Governance

  • Updated

Governance Model

Perpetual Protocol is governed by the community via forum discussions and voting on proposals. We welcome any discussion about how the governance model works, either by participating on the governance forum or in the #governance Discord channel.

Currently governance of Perpetual Protocol operates under a hybrid model.

  • Community governance: Covers all aspects that can be reasonably handled via community discussion and voting.
    • Use of Perpetual DAO funds, including PERP tokens
    • Exchange parameters, such as insurance fund threshold, fee level & distribution, etc.
  • Foundation team: Covers aspects that cannot be reasonably handled via governance at this time, or are of a sensitive nature.
    • Short- and mid-term strategy
    • Protocol design & development
    • Website development and maintenance
    • Emergency updates, fixes and operations

As the protocol develops and more governance tools become available, community governance will take over more aspects of protocol development and operations.

Perpetual DAO

The core of the project is the Perpetual DAO, which controls the DAO treasury including PERP tokens, and of which all PERP holders are members with voting rights.

To streamline DAO governance, operational tasks are divided among a growing set of sub-DAOs. New sub-DAOs may be proposed and added / removed as required.

Sub-DAOs

The vision for Perpetual Protocol is to decentralize gradually over time, eventually dissolving the foundation and transitioning it into a fully fledged Decentralized Autonomous Organization (DAO) so that the community has complete stewardship of the protocol.

Following the lead of DAOs such as Yearn Finance, one of the first projects to successfully partition itself, Perpetual Protocol is working towards compartmentalizing different aspects of the protocol, where each sub-DAO is responsible for making decisions and managing their own budgets independently.

These sub-DAOs sow the seeds for grassroots participation, enabling new forms of coordination and creating a user-centric network. Currently, a committee model is used across sub-DAOs, where token holders periodically vote for a committee, which will then make the decisions for a particular focus area.

However, the plan is for sub-DAOs to be self-organizing, allowing individuals who share a common view to create a group and then work together for the Perpetual Protocol DAO. This approach to governance is inspired by MakerDAO’s ‘The Endgame Plan’.

The current sub-DAO structure is shown below. All the current sub-DAOs use Coordinape and DeWork for to organize tasks and recognize members’ contributions. Any use of the DAO treasury funds must be first approved by token holders, through community dialogue, governance forum proposals and voting via Snapshot.

 

Below, we detail the sub-DAOs that currently exist or are being proposed. The formation of further sub-DAOs in the future across different areas (e.g., engineering, marketing, partnerships, etc.) will help the project achieve its goal of decentralization and immutability.

Grants DAO

The Grants DAO was introduced in August 2021. As detailed on the PERP token page, 54.8% of the token supply is earmarked for the ecosystem and rewards. A portion of these funds are geared towards funding grants that help accelerate and expand the Perpetual Protocol ecosystem.

  1. Business solutions/integrations: anything that utilizes Perp as a base layer (e.g., structured products).
  2. Tooling: building out any tooling that may be helpful for either makers, traders or token holders.
  3. Marketing: anything that focuses on explaining Perp and how it works, as well as getting the word out to the community. This can be anything from design to written content.

Committee members are chosen via a public nomination and voting process. Members are elected every six months via a Snapshot vote.

Depending on the ask, proposals will have to either go through the Grants DAO (<$50K) or submit a public proposal through the governance forum (>$50K). For Requests for Proposals, the price for the deliverable is set at the start.

All grants are priced in USD and then paid out in PERP, using a 7-day TWAP price at the time of payout. For example, if we payout a milestone, then we take the USD amount / TWAP price and send out the required amount of PERP. We expect there also to be up-front payments to kick start grants, but this will be at the discretion of the committee.

Token Listing DAO

The main purpose of the Token Listing DAO, created in November 2021, is to approve or reject new markets and co-marketing spends for token listing campaigns. The DAO is in place to ensure that there's some level of governance to prevent outright scams from being listed on Perp.

The DAO is composed of six committee members who are chosen via a public nomination and voting process. Members are elected every three months via a Snapshot vote.

Any markets approved by the Token Listing DAO will be listed on app.perp.com by the foundation team. Anyone can submit a proposal for a new market to the DAO and put forward a case for its inclusion. The Token Listing DAO is also responsible for the marketing budgets to bootstrap new token listings.

Each asset is considered individually for listing suitability. The criteria include:

  • Feasibility
    • price feed availability
    • asset stability
  • Demand
    • availability of trading options on Ethereum/Optimism
    • popularity of the asset, and its related project
  • Marketing opportunities
    • opportunities for co-marketing with listed projects

Community DAO (proposed)

The Community DAO (currently in the proposal stage) to decentralize community initiatives and build the Perpetual brand in areas such as marketing, localization, community moderation, and more.

Similar to other sub-DAOs, a committee made up of seven members will steer the direction and control the budget. This committee will be responsible for reviewing, evaluating and planning the execution of campaigns to increase the number of active traders and raise awareness about the Perpetual brand. Quarterly reviews are proposed to gauge the effectiveness of these campaigns.

Treasury DAO (proposed)

Currently in the planning stage, Treasury sub-DAO members will be elected periodically and given a mandate by token holders to manage the Perpetual DAO treasury and fund all other sub-DAOs. At some point in the future, the foundation team will eventually transition into its own sub-DAO and receive funding from the Treasury DAO.

PERP as a Governance Token

The PERP token is used by its holders to vote on governance proposals.

The governance forum is the main place to propose and discuss the pros and cons of new ideas in the foreseeable future (such as new collateral types, new features, etc.). Snapshot, an external off-chain voting platform, is used to get input from the community.

The 1 token-1 vote model clearly has drawbacks, where voting power is concentrated in the hands of the few and majority rules is the default. To improve the governance process, we will be transitioning to a veToken model where token holders can lock PERP into vePERP for up to 52 weeks to boost their voting power. The longer the tokens are locked for, the greater the boost to voting power, similar to veCRV.

The amount of time tokens are locked into vePERP and the quantity of tokens held jointly determines voting power, reducing the likelihood of governance attacks (such as using flash loans to vote using borrowed tokens).

Proposal Lifecycle

  1. Gauge community sentiment for a potential proposal through our community channels on Discord, Telegram and/or Twitter.
  2. Create an account at gov.perp.fi and submit a proposal (see proposal template here).
  3. Proposals must be discussed for at least 7 days and generate meaningful discourse. Go to this page to check and discuss current proposals.
  4. Author or (author’s delegate) must submit their web3 address to a forum mod to be added to the Snapshot account.
  5. Author/author’s delegate creates a vote, to last 7 days.
  6. Votes are subject to a minimum 10% quorum.
  7. If the proposal passes the voting stage with majority support (>50% of the vote), then it will be accepted as actionable by the Core team.
  8. Any vote that doesn’t pass or cannot reach the quorum will be rejected, and can restart at the proposal stage.

Snapshot Voting

Snapshot voting calculates voting power based on the number of PERP/vePERP that you have locked up, and allows stakeholders to support proposals without any gas costs.

Follow the steps below to cast your vote:

  1. Head over to https://snapshot.org/#/vote-perp.eth
  2. Click on “Connect Wallet” and connect with an account that holds PERP/vePERP
  3. Browse the active proposals
  4. Select your preferred choice(s): for weighted voting, you can vote for more than one option.
  5. Sign the message using your wallet and submit your vote.
  6. Once the vote has enough support, the foundation team will implement the proposal.