PsyOptions Governance Structure

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Arguably the most important part of any decentralized project is how it will operate in a decentralized manner. As we get closer to the launch of PsyOptions on Solana mainnet, I think it is time for us to start thinking about the formation of the PsyOptions DAO. How will governance work? How will the core team and contributors work together to build a great product? How will we approach collaborations with other projects? These are just a few of the questions that will inevitably arise as we get into the thick of things.

We will not be able to cover all of these questions within one forum topic, however, we can start chipping away one by one. With that said, I would like to start the discussion on how PsyOptions governance will work.

From my understanding, there is currently little to no governance infrastructure for the Solana Ecosystem. Solana Labs is in the process of developing this infrastructure, and the PsyOptions Core Team will be assisting where we can. We should note just how early we are both as builders and as a community to the Solana ecosystem. There will be growing pains, and those who come after us will be able to build on top of the things we create now.

To start the discussion on governance, I would like to present the governance structures of two protocols I think do it well: Synthetix and Inverse Finance. As a brief reminder, Synthetix is a synthetic asset protocol on Ethereum(i.e. Syntehtify) while Inverse Finance is a suite of decentralized finance tools that famously took back airdropped tokens from receivers who were not participating in governance.

The standard approach to governance typically works something like this: you hold a governance token and when there is an improvement proposal up for vote, you simply vote with your coins. Simple enough.

However, what is interesting to me is how Synthetix and Inverse Finance both incorporate “delegation”. An example of this is how $INV holders can delegate their vote to another individual(the Delegate) and once the Delegate attains 1000 community member votes, they are able to launch a proposal that can then be voted on by the wider community. $INV holders can re-delegate their coins to a new Delegate at any time.

Synthetix takes this system a bit further, as their DAO is actually composed of multiple DAOs. There is the Spartan Council, the Protocol DAO, Synthetix DAO, Ambassador DAO, and finally Grants DAO. Each of these DAOs have their own duties, but within this discussion we will focus on the Spartan Council and the Ambassador DAO.

From the Synthetix docs page on governance:

“The Spartan Council is a governing DAO which currently comprises 8 members who are elected for the duration of an epoch by community staking participants. The Spartan Council is responsible for conducting SIP/SCCP interviews, debating the implications of proposed changes, coordinating protocol changes with the protocol DAO and hosting periodic community governance meetings in order to best represent and protect the wider Synthetix stakeholders.

The SC, like other DAO roles, are paid a stipend by the Synthetix DAO and conduct their duties on the relevant discord governance channels and utilises snapshots IPFS signature voting on the staking governance site. “

“Ambassadors are nominated community members who are appointed as a signer on a Gnosis multisig, their role is to gather support from Synthetix community members who delegate their governance tokens (from other external protocols) to the multisig, effectively empowering the Ambassadors to participate in external protocols governance systems which have a positive impact on the Synthetix ecosystem (i.e interoperable protocol features, listing of synthetix synths on DEX’s).
The Ambassadors are re-elected every epoch, and the members are paid a stipend by the sDAO during their tenure.”

There are two groups of “elected officials” within the Synthetix governance structure: the Spartan Council and Ambassadors. In summation of the previous excerpts, the Spartan Council is elected to hash out all the details surrounding protocol improvements, and act in the best interest of the Synthetix community. The Ambassadors are essentially delegates as discussed in the Inverse Finance section of this post, except they are delegated coins from other protocols to then go vote in the best interest of the Synthetix community. Example: Synthetix community members would delegate their $AAVE to an ambassador who then goes to vote on proposals within AAVE that would be beneficial to Syntehtix.

These systems of delegation and elected DAO officials sound like a simple reinvention of democracy, however, I think they are worth considering as options for PsyOptions’ governance structure. All governance structures have both their merits and flaws, and it is our responsibility as early members of the PsyOptions community to have an open discussion on these matters as we begin to lay the foundation for what’s to come.

Thank you for reading.

EDIT: I forgot to include links to Inverse Finance and Synthetix’s governance documentation.

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Very Educative. Kudos man

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Here are some reading materials relative to the Solana ecosystem: governance repo and example UI solana-governance and of course Mango’s DAO. I believe Mango will be putting together a more detailed blog post that should shed some light on all the incredible research they’ve done on this subject.

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Very interesting. I like the idea of couscils. However, looking at the website documentation, it seems some of these governing bodies have the final dictation if a proposal is passed into voting or not. If there is an alarming amount of “yes votes” for a proposal to be enacted but the council decides to decline the process to vote on that proposal, is this really considered a DAO? Or will there need to be certain criteria that must be met for the council to decline a “community passed” proposal?

“Although anyone can author a SIP, it is ultimately up to the Spartan Council to approve and accept a SIP, all successful SIPs are granted a Synthetix Network Token reward.”

An example is if the proposal was detrimental to the survival of the protocol and it met criteria A, B, C then the council can overturn a “passed” vote from the community. This can be followed up from the council with some details such as “Not enough detail in the proposal”, “Needs refining”, “5 out of 8 members declined due to X/Y/Z” etc. This gives clarity to those that wrote the idea and allows them the chance to come back with a stronger formulation. I suppose this happens in their interview process with the author…

Perhaps creating a detailed vetting system in which ideas can go through to become refined…

I wonder if a certain % threshold of voting from the community needs to happen for a proposal to be valid. Such as “At least 10% of gov. tokens must have a yes vote for this to be valid”.

I think its important to note that we should have a general threshold for token holders to initiate proposals as well. If I personally hold 1,000 governance tokens,I technically don’t need anyone to delegate to me. I automatically am granted the permissions of a delegate which you can delegate to me if you agree with how I vote. We could even set up a voting reward system where I will tell you which option I am voting for and to reward delegates who vote the way they should or from those who are delegating to them.

Lastly, if a delegate losses their minimum required voting power during a process and they enacted a proposal, does that proposal automatically get revoked? Or as long as the delegate had the required amount of votes to initiate a proposal then the community can still vote on it? This situation could occur for users who are trying to manipulate the ecosystem etc

Lots to unpack here but I enjoy this stuff, sorry for the rant XD

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I’m super excited about this idea of sub DAO, it is an obligation for each sub DAO to promote the best interest of the DAO and protocol. I’m suggesting that there should be a mechanism in place to checkmate people in the sub DAO inorder to avoid their personal interest to outshine the best for the protocol. One more important thing is about formation of this sub DAO, is it going to be through nomination, recommendation or voting?

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