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Governance

Governance structure and progressive decentralization roadmap for Prediction DAO.

Current Governance Structure

Guardian Multisig

Composition: 5-of-7 multisig

Powers: - Emergency pause capability - Initial parameter tuning - Temporary intervention if critical issues

Members: TBD during launch phase

Futarchy Process

All non-emergency decisions go through futarchy:

  1. Community votes on welfare metrics
  2. Proposals submitted with bonds
  3. Prediction markets determine outcomes
  4. Execute if markets indicate approval

Progressive Decentralization

Phase 1: Guarded Launch (Year 1)

Guardian Powers: - Full emergency pause authority - Can update certain parameters - Monitor system closely

Rationale: New system needs close oversight

Spending Limits: - 50,000 ETC per proposal - 100,000 ETC daily aggregate

Phase 2: Increased Threshold (Year 2)

Changes: - Guardian threshold: 5-of-7 → 6-of-7 - Longer timelock periods - Higher spending limits - More community oversight

Rationale: Require broader consensus for intervention

Phase 3: Reduced Authority (Year 3)

Changes: - Guardians can only pause, not modify - Community can override guardian pause - Significantly higher spending limits - Automated monitoring reduces need for intervention

Rationale: System proven stable, reduce central control

Phase 4: Full Decentralization (Year 4+)

Changes: - Guardian multisig disbanded - All decisions via futarchy - Meta-governance: system governs itself - No special privileges for anyone

Rationale: System mature enough for full autonomy

Governance Parameters

Adjustable Parameters

Parameters that can be changed via governance:

Economic: - Bond amounts (proposal, oracle, challenge) - Spending limits - LMSR liquidity parameter - Fee structure

Timing: - Review period duration - Trading period range - Challenge period - Timelock duration

Welfare Metrics: - Add new metrics - Adjust metric weights - Change calculation methods - Update data sources

Parameter Change Process

  1. Submit proposal for parameter change
  2. Goes through full futarchy process
  3. Market determines if change improves welfare
  4. If approved, parameter updated after timelock

Welfare Metric Governance

Current Metrics

  1. Treasury Value (Primary) - Weight: 40%
  2. Network Activity (Secondary) - Weight: 30%
  3. Hash Rate Security (Tertiary) - Weight: 20%
  4. Developer Activity (Quaternary) - Weight: 10%

Changing Metrics

Adding New Metrics:

  1. Propose new metric definition
  2. Specify calculation methodology
  3. Provide data sources
  4. Markets decide if addition improves governance

Adjusting Weights:

  1. Propose new weight distribution
  2. Justify based on protocol priorities
  3. Markets evaluate impact on decision quality

Meta-Governance

System Governs Itself

Once fully decentralized, protocol upgrades go through futarchy:

Upgrade Process:

  1. Propose contract upgrade
  2. Specify changes and rationale
  3. Select welfare metric (typically treasury value)
  4. Market decides if upgrade improves protocol
  5. If approved, UUPS proxy updated

Benefits:

  • No external control
  • Economically optimal decisions
  • Continuous improvement
  • Self-correcting system

Emergency Procedures

When Guardians Can Pause

Valid Reasons: - Critical smart contract vulnerability - Oracle manipulation detected - Market manipulation detected - Significant unexpected behavior

Invalid Reasons: - Disagreement with community decisions - Political pressure - Personal interests

Pause Process

  1. Guardian multisig detects issue
  2. Threshold of guardians agree (5-of-7)
  3. Emergency pause activated
  4. Public announcement with explanation
  5. Investigation and fix
  6. Community review
  7. Unpause via futarchy vote

Overriding Guardian Pause

After Year 3, community can override:

  1. Token holders vote
  2. Requires supermajority (67%)
  3. Unpause if approved
  4. Guardian action logged for accountability

Governance Participation

Who Can Participate

Submit Proposals: Anyone with 50 ETC bond

Trade on Markets: Anyone with ETC for gas + positions

Report Oracle Values: Anyone with 100 ETC bond

Challenge Reports: Anyone with 150 ETC bond

Vote on Metrics: Token holders (if applicable)

Incentives

Aligned Incentives: - Traders profit from accurate predictions - Proposers bond returned if legitimate - Oracles build reputation - Token value increases with good governance

Penalties: - Spam proposals lose bond - False oracle reports lose bond - Frivolous challenges lose bond

Governance Analytics

Key Metrics to Track

Participation: - Number of proposals per month - Trading volume per market - Number of unique traders - Oracle accuracy rate

Outcomes: - Proposal approval rate - Average welfare metric improvement - Challenge frequency - Ragequit utilization

Health: - Market liquidity - Price volatility - Time to resolution - Bond forfeiture rate

Future Governance Features

Potential Additions

Delegation: Delegate trading/voting power

Reputation: Track historical accuracy

Quadratic Mechanisms: QF or QV for certain decisions

Prediction Markets for Metrics: Markets decide metric weights

Multi-chain: Cross-chain governance coordination

For More Details