[14 Aug 2023: Below version represents the updated version after feedback has been incorporated from Phase 0]
[29 Sept 2023: Below version represents the updated version after feedback has been incorporated from Phase 1 and the discussions around the resource allocation framework]
[10 Oct 2023: Minor change in wording]
Title: Governance Framework
Authors: @Andre, @Christoph
Abstract:
The purpose of the governance framework is to define and outline the key stakeholders involved in the governance of SafeDAO, to establish a dynamic governance approach and to describe the governance process
Proposal details:
A. Hierarchy of governance sources
SafeDAO governance is built on a hierarchy of norms. In this hierarchy, each level must comply with the level above. On top stands the SafeDAO constitution, which sets the blueprint for SafeDAO, a decentralized collective, stewarding the thriving ecosystem around the Safe Smart Accounts on Ethereum and other blockchains. The governance framework must align with the constitution, and in turn, seasons and proposals must adhere to the governance framework. This structure ensures each element supports and enforces the broader goals outlined in the constitution.
B. Stakeholder overview
SafeDAO is made up of various stakeholder groups, with a participant potentially being part of several groups. An overview of each stakeholder is provided below:
I. Token holders
1. Rights
Safe token holders (Token holders) can vote within the scope of governance of SafeDAO (see C. Scope of governance). They can vote with their vested and unvested tokens and delegate their voting power.
2. Responsibilities
Token holders are encouraged
- to actively participate in decision-making processes, lending their voice to proposals, discussions, and voting.
- to delegate their voting rights to trusted individuals or entities, if unable to actively participate
- to fully understand the implications of their votes by doing their own research to ensure informed decisions. If they cannot commit to this due diligence, delegation to delegates is encouraged.
II. Delegates
1. Delegation process
The delegation process is offchain. Token holders can delegate their votes to any address of their choice. The current delegation system requires full delegation of the voting power. Partial delegation may be implemented. Token holders can redelegate or undelegate at any time.
2. Rights
Delegates can vote on behalf of token holders who delegated their voting rights to them. Delegates may not delegate their delegated voting right to someone else.
3. Responsibilities
Delegates should be actively involved and responsible for representing the interests of the token holders, participating in decision-making processes, and facilitating transparent and effective governance. As such, delegates should provide a short reasoning on each of their votes on Snapshot through its commentary function.
III. Guardians
1. Guardians selection
Safe Guardians are active members of the Safe community, who have verifiably proven their commitment to SafeDAO’s vision. They steward the Safe ecosystem and protocol, while driving the adoption of Smart Accounts. They are mission-aligned and likely to be actively participating in governance.
The first cohort of Guardians (Guardians v1) was chosen by the Foundation and has already received a retrospective token allocation and enjoys certain benefits. Given that Guardians play an essential role in SafeDAO governance by virtue of their responsibilities, there will be further cohorts. Those cohorts will be administered by SafeDAO. Details will be laid out in Guardians v2.
2. Rights
Guardians can vote with their tokens granted as part of Guardians v1.
3. Responsibilities
As outlined here, Safe Guardians are expected to
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Keep up with announcements and discussions
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Give feedback on Safe Ecosystem Proposals (SEPs) which will also serve as a signal to other community members.
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Move proposals which are mature enough for a voting from Phase 1 to Phase 2.
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Vote on SEPs via the Safe Snapshot space
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Provide a reasoning on each of their votes on the SafeDAO forum and on Snapshot through its commentary function
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Push new ideas that could transition to proposals
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Advocate for voting delegations - boost responsibility by campaigning for other token holders to delegate
Guardians are encouraged to be actively involved in discussions on the forum.
Details of the responsibilities may be specified in a code of conduct, should one be established.
IV. Non-token holders
Non-token holders have various ways to contribute to SafeDAO. They can submit proposals, engage in discussions on the collaboration platforms and become delegates. As such their rights and responsibilities correspond to their corresponding role.
V. Safe Ecosystem Foundation (SEF)
The Safe Ecosystem Foundation (“Foundation” or “SEF”) is a foundation governed by the laws of Switzerland and established in Zug (Switzerland). A Swiss foundation is an independent special-purpose fund endowed with legal personality, whose assets may only be used to achieve the purpose of the Foundation. It is a special form of legal entity, as it has no shareholders and no beneficial owners and thereby aims to avoid the value extraction by governance bodies which are not in compliance with the purpose of the foundation.
SafeDAO is stewarded by the Foundation, consistent with the SafeDAO Constitution and the Foundation Deed. The Foundation acts as a legal wrapper of the SafeDAO treasury, facilitates and administers the governance procedures and implements passed governance proposals if necessary.
1. Purpose and mission
The Foundation Deed, the regulations, directives and policies of the Foundation in alignment with the Swiss foundation norms, delineate its purpose, mission, and governance structure. It states that the Foundation is dedicated to the development and promotion of technologies within the Safe Ecosystem, public education about the ecosystem, and the management of related assets. As a legal document, it lays down the operational blueprint, guiding the Foundation’s dealings, including liaising with various entities, managing intellectual property rights, and supporting research and development. This promotes transparency and accountability in the Foundation’s efforts towards achieving its objectives in the Safe Ecosystem, thereby ensuring its alignment with the overarching goals of SafeDAO.
The full text of the purpose of the Foundation in its legally binding, German version can be found here. An unofficial translated version (German / English) can be found here.
In principle, the Foundation does not have a profit-making-purpose and does not seek any profits. The Foundation may generate profits to the extent required for the realization of its purpose.
2. Foundation’s governance
a. Council
The Foundation council (“Council”) is the highest governing body of the Foundation, with the core duty to implement the Foundation purpose. There is a minimum number of three Council members required in accordance with the Foundation Deed. The current Council members are elected for a term of office of 4 years. With an exit of a Council member, the remaining Council members would appoint a new member. The Council can remove a Council member with a majority vote. The current composition of the Council can be found in the Governance Hub.
b. Responsibilities of Council
In order to achieve the Foundation purpose, the Council is tasked, among other things, with:
- specifying the organizational structure and strategy using Foundation regulations and guidelines,
- personnel planning at Council and executive management level,
- appointing and dismissing members of executive management, and people entrusted with representing the Foundation,
- supervising members of executive management and people entrusted with representing the Foundation with respect to objectives,
- approval of the annual report / annual financial statements,
- supervising compliance,
- communication with the Swiss Federal Supervisory Authority for Foundations (also known as the Eidgenössische Stiftungsaufsicht / ESA).
c. DAO committees
DAOs face a variety of unresolved legal issues. The most prominent ones are the lack of legal personality, the limitation of DAO participants’ liability, and the tax treatment of community assets (please refer to the explanations of the dydx foundation and the chosen approach of a Guernsey purpose trust). The Foundation’s goal is to provide an innovative Swiss solution to the legal challenges by leveraging SEF’s legal personality in engagements with contracting parties and acting as a legal wrapper of the treasury for tax purposes.
SEF has prepared its Foundation Deed for the possibility of setting up so-called DAO committees. The unique characteristic of these foundation native bodies is that they can be staffed with DAO participants only and the composition is chosen by SafeDAO. Furthermore, there would be the advantage that the members of the DAO committee could be supported by the legal and financial department of SEF. Administrative support would allow members of a DAO committee to focus on their substantive activities. The Council as well as SafeDAO can assign certain activities, as well as rights and responsibilities which are in their scope of governance to the DAO committees. Currently, SEF is clarifying the organizational requirements for the establishment of DAO committees with the relevant authorities. Once these requirements have been clarified, it is intended that SEF and SafeDAO will jointly coordinate the establishment of DAO committees.
d. Supervision of Foundation
To ensure that the Foundation duly promotes the Foundation’s purpose and does not undertake any non-compliant value extraction, Swiss foundations are subject to supervision of the Swiss Federal Department of Home Affairs, enforcing through the Swiss Federal Supervisory Authority for Foundations.
3. Rights and responsibilities in SafeDAO
a. Economic holder of SafeDAO assets
SEF maintains stewardship over the assets of SafeDAO, e.g. Safe token allocation assigned to SafeDAO. The Foundation acts as a legal wrapper of the SafeDAO treasury. SEF does not engage on behalf of SafeDAO or allocate funds from the SafeDAO treasury without previously being signaled so by SafeDAO.
b. Governance administration
SEF assists with the administrative elements of SafeDAO’s governance processes. This includes:
- Moderation and facilitation of governance proposal processes.
- Removal of proposals that are fraudulent, spam-oriented, defamatory, hateful, or otherwise inappropriate or inconsistent with the SafeDAO Constitution, SEF Foundation Deed or any Foundation regulation (if applicable).
- Exercising oversight and control over collaboration and communication platforms such as Discourse, Discord, Telegram, Twitter, and Snapshot to ensure and facilitate effective engagement and interaction.
- Monitoring of the voting process including the accurate reflection of voting power, voting periods, quorums and approval thresholds.
- Other necessary services aligned with the SafeDAO Constitution to ensure orderly operations.
SEF provides administrative support to governance processes in order to offer a minimum level of structure. It is open to support community initiatives that carry out governance administration independently or in addition.
VI. GnosisDAO
SafeDAO is a spin-off from GnosisDAO (see “History” in the Governance Hub), which was decided in GIP-29. This states that GnosisDAO has two functions:
- Token holder: GnosisDAO is a significant backer and token holder (see “Safe Token” in the Governance Hub).
- Joint treasury: A joint treasury between SafeDAO and GnosisDAO was established which is collectively governed by both DAOs.
C. Scope of governance
I. Domains of governance
The following domains are under governance of SafeDAO:
- Constitution
- Governance framework: This encompasses the scope of governance, dynamic governance, decision-making process and principles of proposal implementation
- Resource allocation framework, once ratified
- Assets of SafeDAO (see “Treasury” in the Governance Hub)
- SafeDAO Treasury and joint SafeDAO/GnosisDAO Treasury
- IP rights: ENS domain, NFTs etc.
- Safe Grants Program with funding and administrative support provided by SEF
- SEF governance signaling: Suggestion regarding the establishment and composition of DAO committees, once established by the Foundation
- Unpausing of Safe token transferability
- Safe{Core} Protocol: Parameters and other governance-related aspects, once they have been transferred to the governance of SafeDAO
The Foundation’s fiat funds and its Safe token allocation are not under scope of governance of SafeDAO, unless these have been allocated specifically and solely for the purpose of SafeDAO by the Foundation.
The below table shall help visualize the responsibilities and scope of governance of SEF and SafeDAO.**
II. Proposal types
SafeDAO votes through Safe Ecosystem Proposals (SEPs). These are separated into proposal types, according to the domains of governance. Proposal types can be executed either on- or offchain.
| Proposal types | Description | Execution |
|---|---|---|
| SEP: Constitutional Proposals | Changes to the constitution | offchain |
| SEP: Governance Proposals | Changes to the governance framework and the resource allocation framework | offchain |
| Other SEPs | All other domains of governance not explicitly stated in the other proposal types | off-/onchain |
| Grants Council Nominations for SGP | Voting on the grants council nominations for SGP | offchain |
As steward of the SafeDAO governance the Foundation is administering which proposal type a specific proposal belongs to.
D. Dynamic governance
I. Objective
The core objective of dynamic governance cycles is to continuously evolve and optimize the democratic processes within SafeDAO. By committing to an iterative and data-driven approach, it is the aim to identify, implement, and refine the best possible governance model over time that truly reflects the collective interests of Safe’s community and promotes their active engagement.
II. Governance cycles
SafeDAO will change its decision-making process over a specified time frame and run several governance experiments (seasons). Seasons will consist of the following 4 sprints.
- Sprints 1-3
The proposals of the first 3 sprints shall address all proposal types except constitutional and governance proposals (s. C.II. Proposal types). This design shall allow a focus on fostering the Safe ecosystem while avoiding distractions from governance proposals.
- Sprint 4: Review and governance amendment sprint
As a counterpart to the restriction of governance proposals during the first 3 sprints, the 4th sprint is dedicated to governance review and governance proposals. During this time, no other proposals shall be submitted.
Notwithstanding the aforementioned, SEPs related to the implementation and execution of the milestones of SEP #3 are allowed to be voted on in any sprint until their completion.
- Guiding principles for timeline
The guiding principles of the timing are (1.) to make the sprint processes predictable, (2.) to provide sufficient time for preparation and review tasks of relevant events and (3.) to strike a balance between Sprints 1-3 and Sprint 4 (review and governance amendment sprint).
III. Changes to governance
Changes to the dynamic governance include the processes laid out in this governance framework which include, but are not limited to modifying the governance cycles, the proposal types and the voting mechanisms. The governance framework can be changed itself by an SEP.
E. Decision-making process
I. Governance toolkit
SafeDAO governance utilizes several tools:
- Snapshot: An offchain voting platform
- Discourse: A community forum dedicated to discussions around governance proposals and related topics.
- Discord: The governance channel is used for governance announcements and less formal governance discussions.
Other tools that are being used can be found in the “Toolkit” section of the Governance Hub.
II. Proposal and voting sprints
To reduce operational burden and voter fatigue several proposals are combined into monthly sprints. Each monthly sprint is structured the same way, so that SafeDAO stakeholders are aware of relevant events and can schedule when they will take action.
| Weeks | Stage | Weekly Schedule | Time | Description | Who? |
|---|---|---|---|---|---|
| Week 1 | Discussion | Monday | 0:01 UTC | Start of proposal cycle (Proposals may also be posted in the forum before this date to maximize feedback during Phase 0) | Authors of proposals |
| Week 2 | Discussion/Review | Monday | 23:59 UTC | Deadline to post proposal to forum for Phase 1/Start of signaling on proposal maturity | Authors of proposals |
| Week 2 | Review | Wednesday | TBD | Proposal review call to present and discuss proposals with community | Authors of proposals; Delegates; Guardians; Everyone interested |
| Week 3 | Review | Monday | 23:59 UTC | Deadline for signaling on proposal maturity | Delegates; Guardians |
| Week 3 | Submission to Snapshot | Tuesday | 23:59 UTC | Deadline submission of eligible proposals to Snapshot | Safe Ecosystem Foundation (subject to change) or anyone with 20k Safe token |
| Week 3 | Voting | Wednesday | 0:01 UTC | Start voting delay | None |
| Week 3 | Voting | Thursday | 0:01 UTC | Voting starts | Everyone eligible to vote |
| Week 5 | Voting | Monday | 23:59 UTC | Voting ends | Everyone eligible to vote |
| Week 5/Week 1 | Discussion | Monday | 0:01 UTC | Start of next proposal cycle | Authors of proposals |
The below visualization is intended to showcase relevant dates on a timeline:
In case that the beginning or the end of a voting sprint event falls on a weekend or a bank holiday, this does not have any effect on the voting sprint processes.
III. Proposal submission
1. Phase 0: Optional discussion stage
Anyone can submit a proposal. Based on the proposal’s maturity, determined by a self-assessment from the authors, they can choose to submit the proposal to either Phase 0 or directly to Phase 1.
Phase 0 is optional, but recommended when discussing new ideas, since a successful proposal will need to garner momentum inside of the community. For this the proposal needs to be
- Submitted to a new discussion thread on the forum in Phase 0
- Marked with [Discussion] in the title
2. Phase 1: Official draft stage
If the authors determined by a self-assessment believe that the proposal is mature enough to vote on it (either after Phase 0 or directly), then it must be
- Submitted as a new discussion thread on the forum in Phase 1.
- If there was a previous discussion in Phase 0 add a link to it.
- Marked with [Draft] in the title.
- Formatted and contain information consistent with the proposal template in Annex 2.
IV. Process from Phase 1 to Phase 2: Signaling of delegates and Guardians
For a proposal to proceed from Phase 1 (proposal stage) to Phase 2 (voting stage), 3 delegates or Guardians, with a total voting power of 60.000 Safe token, must give signaling on the discussion thread. Guardians or delegates may not approve their own proposals. Guardians or delegates may signal approval by pasting the following comment on the proposal discussion thread: ”I am a Safe delegate/Guardian [link to your wallet address(es)] with sufficient voting power and I believe this proposal is ready to move to a vote." Multiple wallets can be linked. The relevant time to determine the voting power for signaling is the deadline for signaling on proposal maturity (E. II.)
If a delegate signals approval to move a proposal to a vote, it should not be construed as an endorsement of said proposal. It solely signifies that the delegate believes the proposal is ready to move to a vote. Authors can reach out to Guardians if they believe their proposal is ready to move to a voting stage.
SEF will implement processes to oversee the verification process to ensure that a wallet address belongs to the delegate/Guardian signaling and that they possess the necessary voting power. After the proposal has gotten sufficient signaling, a proposal number is assigned by a forum admin.
V. Phase 2: Voting process
1. Voting system
These are the parameters of the voting system that can be used in upcoming seasons. The specific voting system used depends on the specific season, the proposal types and the individual proposals.
2. Voting formalities
The final ratification of a proposal requires a successful vote on the safe.eth Snapshot space or specific subspace that fulfills the following requirements and those laid out in the Annex 1 to the respective season.
- Duration: Proposal must comply with the voting delay and voting period of the Proposal and voting sprints
- Who: The Safe Ecosystem Foundation can add proposals to Snapshot that are eligible to Phase 2 or entrust the responsibility to (a group of) guardians or other SafeDAO participants. In addition, any token holder with at least 20,000 Safe token can technically post proposals on Snapshot.
- Form:
- Proposals must comply with the voting system for proposal type. One outcome needs to be “Make no changes”
- Proposal must comply with quorum
- Majority - Specific majority of SAFE used for voting on Snapshot
- Proposal title - [SEP #] SEP title here
- Proposal description - Has to follow the SEP template
- Proposal discussion link - Link to SEP on the forum
3. Participation agreement
The participation agreement as implemented through SEP #1 defines who qualifies as a SafeDAO participant. It provides rules to reduce liability to the greatest extent possible, and establishes a complaints and disputes procedure. It aims to manage expectations and provide legal clarity for stakeholders interacting with SafeDAO within the broader Safe ecosystem. Every stakeholder who wants to vote on a proposal via Snapshot needs to first agree to the participation agreement.
4. Voting power
The voting power is the sum of the voters own voting power and delegated voting power.
a. Own voting power
Token holders can generally vote with their vested and unvested Safe token. One Safe token equals one vote, unless agreed otherwise through a specific voting strategy.
SafeDAO and the Foundation do not vote nor delegate with their Safe token allocation. GnosisDAO only votes and delegates with their vested Safe token. SafeDAO and Gnosis do not vote nor delegate with their joint treasury.
b. Delegated voting power
Delegates may vote on behalf of token holders that delegated voting rights to them. Delegation does not restrict token holders from voting themselves; in the event of token holders exercising their voting rights, their vote takes precedence over any vote cast by their delegate. Token holders can delegate or redelegate any time.
c. Calculation of voting power
The voting power is calculated at the time that the vote starts. Votes can be changed until the voting cycle is over.
F. Principles of proposal implementation
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If proposals approved by SafeDAO are not executed automatically onchain, governance proposals will be directed to SEF for implementation.
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If proposals are carried out onchain via the Zodiac Reality module (also known as SafeSnap), SEF supervises for safety. If a proposal or transaction is deemed unsafe or fraudulent, SEF retains the right to veto the implementation and remove it.
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If a proposal affects SEF’s sphere of responsibility, SEF will assess the proposal to ensure their alignment with the purposes of the Foundation and SafeDAO, feasibility for implementation, legal compliance, and overall safety and security. For compliance reasons SEF remains an unobstructed veto right. It will only exercise such right if a proposal does not materially comply with the defined regulations from SafeDAO such as this governance framework, the constitution or legal requirements.
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If a proposal fails to pass the assessment, SEF retains the option to remove it for resubmission or implement it with certain limitations. In such cases, SEF will provide explanations to SafeDAO regarding the rejection or the restrictions imposed on the proposal.
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If a proposal passes the assessment, SEF will diligently and in a commercially reasonable manner facilitate its implementation. Proposals that need the technical involvement of SEF shall state this clearly in the proposal template.
G. Entry into force
The framework shall enter into force on the second Monday after the successful vote on Snapshot.
H. Annex 1: Season 1
For the inaugural season, Season 1, the goal is to utilize the new governance framework in practice and gather experience. Therefore the changes to the voting types are minimal, only adding multiple choice voting.
For Season 1, the governance framework will operate under a soft launch protocol. Recognizing the need for flexibility during the formative phase of SafeDAO, the Foundation retains the prerogative to deviate from the processes laid out in D.II. Governance cycles and E.II. Proposal and voting sprints if necessary to ensure an efficient decision-making process. Any deviations will be communicated transparently and are subject to review in the review and governance amendment sprint. This exception is limited to Season 1 and is introduced to allow a smoother transition into the new governance framework.
I. Annex 2: Proposal Template
Changes to the proposal template in this annex don’t require the SEP process. The Safe Ecosystem Foundation holds the authority to make these modifications or delegate the responsibility to (a group of) guardians or other SafeDAO participants, ensuring alignment with the framework’s objectives.
[NOTE if Phase 0: Proposals in this section (i.e., phase 0) do not need to follow a certain structure like SEP proposals (i.e., phase 1) need to do. Nevertheless, we advise you to adopt the following template to the extent possible. This helps the reader better understanding your proposal in context and minimizes your workload needed later once the proposal transforms into an SEP.]
–
Title: Pre-fix: [Draft/Discussion]; write a concise title to be used for referencing the proposal.
Authors: List all names of people contributing to this proposal (e.g. legal names, forum usernames, ENS names, email addresses).
Created: Date when this SEP was initially created. Format: YYYY-MM-DD
Abstract
Write a short summary (tl;dr) of the proposal. Keep it as simple and concise as possible.
Proposal types
State which proposal type this proposal belongs to.
Proposal details
Share all information and context about this proposal, including:
Purpose and Background
What problem does it solve? What is the reasoning behind the proposal? What is the goal? Why should SafeDAO care about the proposal?
Effects and Impact Analysis
What are the effects of the proposal? What are the pros and cons? What are risks?
Alternative Solutions
What alternative solutions have been considered? Why have they been discarded?
Implementation
Does the implementation of the proposal require new code? How is the security of the code ensured? How is the implementation of the proposal carried out?
Own implementation possible
Own implementation but with funding (how much % to implementation)
Request for technical support through Safe matter expert:
- Who is needed?
- Did you reach out?
- Is there a roadmap?
Open Questions
Anything that needs to be cleared up before the community can make an informed decision?
Copyright
Copyright and related rights waived via CC0.
Purpose and background
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What problem does it solve? The proposal provides a stakeholder mapping and outlines the processes by which they interact with each other. It strives to implement checks and balances while recognizing DAO governance as a novel form of community alignment.
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What is the goal? The goal is to get high-level buy on the abstract governance structures and to agree on concrete parameters of the first season.
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Why should SafeDAO care about this proposal? SafeDAO has a genuine interest in their decision making and implementation processes. This is also manifested by the fact that a governance framework is required as an important milestone as a result of SEP3.
Effects and Impact Analysis
The governance framework will introduce a new level to the hierarchy of norms and thus have an impact on subsequent proposals. To avoid friction with any potential work on further proposals, the framework shall enter into force on the first Monday after the transferability of the Safe token has been enabled.
Alternative Solutions
- No governance framework: Challenging for community members to engage in decision making and implementation without having a basic understanding of the organizational structure.
- Detailed governance structure beyond a framework:
- Would take a lot of time research and community alignment.
- Would assume that there is the “one right” governance concept. It would not take into account that DAO governance is new and ideally tested through trial phases.
Technical Implementation
In order to implement the dynamic governance framework, settings in Snapshot will have to be changed and potentially new subspaces need to be opened to reflect the various voting systems in the future. Additionally, the forum structure will need to be changed to include the new proposal templates and an analytics dashboard needs to be created to check onchain the voting power of delegates and guardians when signaling under E.IV. Process from Phase 1 to Phase 2: Signaling of delegates and guardians.
Open Questions
None
Acknowledgements
Special thanks to Adam Hurwitz, Anton Mishchenko, Dmitry Bespalov, Eylon, Georg Reichhelm, Jekl, Jenny, jengajojo, Kevin Leuthardt, Lukas Schor, Nneoma, Oliver, papa_raw, Patrick Nick, Peter, Senad, Shelby, Tobias Schubotz and Varit for their contributions and feedback.
Copyright
Copyright and related rights waived via CC0.