By the end of this article, readers should have
- Understood the basic concept of blockchain governance
- Learned the structure of governance in Polkadot/Kusama
- Understood the voting mechanisms employed in Polkadot governance
- Learned how to participate in Polkadot governance
Introduction
In any setting, regardless of context, once you have a group of two or more people in a community, there arises a need to implement a system of rules that controls the actions and collective decision-making process of these people, in order to ensure a smooth and peaceful coexistence; And that is the genesis of Governance.
Governance encompasses the system by which an organization is controlled and operates, and the mechanisms by which it, and its people, are held to account.
-Governance institute.
And while the need to have a specific set of rules and guidelines by which people interact stretches far beyond historical accuracy, different communities have adopted various types of governance and implementation structures over time, with some evolving to be more transparent and more democratic than others.
The concept of using blockchain for governance has been floating around for a long time now mainly because of the transparent and immutable nature of blockchain technology as well as the ability to have a premise of truly free and fair elections. Many projects have adapted, in one way or another, blockchain governance. Most of these, however, only have elections on-chain. The execution however still falls into the hands of one or more people, subjecting it to human error or gross manipulation.
Today we dive into one of the most practical applications of decentralized voting mechanisms, as well as the on-chain implementation of the results of these voting processes. And that is the Polkadot/Kusama Governance system.
And while political scientists will insist that there is no system of governance that is perfect, if there is one as near-perfect as possible, it is one where every member of the society has a say. It is one in which there are no barriers to participating in the decision-making process.
“We cannot be mere consumers of good governance, we must be participants; we must be co-creators”
Rohini Nilekani
Structure of Polkadot Governance
The Polkadot/Kusama governance is made up of three major branches which are analogous but quite distinct from the territorial and domestic governance structures that we are familiar with. These are:
- The Referendum chamber
- The Council
- The Technical Committee.
The Referendum chamber
This is essentially anyone who holds DOT or KSM tokens in their wallet, otherwise referred to as the Community. Anyone with the minimum number of DOT tokens can make a proposal on-chain, which joins a queue of other proposals.
The community members are also responsible for electing council members (and by extension the technical committee) and they ultimately have the last say in whether a decision is to be made. Like a true democracy, the community has most, if not all the power.
The Council
The council is a democratically elected group of six to twenty community members ( currently 13 for Polkadot and 19 for Kusama) that are represented by their on-chain identities, and spearhead the direction of the network.
The council is analogous to a house of representatives or senate. They represent the voices of the passive holders who may not necessarily be present to always vote for proposals or referenda. They have specific powers within the network which allows them to :
- Propose Referenda.
- Cancel Malicious Referenda
- Elect the technical committee
- Control the treasury.
As stated earlier, the Council has a separate queue for submission of proposals, which later become Referenda. These proposals have to be unanimous or supported by a strict majority in order to join the queue and become a referendum.
Disagreeing council members can also Veto a council proposal and The council itself can also cancel or veto community proposals that are deemed harmful or malicious to the network by the majority.
Controlling the treasury
This is a major responsibility that falls within the powers of the council which entails total control of the network’s finances. Like any sovereign nation, there is a pertinent desire to ensure that the finances of the network are secure and in safe hands.
The Polkadot/Kusama treasuries are collections of funds that are collected through a portion of block rewards, transaction fees, slashing, and staking inefficiencies. They form a pool of funds that are used to cover the economic development of the ecosystem.
Members of the community submit proposals for funding and the council can vote to either grant or deny the proposal depending on its viability and usefulness of the proposal. Treasury proposals can be submitted for infrastructure deployment and continued operation of the network as well as various network security operations (monitoring services, continuous auditing).
Treasury funds can also be used for marketing activities (advertising, paid features, collaborations), educational programs, as well as community initiatives. Read more about how the treasury is run, the burn mechanism, and how the treasury is protected from misuse here
The technical committee
This is made up of teams of technically oriented individuals who have a proven track record in the Polkadot/Kusama ecosystem. They are added and removed through a simple majority vote by the council. Their main purpose is to avert potentially malicious referenda from passing and being implemented.
Because of the emergency nature of their task, the technical committee is the only branch of the Polkadot governance system that can fast-track proposals in order to quickly implement network fixes and abort potential disasters.
Referendum
The basic democratic unit of the Polkadot governance system is what is known as a referendum. It contains within it a proposal that is intended to accomplish something. It provides the voters with a binary option of either yes (Aye) or no (Nay).
A proposal is usually submitted by any of the aforementioned branches of the governance structure, that is, Any member of the community who holds DOT/KSM tokens, The Council, or the technical committee. Although the technical committee only submits and fast-tracks proposals in case of emergencies that require immediate action of some sort.
After every 2 voting periods, (approximately 2 months), the proposal with the most stake behind it is promoted to the referendum from either of the two queues ( Council and Referendum Chamber) in alternating succession.
A referendum can be submitted for a lot of purposes, with by far the most powerful of these being the proposal to modify the runtime of Polkadot itself. This is the cornerstone of a very important feature of Polkadot, Evolvability, which allows seamless upgrades on the Polkadot runtime without the need for a hard fork or downtime in the network. Proposals could also be submitted to add or remove a parachain, modify blockchain parameters, or cancel other proposals or referenda.
And while these all seem like fantastic ideas, it becomes quite obvious that malicious individuals could hijack the vote to destabilize the network, request illegitimate funding from the treasury, or maliciously ban a competing project from parachain auctions. Therefore, security measures have been put in place to discourage malicious voting practices. These include;
- Stake-weighted voting
- Time-locked voting
- Adaptive quorum biasing.
Stake-weighted voting: This simply means the number of DOT or KSM tokens that are used to support a proposal. The more the number of tokens, the higher the stake – weight behind the proposal. Additionally, other members of the community who approve of a proposal can second it by adding their own tokens to it, thereby increasing its token weight, and moving it up the proposal queue.
Time-Locked voting: This is the strategy that complements the stake-weighted voting to prevent community members from throwing their weight around (pun intended). This makes it such that the value of your vote is directly tied to the time for which your stake is locked. So a vote of 25 stake weight locked for 5 voting periods weighs more than a vote of 50 stake weight locked for 2 voting periods. It is essentially a system that values commitment to the proposal and the tokens will remain locked for the stipulated period only if the referendum passes. Otherwise, they are returned.
Note that: The locking only prevents the transfer of tokens but not other actions like staking validator to earn rewards from block production.
Adaptive Quorum Biasing:
This is a complicated system of biasing the vote turnout in favor of the outcome that is most likely to benefit the ecosystem. With adaptive quorum biasing, depending on the voter turnout, the majority doesn’t always carry the vote. The system works on some assumptions
- The council, (and by extension the technical committee) can be trusted. They always act in the best interest of the network.
- The community isn’t immune to infiltration by nefarious elements.
- Passive DOT/ KSM holders are generally happy with the way the network is and would like it to stay that way.
These assumptions were used as the basis of the following outcome. For a proposal originating from the council, there are two possible specific outcomes:
- Simple Majority: If a majority of the council approves of the proposal, then all it needs is a simple majority (50 +1%) to vote ‘aye’. Regardless of voter turnout.
- Negative turnout bias: If the council (and technical committee) unanimously vote FOR a proposal, then it is highly likely that it’s the best possible choice for the network, so the system is biased towards making sure that the proposal passes. This means that with a low enough turnout, the proposal can pass even without the majority vote.
So let’s say only 30% of voters turn up for such a vote. After the voting period, the proposal will still pass if at least 30% vote YES.
For a proposal arising from members of the community, the possibilities include
- The absolute majority: Regardless of where the proposal comes from, if 50% +1 of all DOT holders vote AYE, Then the proposal shall pass.
- Positive turnout bias. This ensures that community-initiated proposals get less likely to pass with decreasing voter turnout. This is because malicious elements can take advantage of a low voter turnout and pass nefarious Referenda. For this reason, when there is a low voter turnout, community proposals need much more than 50% in order to pass.
The more the voter turnout moves toward 100%, the less the effects of Adaptive Quorum Biasing are felt.
Conclusion.
The Polkadot governance system is one of the most decentralized applications of blockchain governance, where the elections and the implementations all take place on-chain, in a fully decentralized and transparent manner. The community is the most powerful stakeholder in the system and they decide the fate and direction of the network.
Further studying:
Comprehensive video on Polkadot governance here
Polkadot governance wiki here