bearing on any conflicts of interest that might prevent them from serving impartially on the Committee. Committee members should recuse themselves from decisions if and when there are any conflicts of interest, however small.

In the event that a masternode holder becomes a member of the Judiciary Committee he/she will not be able to vote in the Masternode Senate during his/her term. Members of the Judiciary Committee should not vote in the House either. Nor should they discuss proposals with community members not on the Committee except in the public discussion forum (XDC.dev) where all can see and participate equally. Finally, Judiciary Committee members shall not invest in any projects seeking or receiving grant funding from the ecosystem development fund.

Breaking any of these rules will result in expulsion from the Committee.

Election Week
The last week of each fiscal quarter will be “election week,” during which the community will vote on submitted grant proposals. The vote will be held on-chain, using a proprietary or available public voting dApp, which will include space for the Senate, the House, and the Judiciary, while discussion and debate should take place chiefly on XDC.dev.

Quarterly elections were decided upon (a) to foster healthy competition between bounty/grant seekers, (b) to reduce first mover advantage and ensure that the process is deliberative and fair, rather than “first come, first served,” and (c) to allow the community to assess proposals, not only in light of one another, but also in light of the budget and its constraints. Throughout this process, community members should encourage high quality projects to submit proposals. Competition is healthy!

Any funds left over once the quarter ends rollover into the next quarter. So the community need not feel obliged to award funds to proposals lacking in quality—on the contrary, they can in that case keep the funds in reserve for other, better proposals! A rejected proposal is money saved to accept a future proposal. Moreover, every accepted grant proposal increases the amount of XDC in circulation. It’s in the community’s interest to fund high quality proposals or none at all, since projects that don’t add sufficient value to the network dilute the supply in addition to adding little or no value.

Grant/Bounty/Reward Proposals

The XDC community grants DAO—DaoFin—will solicit grant proposals from entrepreneurs, developers, innovators, and community members across at least the following seven subject areas:

Protocol development
Applications and layer 2s
Developer tooling
Code audits
Committees, sub-committees, and DAOs that serve the XDC ecosystem
Community service (marketing and education)
Events and hackathons

There will be, in total, three grant tiers:

Tier 1 grants are small grants, under 250,000 XDC. To submit a small grant proposal,
500 XDC must be burned.

Tier 2 grants are medium grants, between 250,000 and 1,000,000 XDC. To submit a
medium grant proposal, 500 XDC must be burned.

Tier 3 grants are large grants, over 1,000,000 XDC. To submit a large grant proposal,
1000 XDC must be burned.

Small Grants
Small grants should be submitted at least one week prior to the start of election week to allow for community discussion. (Grants not submitted in time will be considered the next quarterly cycle.)

Small grant proposals that receive support from a majority of the House, the Senate, and the Judiciary will be accepted and funded.

Small grant proposals that fail to receive majority support from one branch, whether it be the Senate, the House, or the Judiciary, will still be accepted if they received supermajority (66%*) support from either or both of the remaining branches.

For a “yes” vote to be considered valid, the minimum participation threshold for small grants in each branch is as follows:

Senate … 25%*
House … 45%*
Judiciary … 100%*

Otherwise, the vote will count as a “no,” owing to lack of participation. Proposals that fail owing to lack of voter participation may be resubmitted the next quarter—proposals that fail with adequate voter participation may not be resubmitted.

Medium Grants
Medium grants should be submitted at least two weeks prior to the start of election week to allow for community discussion. (Grants not submitted in time will be considered the next quarterly cycle.)

Medium grant proposals that receive support from a majority of the Judiciary, a majority of either the Senate or the House, and a supermajority (66%*) of the remaining branch, whether it be the Senate or the House, will be accepted and funded.

Medium grant proposals that fail to receive majority support from the Judiciary and either the Senate or House, or a supermajority from either the Senate or House, will be rejected.

For a “yes” vote to be considered valid, the minimum participation threshold for medium grants in each branch is as follows:

Senate … 30%*
House … 50%*
Judiciary … 100%*

Otherwise, the vote will count as a “no,” owing to lack of participation. Proposals that fail owing to lack of voter participation may be resubmitted the next quarter—proposals that fail with adequate voter participation may not be resubmitted.

Large Grants
Large grants should be submitted at least three weeks prior to the start of election week to allow for community discussion. Prior to submission, it is highly advisable to visit with the Judiciary Committee in “office hours” to receive initial feedback, ask questions, and ensure compliance with the guidelines. (Grants not submitted in time will be considered the next quarterly cycle.)

Large grant proposals that receive support from 80%* of the Judiciary, and a supermajority (66%*) of both the Senate and the House will be accepted and funded.

For a “yes” vote to be considered valid, the minimum participation threshold for large grants in each branch is as follows:

Senate … 35%*
House … 55%*
Judiciary … 100%*

Otherwise, the vote will count as a “no,” owing to lack of participation. Proposals that fail owing to lack of voter participation may be resubmitted the next quarter—proposals that fail with adequate voter participation may not be resubmitted.

In the case of large grants, one week prior to the start of election week the Judiciary Committee will publish its feedback on large grant proposals. The Committee’s assessment is merely advisory to the larger community, which is free to accept or reject its analysis. In the event that the Committee’s opinion is not unanimous, the Committee will issue two opinions, one for, one against, to guide community discussion.

Large grant proposals should, as a rule, be broken up so that funds will be disbursed only as milestones, clearly identified in the proposal, are reached over time. Such projects will be funded incrementally, as they achieve key benchmarks and report on their progress to the Judiciary Committee at the designated time.

Projects should be careful to set realistic goals for themselves. The Judiciary may, in extreme cases, with a majority vote, deem projects that have not reached their milestones unworthy of additional funding. Moreover, a plurality (33%*) of the Masternode Senate can request a milestone report from the Judiciary after the fact and, if they are not satisfied with the progress being made by the project, they can trigger a vote during the subsequent election week to determine whether funding should be continued by notifying the Judiciary Committee. Funding will be suspended with a supermajority vote of the Senate.

Projects seeking large grants should not be starting from scratch. Ecosystem development funds should not be used to bootstrap significant projects with nothing to show for themselves; they are to be used to fund projects that have already begun their work and demonstrated that they have skin in the game, whether by having an MVP, or by deploying on chain, or by having assembled a working team with clear signs of progress made, or by some other means.

For the sake of full transparency, the Judiciary Committee will publish an annual report, aggregating all successful grant proposals, complete with all available on-chain data tracking fund movements end-to-end and vote tallies for all three branches of the DAO government.

Conclusion

Think of this as a first step toward decentralizing ecosystem development on XDC. There’ll be more to come, as the process unfolds gradually over the coming months and, together with the community, we learn what works and what doesn’t. The proposed plan seeks to empower the various stakeholders already active in the community, without giving too much power to any one single interest group. The system of transparent, divided government that we’ve proposed is intended to make it hard, if not impossible, for powerful interest groups or factions to collude while still leaving room for community members to cooperate with one another. The community should take the next 30 days to discuss the plan and to share their feedback, both positive and negative, on XDC.dev (as comments). Nothing is set in stone, and we fully expect to iterate over the coming weeks and months, in light of the discussions we have with one another, until we’ve reached a satisfactory result.

Remember, as you go about offering your constructive criticism, that we consider ourselves to be a DAO on a hill … the eyes of the world are upon us. The ultimate goal is to build a DAO worthy of the name, a DAO as decentralized as the XDC Network already is, and this is impossible without your input.

WeAreXDC

PS: Special thanks to Atul, XDC Foundation, XDC Community, XinFin, Dustin and Billy for helping to create the 1st draft for DAO.

Blockchain #Governance #DeFi #Web3 #Governance #DAOsociety #DAOrevolution #XDCNetwork

Discussion (34)

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yourbroquincy profile image
Quincy Jones • Edited on

I think the governance model with the senate, house and judiciary are genius ideas allowing for the decentralization of power while having a focus on what's best for the community. Also with such incentives and rewards community participants can remain stake holders in the success of the network and any application that may reside on the XDC Network

one thing I think could be added is some slashing mechanism or a vote of loss confidence where party members can slash bad actors that may covertly, or overtly attempt to game the governance system, this just allows for a means of control by the stake holders against bad actors

another thing I would ADD is potentially adding more judiciaries with a 90% participate rate 1. I feel like the 5 now would have the network be incredibly skewd in one direction allowing 3 judiciaries to determine the direction any given app is going and I feel like raising that number to 10-15 allows for more conversing on a topic before a decision can be made and allow for better representation for different factions on the network like investors both retail and institution,developers,layer2 projects, the protocol team, the master-nodes, and even migrating projects from other networks(I just don't feel 5 adequately represents the community)

one last thing I would add as a suggestion but participation should be front and center for all stake holders involved lack of involvement should be met with either a vote of loss confidence or a slash

otherwise I love the idea I think creating a governing system to ensure the effective growth and decentralization of the network is pivotal to the success of the network as well as effectively organizing an agenda around concerns in the space in a equitable way

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duts profile image
duts

Good stuff. 1) I do think it might make sense to add a couple more judiciary members. One downside there is that being on the judiciary is actually going to require quite a lot of work - you can't just show up and vote; you have to write numerous, lengthy reports, hold regular meetings, etc. So finding 10-15 people who are willing to devote so much time to that isn't easy. 2) Another thing is, I think, you don't want too many people on the committee that they can't easily jump on a call and deliberate, forge strong working relationships, and trust. So maybe 7-9 is a good middle ground? 3) I like the idea of adding a way for the House and Senate to call a referendum and boot someone from the committee in extraordinary circumstances. The downside there is that you'll tend to convulse the community and embroil in controversy. Maybe better to just wait for the term of the members to expire and then throw the bums out and elect new members? In that case, though, we should definitely find a way to allow proposals to be submitted multiple times, as Sal said in his comment here, perhaps with a waiting period in between, so as to account for changeover in the government/community over time. 4) I don't think we should put layer 2s on the judiciary (though of course the community can vote in whoever they want), as Salomon said as well - that'd be too great a conflict of interest. Essentially, they'd be asked to vote on funding or not funding their competition. Moreover, layer 2s aren't necessarily only building on XDC; their highest loyalty is ultimately to themselves, however much it may overlap with the good of the network overall. 5) Finally, and this is key, the judiciary IS an anti-majoritarian element here, like the Supreme Court, it's a check on the excesses and dangers of populism. Key to remember here that the judiciary, while powerful, cannot simply ram through funding approvals by itself - it absolutely needs the support of the other branches. The worst a corrupt judiciary could ever do is block proposals that don't have overwhelming community support - they couldn't seize the treasury, and that's the main thing we want to prevent. Again, great points and I'm going to take them all under consideration.

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s_xdc profile image
S.

I think this needs to be carefully considered.

Few efforts have helped the XDC Network gain more legitimacy in the eyes of the industry participants than the decentralized adoption of the technology and the various entities/individuals that have helped facilitate that adoption.

An effort to further decentralize the ecosystem development process will place the network on the leading edge of industry practices and help the network continue to move in the direction global regulators are uniformly steering.

At first glance, I think the representative democracy outlined here should help to disperse the decision making power amongst different interest groups. Nothing will be perfect out of the gate or ever; but it's good first step.

I plan to take more more time to process the proposed structure, election processes and the checks and balances considered here. I probably will have more thoughts around the judiciary committee, specifically, as a number factors will need to be considered and contingency plans for a whole branch represented by such few people.

When it comes to proposals themselves, I do have a specific thought. I question whether a proposal should ever be outright banned from being resubmitted regardless of whether or not it received adequate voter participation.

Mainly, the reason is two fold: one, as we all know the landscape of this space is constantly changing and the ecosystem will need to remain increasingly adaptable to drive adoption and remain competitive with other L1s. An NFT-based project proposal that may have been voted down in early 2020 may be near universally embraced by the community in late 2021.

If the latest innovations are not being developed on the XDC Network, then community members might seek other networks where participants are truly innovating.

Second, building community means adding new participants with diverse interests and skill sets. There is historical precedent for exponential growth of community as well. So the majority of today might not be the majority of tomorrow.

I think we have to allow proposals to be revisited as the community, the industry and the team behind each proposal develops. The proposal I would imagine could be revised and resubmitted, but I would want to ensure that.

Just getting these thoughts down for now and will revisit some the weightier matters later.

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duts profile image
duts

Great point. Yes.

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mrblockchain22 profile image
Salomon Morales

This is something the XDC Network really needs and I am glad to see the start of this amazing DAO. I follow the same sentiment @quincyj has when it comes to the loss of confindence and a way to remove those there if the votes feel skewed by their own interests etc. Adding more judiciaries feels necessary to allow an ample representation of the community and projects already on the network. Maybe, possible adding 1 judiciaries per current project (Layer 2's) already on the network as they have skin in the game and this will allow them to make the right choices for the entire ecosystem and their projects. I love this first draft and really looking forward to seeing it fully developed and in motion. Lets go XDC family!

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redpill1 profile image
samsam

Excellent work #WeAreXDC team!! Very well thought out proposal.
There is a lot to digest and read through few times before further feedback.
Few quick comments in the mean time.

  1. I agree with Sal on having more representation in Judiciary and include one from each of the current projects that are primarily XDC Network based.
  2. I am not sure I understand the rationale for this clause because we are suppose to be open DAO and why would this a necessity. I must be missing something. "Judiciary Committee members shall not invest in any projects seeking or receiving grant funding from the ecosystem development fund."
  3. I can understand the rationale behind this next clause, but ho would the work out in reality? Because those who have been enthusiastic on XDC Network have invested in many of XDC projects and will continue to invest. So, finding a Judiciary committee member not interested in x,y,z but at the same time have enough interest in XDC eco-system would be an interesting challenge. Here is my thought as a compromise. Member need to disclose which of XDC projects they have investment interests, and make them obligated to recuse from voting on specific governance resolutions on individual case by case. I guess I need re-read few times :)

Again, great work. Now I am even more excited to be part of this great XDC community. Lets go #WeAreXDC !!! (I will refrain from adding "to the moon" lol).

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duts profile image
duts

Thanks for the comments! The conflict of interest stuff is a challenge. Here's how we're thinking it'll play out: yes, since judiciary members will likely already have investments in various layer 2s on XDC already, prior to joining the committee, they'll have to disclose their financial interests to the founders and recuse themselves from cases in which there's a conflict of interest. It's okay to have prior investments in layer 2s, on this draft, but, once they're on the committee, new investments will be forbidden. It's a bit like being an investment banker, where, if you're working for a big brokerage firm, you're limited in how you personally invest by law. So judiciary members, once they've signed on to the job, should not be making new investments that might create real or even apparent conflicts of interest.

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dev_long_ae20936c70fd2ae7 profile image
Dev Long

Ive been a long term XDC community member and I've been observing the progress of the XDC Network, even when it used to be called XinFin Network. This proposal is amazingly put together but what I fail to see and I hope this gets integrated, is the fact that funding for this DAO will come from somewhere. Based on the proposal, the ecosystem fund will be funding all these projects wanting to get funding for their projects and any future development of the network. The DAO (Senate, House and Judiciary) will determine how the funds get allocated, but who will be in control of the actual funds?

What I am suggesting is to put the ecosystem fund in a smart contract where the funds are controlled by automation vs a team of people because that will not be decentralization. Putting the ecosystem fund in a smart contract will allow to release funds in a predetermined timeline (monthly, quarterly, yearly etc). This way the DAO can truly have oversight of the funds being released. Just as suggested by the proposal, if the funds are not spent, then they can be locked again in the smart contract. This way, the funds are truly decentralized by the smart contract and the actions taken by the DAO will also be decentralized because it will be the community represented by everyone voting on such proposals.

This will also allow transparency in the way that anyone interested in seeing how the ecosystem funds are being spent can take a look and be satisfied that funds are being utilized for the growth of the XDC Network and not one single group or entity can deny access to the funds if the DAO votes in favor of X or Z project. This will also place the power to the DAO without having to rely on a single entity because, let's be honest, this will not be a decentralized network otherwise.

Once the smart contract is set up to distribute the funds, the funds can be deposited into a multisig wallet that will require at least a few people (2 of 3 signatures) to disperse funds to a project. Each signature can be: 1 for the House, 1 for the Senate and 1 for the Judiciary team.

I truly hope for the best to the entire XDC Network and the progress to a truly decentralized network.

Godspeed!

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duts profile image
duts

Great points. So, thus far, the focus has been on developing the plan - questions about execution, including how to custody and release the funds, will be taken up only once the plan has been finalized. For now, I'll just say that there's a lot to think through here. Smart contracts sound great in theory, but they carry significant risks, and can actually scare off regulated entities. Putting the whole treasury into one wallet controlled by a single smart contract would be bad OPSEC, as, in that case, there'd be one single point of failure and, as we all know, smart contracts fail (i.e., get hacked/manipulated) pretty regularly. Just imagine billions of XDC suddenly in a hacker's possession! Now, to be clear, I'm not against the idea of stuffing the whole treasury into smart contracts; I'm just saying it's not nearly as easy as it sounds. But note, regardless of whether the treasury is ultimately controlled by multi-sig or by smart contracts, all fund movements will be visible on the blockchain for everyone to see. So you'll have perfect transparency no matter how the custody question is ultimately answered. That said, whatever happens at first, I do agree that the end goal should be automation wherever possible.

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dev_long_ae20936c70fd2ae7 profile image
Dev Long

I respect the points that you bring, but who's to say that the funds will not get hacked where they are currently being held. The smart contract can be executed while maintaining the funds in a secured custody solution that offers insurance in case of hacks. Anything is hackable with the proper amount of effort and time, so the excuse of smart contracts are hackable does not solve the issue of one entity controlling the funds. How is it possible that other foundations (ETH for example) is able to keep their funds secured with so much more transactions and volume on their network? Because it is possible to achieve what I am suggesting. Let's see how this plays out but if we truly want the XDC Network to be decentralized, the way things are the moment is not decentralized and the DAO will be just a front of decentralization while the actual funds are controlled by a handful of people. All my comments come from a good place because I do want the XDC Network to be successful.

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duts profile image
duts

Noted, and appreciated! We'll be looking into all this very closely.

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thecryptonightingale profile image
Luna Nightengale

I reckon this is a solid idea. If the funds aren't under the control of the DAO, then it ain't really decentralized, is it?

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inv4fee2020 profile image
inv4fee2020

What a 1st step! Clearly a lot of thought and consideration has gone into this 1st draft and I for one am in support of what I have taken away following my initial reading.
As has been shared previously, more questions to follow after a few more passes.

A massive thank you to all the team that helped shape this draft and the structures within..

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ronald_mitchell_0de6c6219 profile image
Ronald Mitchell

Very well thought out to include various levels of participants. This is a beautiful pathway to decentralization. I support moving in this direction and encourage others to support as well. As stated this is 1st draft, I will likely have detailed questions after I read through it many times over. Others may have questions or suggestions as well... But congratulations on one hell of a 1st Draft, Team. Well done!

This is very exciting! (Insert FIRE emoji)

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bblock profile image
Brad Akers

This is exciting :) Great Approach to increasing even more decentralization to the network.

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s4njk4n profile image
s4njk4n

Great discussion here.

My contribution is much simpler and possibly (as noted) more relevant after the Plan stage as it refers to the mechanics. Thought I'd just flag it early.

Issue:
Directly using a private key online (if not using a hardware wallet or equivalent) increases the risk that it becomes compromised. If nodes are compromised then this presents some risk to the network. The less frequently a node operator has to directly use their private key, the less risk they hold of that key and its associated staked XDC being lost.

Suggestion:
Perhaps node operators could nominate a secondary address/privatekey that would be used to vote from (instead of having to use/expose a masternode private key every time a vote is taken)

Perhaps it could be done by logging in to the masternode dApp to nominate a secondary private key/address and the voting mechanism would then look to that secondary address for the vote of that node operator.

Votes could then be done from that address/privatekey and, if neccessary, the node operator could even log in to the masternode dApp and re-nominate a different address for future votes if they thought the regular-use private key was compromised. Or even better, they could just nominate an address controlled by a hardware wallet to increase security during the voting process from the get-go).


As I mentioned, just flagging the issue early for consideration when determining the mechanics of how whatever the determined process is gets actioned.

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duts profile image
duts

Great suggestions. I completely agree.

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thecryptonightingale profile image
Luna Nightengale

I've been a fan of XDC for ages, but only just created an account so I can have my say. This is a crucial issue for the XDC Network, and DAOFin - or 'Dolphin' as I keep accidentally calling it - needs full control of the dev fund to succeed. A time-released smart contract, with quarterly releases like Ripple's XRP, would be the best way to make sure the community is heard and that things get done.

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duts profile image
duts

Yes, I think that's something we all aspire to. Remember, this is only a first step. Decentralizing the treasury as a whole will take some time, and can't be rushed or done in one fell swoop, but it will start to snowball.

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e_2_592b67f295573a93c0685 profile image
e 2

I thoroughly enjoyed this proposal, and appreciate the intent behind decentralizing and democratizing the XDC Network. I have a few concerns and ideas, all of which might be unjustified or easily solvable.

To start, there has been a heavy focus on the Judiciary Committee, which acts as the checkpoint for any voting proposal to gain exposure within the ecosystem. My thought would be to expand on the requirements for someone to become a member of the Judiciary Committee. Since voting proposals brought to the XDC Network will vary in scale and specificities, I imagine it will be important for each member to have a skill set that can be applied uniquely to each proposal.

In order to avoid proposals being held up or rejected at any stage, there can be an advisory panel that assists projects who have a proposal they want to submit to the XDC Network. This panel could operate in tandem with the Judiciary Committee to ensure full compliance. In that regard, a guideline or documentation page for anyone looking to make a proposal would be beneficial as a time and cost-saving tool.

The subject of network operational costs is also a concern, as such expenses are required to maintain proper function. In response, there could be a recurring vote that gets voted on quarterly which covers operational expenses. The details of the vote would also have to be adjusted as changes within the network occur.

Lastly, according to the proposal, voting requires a minimum number of XDC tokens to be staked and locked for a period of time. This method works for those with a sufficient amount of XDC, but ultimately disenfranchises those that lack the funds. To work towards decentralization and not away from it, there could be a mechanism that lowers the staking requirements based on the total value locked in the governance pool. This can simultaneously incentivize greater network participation and lower the barrier of entry.

The DaoFin proposal is a massive step towards realizing the expectations many people have for blockchain and decentralization. In order to successfully implement DaoFin, constant participation, education, and questions are prerequisites. Through those actions I expect DaoFin to evolve and become an example of achieving decentralization.

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lolaiza profile image
lola Lola

Lolasa (lolaiza jende)

The most vested in this projects are gonna be the judicial committee. I feel like those are the ones that are going to vote with the XDC vision in mind. I've read everybody's comments, but it seems like some are getting off track as to what the DAO is trying to accomplish. The DAO. Is wanting to make best use of the treasury funds. And Use Them in a new decision making model that is decentralized. They are not. Changing the dpos protocol. They are not changing how xdc functions. They are only changing how the projects gets funded. And increasing transparency. Removing. The risk of of centralizatiin in how. Projects are funded. Some projects to be decided on are called Xip. Means xdc improvement proposals. Which is what ethereum already has : Eip. The goal of this DAO is to get evm devs and projects to develop and grow. Xdc ecosystem . To have incentives in improving infrastructure. Improving. Tools. Increasing devs power. Increasing utilty projects. And not redundant projects . As has been spoken before ethereum has large following of devs because of tools ,Infrastructure and community. That is what xdc is missing . Having the treasury. In a smart contract is not what the a priority for the DAO. That is waste resources at this moment of decision making . To have an increase in momentum we need have increase in finacial incentives for devs. Betters tools. More support. For infrastructure . I really like the judicial structure. With the 7-10 members. To decrease risk plutocracy. The judicial members have high regard for keeping the best practices for xdc ecosystem. And in particular layer 1 projects. And the. Judicial members can be changed maybe every 2 years . And agree. With having two standby in case there is conflict of interest. The conflict if interest has to be outlined. As much as possible

Would it be an overeach to try and incorporate the senate ( node owners) And the house which are ( xdc community in general)??

I am not sure. And i am not convinced. How much participation the house would actually provide at this time. There is still. Lot knowledge deficit in xdc general community . I am not sure they would understand all the terminology to make. Best decision . Several newcomers dont know the logistics of even Voting Maybe those branches could be incorporated. Later on once the judicial has been firmly established ?

If. House voting is incorporated. Then it is needed that they stake. Their vote one month before The quarterly decisions are made to avoid spammers and manipulation of voting at the last minute . No laggards. We want. Xdc holders who have made. A firm decision not last minute . If. House is incorporated in future. The voting has to incorporate our holders that are very educated but can not afford 100k. Xdc to make a vote. Although i do not know the exact solution to this .

If the senate is incorporated into the Dao ? What does that mean for. Staking . Do the node holder actually lose. Staking rewards for voting ? Is there a large portion of node holders that are business and have no intentions on voting. For example exchanges (bitrue kucoin or. Other enities that have nodes . And are only wanting rewards. Have no intention of ever voting ? How does. A vote look like when it comes. From nodes that are shared node holders. Who decides in the vote ?

I will go with whatever decisions are made. But. I was so surprised at the. Statistics that have been given . We as community need to be more involved. And have more knowledge as to how this ecosystem works . Several have no clue about these commitees. Ethereum has at least 5000 devs From what i understand. Xdc. Has 500x less. Correct me if I misunderstood . Thus the importance Of this this community decision.

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sarthak_bakshi profile image
sarthak bakshi

Overall, it seems like a well thought out plan for decentralizing ecosystem development on the XDC Network. The proposal's focus on checks and balances is particularly noteworthy, as it helps to mitigate the risks of manipulation while ensuring that stakeholders have a fair say in governance decisions.

One potential concern with the proposal is the possibility of voter apathy among the community, which could lead to a small panel of experts having too much power. However, the proposal's inclusion of a deliberative body that is ultimately responsible to the community could help to prevent this from happening.

Another potential concern is the rewards system for XDC staked in the governance pool. It will be important to ensure that the rewards are distributed fairly and that they align with the long-term goals of the XDC Network.

Overall, I think this proposal is a positive step toward further decentralizing ecosystem development on the XDC Network. It is important to ensure that stakeholders have a say in governance decisions, and this proposal does a good job of balancing that with the need for checks and balances to prevent manipulation.

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supersnips profile image
Supersnips

I have devoted a significant amount of time to thoroughly think about the proposal, as it is of great importance. I wanted to share my thoughts on how we can possibly make a few changes to better serve our community and facilitate more balanced and effective decentralized governance.

Firstly, I appreciate the level of detail and thought put into the DaoFin proposal, and I believe it has the potential to provide a strong foundation for the XDC community's growth. However, I think we can make a few adjustments to ensure the power dynamics are more balanced and foster a more inclusive decision-making process.

In its current form, the People's House voting power is proportional to their token holdings. While this approach acknowledges the contributions of large stakeholders, it may unintentionally concentrate power in the hands of a few if there is no cap on the staking amount. To address this concern, we can introduce a cap on the maximum voting power any single address can hold in the People's House. This change would ensure that no single entity dominates the decision-making process while still rewarding larger stakeholders. The Idea of incentivizing active voting for Community members is a really great thought and will hoepfully increase participation over time. It needs to be a well thought reward system.

The current voting structure may have a participation threshold that is too high. Going forward we will surely figure out what percentages are best.

I see some possible barriers for voting. There needs to be a secure way for Masternode holders to vote without the need to connect their Masternode wallet directly with the voting DApp. (Maybe through NFT's or integration into the xdc.network masternode app.

The DaoFin proposal outlines an Election Week for the community to vote on submitted grant proposals. To make this process more inclusive, we can create a dedicated forum or discussion platform for community members to actively share their thoughts on grant proposals, ask questions, and engage in constructive debates. I would like to keep the XDC.dev forum focused on developers and developement related topics. This approach will ensure a better overview and that a broader range of perspectives are considered, helping the community make more informed decisions. If it turns out that this aspect has already been taken into account for integration in the Voting DApp, please disregard the just mentioned suggestion about a new dedicated forum for voting.

Enhancing Transparency and Accountability,
while the DaoFin proposal does mention transparency and accountability, we can strengthen these aspects by setting up a public dashboard to track the progress of funded projects. This dashboard can include details such as milestones achieved or reports the projects can submit for the community to read, and the overall status of each project. This level of transparency will help keep the community informed and enable them to hold project teams accountable for their progress.

The DaoFin proposal has the potential to bring about a whole new era of decentralized governance for the XDC Network. I look forward to discussing these suggestions with all of you and working together to refine the DaoFin proposal further.

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mattiematt profile image
Mattie Matt

I understand the concern of whale manipulation and forgive me if I missed it but what consideration if any will be given for those who have invested over the long term.
Could there not be a snapshot taken of wallets to show that they have held XDC for X-amount of time to be given some extra consideration? Because as I said, I understand the whale concern, but I also think there should be some consideration for those that continue to HODL XDC diligently.
This would also help encourage stability in the network so that Holders aren't tempted to swap XDC to catch the next run on BTC since the price of XDC isn't really impacted by BTC other than market sentiment in general.
Thanks!

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mattiematt profile image
Mattie Matt

Also, side note. What are thoughts about incorporating XDC Domains into the KYC registration process. ie registering an XDC domain name with your KYC verification could provide multiple benefits including allowing individuals to change wallets without having to constantly update wallet address in KYC.

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lance profile image
Lance Lilly • Edited on

I like the idea of having the judicial committee but think it should be 7 instead of 5. With 7 we could have a "majority" with 4 voting yes and a "supermajority" with 5 votes. Since these committee members can be voted in, the community will stay play a large role in the building of this ecosystem and process. This also makes me feel comfortable with delegating more authority to the judicial. If this committee votes No unanimously on a proposal, I feel that it should be vetoed and closed. These individuals will have a better idea of what this network and ecosystem needs, as they will be individuals who work closely with the industry and network. If the majority is not comfortable with delegating such authority to the judicial, we could over rule it with more of a majority and participation in the other 2 branches. Another option could be the judicial branch screens proposals & can pass them on for a community vote if accepted by majority of the judicial. If we didnt want to do screening or add a Veto process, I would be Ok with a super majority 5/7 being required for Large & Medium grants. Again, these individuals are elected so it's not like they will hold too much power over the ecosystem if we decide to go this route.

Governments & decentralized organizations have been trying to perfect processes such as these for a long time and there isnt really a perfect solution out there. My reasoning for my line of thinking is quality in the proposals & need for the ecosystem. I like the idea of more money being delegated for protocol, infrastructure, network tools, resources, utility focused projects, and even bringing more smart devs/engineers into the ecosystem. Daofin will definitely take XDC another step torwards decentralization economically, but we also need to be mindful of programmatic decentralization. Programmatic decentralization will only happen if we attract more builders and individuals that care about the network enough to enhance it.

I am also curious about the actual funding process. Would the judicial committee have control over the funding or would that be handled outside of the DAO? Once released from the ecosystem development fund, does the DAO pay out the grants or would it come straight from the ecosystem development wallet?

When it comes to the committee discussing proposals, formal or official statements should take place on xdc.dev but I do like the idea of discussions taking place across all outlets. Discussions through Twitter Spaces, Discord meetings, etc are great for interactive conversations and attract large audiences. This platform should be the home and source, but discussions across all platforms can bring more attention to initiatives.

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onxdcnetwork profile image
Tre Nelson

This is a great step toward decentralization. Well done.

Just a couple thoughts:

  1. The Judiciary branch in this model would have too much power and control. If these individuals are hand picked, their votes can also be influenced and persuaded. Amazing ideas are born out of healthy debate. 3 of 5 votes in a transparent democratic process is reasonable.

  2. Sometimes, builders need to get started before a grant can be 'formally approved'. There should also be a process that allows those adding value to the network to received grants for projects that have already been completed, or are in process.

I love to see the community coming together to share ideas and make the network stronger!

WeAreXDC

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ravikumar_j_5016c023f6919 profile image
Ravikumar J

Excited to see this Well thought out praposal, it might have taken a great effort and experience to bring this draft praposal for till voting.

Is there any chance that a praposal goes for pre screening before it's put for voting on the DAO. mean to say first of all "should we consider this praposal for voting" to check for the ethical, selfish goal oriented and effectiveness of the praposal so that it will not harm the XDC ecosystem in future in a wrong way?

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duts profile image
duts

Great suggestion. The problem with doing something like this is you end up taking too much power away from the community. Whoever does the pre-screening is going to have a ton of power, and will probably be able to wield it unaccountably and without transparency. That said, the current system is designed to make it hard for high value proposals to pass. High value proposals need a lot of support from multiple branches of the government, and, given that the judiciary will do due diligence and publish reports and feedback for the larger community to review, I think there's very little risk that bad actors will get any funding. In fact, the downside of this system - and of all divided government, in politics too - is that it's harder to get things done because there are so many interest groups and diverse bodies involved in decision making.

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ederson_acclaudiano_981 profile image
Ederson A C Claudiano

muito boa ha ideia , so que tem que ser bem administrado esses recursos

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boris_xdc_b7b9a25940bb63d profile image
Boris XDC

Very well thought of and written.

I'm an advocate of the DAOrevolution hence I 'm in favour of this.

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leopoldcod profile image
Leopoldcod

Intresting post

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bombaypompei profile image
Bombay Pompei

I sent xdc from kucoin to ledger but I sent with xdc network with my 0x… (eth adress) did I lost all my xdc …? 😭

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sean_ profile image
Sean

Though this was really not the place to post this issue but has this issue been resolved?