A PROPOSAL TO DECENTRALIZED ALGORAND GOVERNANCE- A CATALYST TO TRUE DECENTRALIZATION

In the last couple of years, Algorand has taken giant strides in the blockchain industry with impressive breakthroughs that has garnered the company widespread attention and solved the consensus trilemma for participants. Today, every account can actively participate in consensus but there’s just one little chink in the whole package; Algorand has been able to provide solution to the consensus problem but not the governance problem.

For newbies and anyone who’s gotten rusty on their blockchain terminologies, governance is the control over non-consensus tasks. Some of these tasks include the funding of grant proposals and so on. Contrary to what you’re probably thinking, governance is not algorithmic. It requires plenty of personal time and attention.

For anyone on the blockchain network, easy consensus is pretty great but more can be achieved which is decentralized governance. The proposal here is that a participation in governance be redesigned to accommodate a few unique features for an altogether satisfactory experience.

To this effect, governance participation should be monitored in order to authenticate real participation in governance, compensated and voluntary. By this we mean Algorand accounts should be free to choose whether they wish to participate in governance or not. Lastly, governance participation should be locked.

On the network, governors are entrusted with the ability to take important decisions that impact the Algorand ecosystem and its growth. To enable influence on votes they cast, all governing accounts should function for one year before locking tokens for a whole year. Here is how this works. Governors have permission to make early withdrawals from these locked accounts. However, any such withdrawal will be with strong limitations and consequences if the requirements of limitations are broken. On the bright side, rewards earned by governors are unlocked, deposited in accounts a governor handpicks.

Why go to all this trouble to improve governing? The purpose here is to decentralize Algorand governance and sync network rewards with this governance. The aim of this proposal to decentralized Algorand governance is to put in place structures that guarantee a secure, proficient and decentralized governance. Simply put, Algorand is doing what it did for its consensus protocol for its governance.

How does Algorand propose to go about it? By addressing four aspects of its governance:

  • Compensation
  • Mechanics
  • Early withdrawals
  • Network rewards


Compensation

Currently, governors receive directives from the Foundation as to compensation payable to governing accounts. This is great but users are not likely to jump on the chance to participate in governance if an unfavorable compensation level is chosen.

Instead of a centralized method of choosing compensation levels, governance reward rates can be picked in a more decentralized manner. This is achievable through what is called a Dutch action. Of course, this will be within the strictures set by the Foundation.


  • Mechanics

In Algorand governance, mechanics entail the process of voting which allows governing decision to be made collectively. With the advent of governance decentralization, dynamic governance mechanics should be explored. Generally, governance mechanics are restricted to governors and the Foundation. These two parties have roles which they play in the system: governors decide, while Foundation facilitates.

Governance mechanics are run by a number of protocols. They are convenience, monitoring, vote options, transparency, zero censoring, zero spamming, voting deadlines, voting sessions, separate governance keys.

Convenience: mobile wallets should be available for governance voting.

Monitoring: currently, monitoring has been feasible through blockchain transparency.

Vote options: sessions for voting should be equipped with the option for voting with the Foundation.

Transparency: for transparency, session items could be suggested by any community member. Next, the items should be posted on the blockchain before inclusion in a session. All research on items requiring a vote should be researched by the Foundation and all votes should be casted first by the Foundation. This also applies to publishing if votes when publishing a session.

Zero censoring: this refers to the event of an item being posted for up to 6 months without getting voting session inclusion. Governors will should then vote on a session with one item by posting on the chain transaction if 25% of the governing stake are in support.

Zero spamming: regular transactions are processed algorithmically while governance items are processed by humans. Spamming should thus be out ruled to avoid wasting the time of governors and Foundation alike.

Voting deadlines: The Foundation should give folks at most 30 days to vote. Voting deadlines for sessions posted on day D and votes posted on that deadline have exclusive right to be posted.

Voting sessions: this requires governors to vote on a set of items, supplying each item with a short summary, options for YES and NO, a link to details of that item and item name.

Separate governance keys: for governance votes to be transient and quick to expire after every voting session, governance votes should be signed digitally by governance-participation keys that are separate from consensus and spending-participation keys. Users can also keep governing accounts with custody providers without forfeiting governance voting power.


  • Early withdrawals

Early withdrawals from governing accounts should be imbibed to encourage locking for participating in governance. These withdrawals would be made on the condition that governors will withdraw at most 90% of locked tokens within the space of 30 days.

Through penalties, governors will be discouraged from withdrawing from their locked accounts. For every withdrawal, governors pay 10% of withdrawn tokens and forfeit all rewards for the month in which withdrawal took place.


  • Network rewards

Network rewards will cover the space of seven years with an annual rate of 8% in 2021 which will be reduced to 1% by 2028. This is a rather interesting change from the former rate of network reward tokens which amounted to 6% in 2020 which was slowly heading towards zero within 3.5 years according to estimates.


Without a doubt, it would be impossible to achieve a working, efficient decentralization in all aspects of governance. The proposed strategy is to work steadily but effectively, starting from vital areas before integrating other areas into this change.