Concepts

Disclaimer: This is work in progress. Mechanisms are susceptible to change.

The governance process is divided in a few steps that are outlined below:

• Proposal submission: Proposal is submitted to the blockchain with a deposit.
• Vote: Once deposit reaches a certain value (MinDeposit), proposal is confirmed and vote opens. Bonded Atom holders can then send TxGovVote transactions to vote on the proposal.
• If the proposal involves a software upgrade:
  • Signal: Validators start signaling that they are ready to switch to the new version.
  • Switch: Once more than 75% of validators have signaled that they are ready to switch, their software automatically flips to the new version.

Proposal submission

Right to submit a proposal

Any Atom holder, whether bonded or unbonded, can submit proposals by sending a TxGovProposal transaction. Once a proposal is submitted, it is identified by its unique proposalID.

Proposal types

In the initial version of the governance module, there are five types of proposals:

• TextProposal All the proposals that do not involve a modification of the source code go under this type. For example, an opinion poll would use a proposal of type TextProposal.
• SoftwareUpgradeProposal. If accepted, validators are expected to update their software in accordance with the proposal. They must do so by following a 2-steps process described in the Software Upgrade section below. Software upgrade roadmap may be discussed and agreed on via TextProposals, but actual software upgrades must be performed via SoftwareUpgradeProposals.
• CommunityPoolSpendProposal details a proposal for use of community funds, together with how many coins are proposed to be spent, and to which recipient account.
• ParameterChangeProposal defines a proposal to change one or more parameters. If accepted, the requested parameter change is updated automatically by the proposal handler upon conclusion of the voting period.
• CancelSoftwareUpgradeProposal is a gov Content type for cancelling a software upgrade.

Other modules may expand upon the governance module by implementing their own proposal types and handlers. These types are registered and processed through the governance module (eg. ParamChangeProposal), which then execute the respective module's proposal handler when a proposal passes. This custom handler may perform arbitrary state changes.

Deposit

To prevent spam, proposals must be submitted with a deposit in the coins defined in the MinDeposit param. The voting period will not start until the proposal's deposit equals MinDeposit.

When a proposal is submitted, it has to be accompanied by a deposit that must be strictly positive, but can be inferior to MinDeposit. The submitter doesn't need to pay for the entire deposit on their own. If a proposal's deposit is inferior to MinDeposit, other token holders can increase the proposal's deposit by sending a Deposit transaction. The deposit is kept in an escrow in the governance ModuleAccount until the proposal is finalized (passed or rejected).

Once the proposal's deposit reaches MinDeposit, it enters voting period. If proposal's deposit does not reach MinDeposit before MaxDepositPeriod, proposal closes and nobody can deposit on it anymore.

Deposit refund and burn

When a the a proposal finalized, the coins from the deposit are either refunded or burned, according to the final tally of the proposal:

• If the proposal is approved or if it's rejected but not vetoed, deposits will automatically be refunded to their respective depositor (transferred from the governance ModuleAccount).
• When the proposal is vetoed with a supermajority, deposits be burned from the governance ModuleAccount.

Vote

Participants

Participants are users that have the right to vote on proposals. On the Cosmos Hub, participants are bonded Atom holders. Unbonded Atom holders and other users do not get the right to participate in governance. However, they can submit and deposit on proposals.

Note that some participants can be forbidden to vote on a proposal under a certain validator if:

• participant bonded or unbonded Atoms to said validator after proposal entered voting period.
• participant became validator after proposal entered voting period.

This does not prevent participant to vote with Atoms bonded to other validators. For example, if a participant bonded some Atoms to validator A before a proposal entered voting period and other Atoms to validator B after proposal entered voting period, only the vote under validator B will be forbidden.

Voting period

Once a proposal reaches MinDeposit, it immediately enters Voting period. We define Voting period as the interval between the moment the vote opens and the moment the vote closes. Voting period should always be shorter than Unbonding period to prevent double voting. The initial value of Voting period is 2 weeks.

Option set

The option set of a proposal refers to the set of choices a participant can choose from when casting its vote.

The initial option set includes the following options:

• Yes
• No
• NoWithVeto
• Abstain

NoWithVeto counts as No but also adds a Veto vote. Abstain option allows voters to signal that they do not intend to vote in favor or against the proposal but accept the result of the vote.

Note: from the UI, for urgent proposals we should maybe add a ‘Not Urgent’ option that casts a NoWithVeto vote.

Weighted Votes

ADR-037 introduces the weighted vote feature which allows a staker to split their votes into several voting options. For example, it could use 70% of its voting power to vote Yes and 30% of its voting power to vote No.

Often times the entity owning that address might not be a single individual. For example, a company might have different stakeholders who want to vote differently, and so it makes sense to allow them to split their voting power. Currently, it is not possible for them to do "passthrough voting" and giving their users voting rights over their tokens. However, with this system, exchanges can poll their users for voting preferences, and then vote on-chain proportionally to the results of the poll.

To represent weighted vote on chain, we use the following Protobuf message.

Copy // WeightedVoteOption defines a unit of vote for vote split. message WeightedVoteOption { VoteOption option = 1; string weight = 2 [ (gogoproto.customtype) = "github.com/cosmos/cosmos-sdk/types.Dec", (gogoproto.nullable) = false, (gogoproto.moretags) = "yaml:\"weight\"" ]; }

Copy // Vote defines a vote on a governance proposal. // A Vote consists of a proposal ID, the voter, and the vote option. message Vote { option (gogoproto.goproto_stringer) = false; option (gogoproto.equal) = false; uint64 proposal_id = 1 [(gogoproto.moretags) = "yaml:\"proposal_id\""]; string voter = 2; reserved 3; reserved "option"; repeated WeightedVoteOption options = 4 [(gogoproto.nullable) = false]; }

For a weighted vote to be valid, the options field must not contain duplicate vote options, and the sum of weights of all options must be equal to 1.

Quorum

Quorum is defined as the minimum percentage of voting power that needs to be casted on a proposal for the result to be valid.

Threshold

Threshold is defined as the minimum proportion of Yes votes (excluding Abstain votes) for the proposal to be accepted.

Initially, the threshold is set at 50% with a possibility to veto if more than 1/3rd of votes (excluding Abstain votes) are NoWithVeto votes. This means that proposals are accepted if the proportion of Yes votes (excluding Abstain votes) at the end of the voting period is superior to 50% and if the proportion of NoWithVeto votes is inferior to 1/3 (excluding Abstain votes).

Inheritance

If a delegator does not vote, it will inherit its validator vote.

• If the delegator votes before its validator, it will not inherit from the validator's vote.
• If the delegator votes after its validator, it will override its validator vote with its own. If the proposal is urgent, it is possible that the vote will close before delegators have a chance to react and override their validator's vote. This is not a problem, as proposals require more than 2/3rd of the total voting power to pass before the end of the voting period. If more than 2/3rd of validators collude, they can censor the votes of delegators anyway.

Validator’s punishment for non-voting

At present, validators are not punished for failing to vote.

Governance address

Later, we may add permissioned keys that could only sign txs from certain modules. For the MVP, the Governance address will be the main validator address generated at account creation. This address corresponds to a different PrivKey than the Tendermint PrivKey which is responsible for signing consensus messages. Validators thus do not have to sign governance transactions with the sensitive Tendermint PrivKey.

Software Upgrade

If proposals are of type SoftwareUpgradeProposal, then nodes need to upgrade their software to the new version that was voted. This process is divided in two steps.

Signal

After a SoftwareUpgradeProposal is accepted, validators are expected to download and install the new version of the software while continuing to run the previous version. Once a validator has downloaded and installed the upgrade, it will start signaling to the network that it is ready to switch by including the proposal's proposalID in its precommits.(Note: Confirmation that we want it in the precommit?)

Note: There is only one signal slot per precommit. If several SoftwareUpgradeProposals are accepted in a short timeframe, a pipeline will form and they will be implemented one after the other in the order that they were accepted.

Switch

Once a block contains more than 2/3rd precommits where a common SoftwareUpgradeProposal is signaled, all the nodes (including validator nodes, non-validating full nodes and light-nodes) are expected to switch to the new version of the software.

Note: Not clear how the flip is handled programmatically