On-chain governance: The greatest virtue of Polkadot

Polkadot is an open-source meta-protocol for Web3 applications founded by the Web3 Foundation Team. Polkadot differs from traditional blockchain 2.0 protocols and smart contract platforms by its multichain architecture based on the parachain structure.

Polkadot is the next evolution step from the world of siloed, independent blockchains because its main function is the interoperability of parachains/blockchains in the Polkadot ecosystem and even beyond.

In comparison to some other platforms, which put governance aside as their last step of development, Polkadot decided to enable public governance from literally day one.

The Polkadot community together with the council governs the network as it sees fit, in a completely decentralized and transparent fashion. This allows the network to upgrade itself, propose new features and schedule the next important events (like the next batch of parachain auctions). And not only for Polkadot, but the governance module is also available to all parachains thanks to the modularity of the Substrate framework!

Polkadot governance explained

The on-chain governance in Polkadot is a sophisticated mechanism that enables DOT holders to participate in the governing process which can modify protocols code, system parameters, update balances or the entire runtime, or even manage parachains.

To make some changes in the network, active token holders and the council participate in the voting and election process. This usually leads to a public referendum where DOT holders can cast their vote which is weighted by the amount of the tokens there locking in (more on this later on).

The protocol itself also evolves over time through forkless runtime upgrades, which are an innovative way of upgrading the blockchain without any hard forks —thus removing any risks of creating spin-off networks like Bitcoin Cash.

On-chain governance together with forkless upgrades is a perfect combination of decentralized management and smooth upgrades of the network itself.

Governance roles

There are three main governance roles, which we will describe below

  • DOT holders (community)
  • Council
  • Technical committee
Source: https://polkadot.network/launch-governance/

DOT Holders

All the owners of DOT tokens have the right to participate in the on-chain governance and decide which changes are being applied to the blockchain. Think of them as shareholders in the joint-stock company. As protection against Sybil attacks, Polkadot has a stake-weighted voting system. This means that the owner of 1000 DOT tokens has a 10x stronger vote than the owner of 100 DOTs.

DOT holders' rights:

  • submit a public proposal
  • vote council members
  • vote in referendums
  • submit a tip

Council

Council represents passive stakeholders, so think of it as elected members of parliament in the parliamentary democracy. At this moment, there are 13 council members, but in the future, the number can be extended up to 23. In the council, 1 member equals 1 vote, co that's quite a difference from the DOT holders' voting system. Any DOT holder can become a councilor but only the most-backed councilors are selected (in the same manner as validators are elected to the active set by the Phragmen algorithm). Council seats also rotate to prevent a long-term concentration of power.

Council rights

  • propose a referendum
  • cancels dangerous referendum (only once, their veto can be canceled by the community in another referendum)
  • manage the treasury
  • elect the Technical Committee members

Technical Committee

The Technical Committee is composed of the teams that have successfully implemented either a Polkadot runtime or a Polkadot Host (and thus proved a deep technical knowledge of the ecosystem). Technical Committee is the last line of defense against unwanted software errors. At this moment, it contains only 3 members.

Technical committee rights:

  • fast-track the proposal to reduce the time being voted on the referendum queue

The role of the committee is basically to allow the network to react quickly in case of an emergency without circumventing the governance process.

The governance process

Okay, now that we know about the three main roles of the governance roles, let's move on to the more interesting part — the governance process itself. As described in the scheme above, Council and DOT Holders can submit proposals, which are then turned into referendums where DOT Holders vote for their confirmation (AYE) or rejection (NAY).

Source: The First Polkadot Vote… by Gavin Wood

Proposals & Motions

Both Council and DOT Holders can submit an on-chain proposal that can turn into a referendum later on. The proposal can be basically anything, from a simple transfer of funds from the treasury up to the full-fledged runtime upgrade of the entire Polkadot codebase.

Treasury proposals

Besides the code and system upgrade proposal, council members or DOT holders can submit a treasury proposal that includes

  • spending of the treasury
  • tips: rewards for the community members for acting that benefits the network — tutorials, translations
  • bounties

Referenda

Every change to Polkadot takes the form of a referendum which is simply an accepted proposal that went through public voting by all DOT holders. Voters can even increase their voting power by committing to locking their tokens for longer periods of time — this is an important feature to mitigate the power of whales.

Source: wiki.polkadot.network

How to propose a referendum?

There are a few different ways how a referendum can be proposed

  • Publicly submitted proposals
  • Council submitted proposals — those can pass unanimously or through a majority
  • Proposals submitted as part of the enactment of a prior referendum
  • Emergency proposals submitted by the Technical Committee and approved by the Council

There is a shifting rule that once a community proposal is turned into a referendum, the next time the council proposal is on the turn and again.

Voting mechanism

Once the proposal passes and is transferred to the referendum, there is a 28-day voting period on Polkadot. Just don't forget that Kusama is 4x faster than Polkadot so things get approved much faster.

Proposals must be supported by an absolute majority of votes, and Polkadot uses the Adaptive Quorum Bias methodology to set parameters to achieve an absolute majority. Adaptive Quorum Bias is a mechanism that variably changes the majority needed to hold a referendum based on turnout.

Source: Polkadot Governance

Simply put, there are three ways how to collect votes for a referendum:

Positive Turnout Bias

  • used for public proposals
  • the more people vote in the referendum, the easier it gets to pass

Neutral Turnout Bias

  • used for proposals with 60% support from the Council
  • a simple majority is necessary for passing the referendum

Negative Turnout Bias

  • used for proposals with unanimous support from the Council
  • fewer people to vote in the referendum, the easier it gets to pass it

Governance tools

There are various governance tools, let us mention here the three most common — Polkassembly, Subsquare and Commonwealth.

Polkassembly

Polkassembly is a Web3-type governance explorer and engagement tool. The voting is tight to your Web3 digital identity and your DOT account through the Polkadot JS extension.

To this date, you can contribute and discuss on-chain governance of both relay chains Polkadot and Kusama as well as from a few different parachains, namely Moonriver, Moonbeam, Kilt and Bifrost. Expect more to join.

Polkassembly interface

SubSquare

SubSquare is another governance explorer for substrate-based blockchains aka parachains. Similarly like other platforms, SubSquare also enables community members to propose, discuss and vote on governance proposals. Actually, there are 6 projects that use SubSquare and namely they are Acala, Karura, Khala, Bifrost, Kintsugi, Interlay and Kabocha.

SubSquare.io interface

Commonwealth

Commonwealth is a governance interface for on-chain communities that allows voting, discussing, proposing changes, funding projects and also validators overview. Commonwealth is for every possible project, so even those that are Substrate-based such as HydraDX, Bifrost, Crust Network, Edgeware, or Darwinia.

Commonwealth.im interface

What's next? The governance news!

What does it mean for Polkadot to have a clear on-chain governance? To transparently hand over the voting system to the true owners of the chain? Simply everything — the spirit of the project and maintenance of the decentralization idea.

We think that the governance in Polkadot is such a virtue of this amazing network that it deserves more attraction. And that's also why we are preparing the most important and the most discussed governance news in our medium channel, so be ready and look for ↓this↓ layout!

Go and follow us here on Medium and also on Twitter under Polkadotters' name!

Sources:

If you want to know more about Polkadot Governance, definitely check out our sources with even more details

  1. Polkadot Wiki: Governance
  2. Polkadot Blog: A Walkthrough of Polkadots Governance
  3. Polkadot Governance by Joe Petrowski

Consider supporting us by the nomination of your tokens to Kusama or Polkadot validator going by the POLKADOTTERS name.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Polkadotters | Kusama & Polkadot validators

Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS