CIP-1694 Breakdown: Distinct Groups Responsible For Ratifying The Governance Actions

The following is a breakdown summary of the “groups responsible for ratifying the governance actions” section within CIP-1694. The current design is still subject to change. We will keep the text current and make any necessary updates in the event of any changes to CIP-1694.

On-chain voting will be used to approve/confirm governance actions. The ratification requirements may differ based on the type of action. They can be met through approval by the Constitutional Committee, with a sufficient number of ‘yes’ votes from DReps or SPOs, or a combination of both, depending on the total registered voting stake.

Constitutional Committee

The Constitutional Committee represents a set of individuals or entities monitoring the governance actions and making sure that the Constitution is being followed.

The Constitutional Committee can also be viewed as somewhat of a special committee that oversees the transition of the current governance system to a fully decentralized on-chain governance model.

The Constitutional Committee can only be in one of the following two states at all times:

  1. a normal state (i.e. one of confidence); or
  2. a state of no-confidence

When the current committee is in a state of no-confidence, voted on by DReps and SPOs, they are unable to take part in any governance action and must be replaced before any further governance action can be carried out. As the committee enters a state of no-confidence, all prior actions that have not been enacted (whether or not they have been ratified) are immediately dropped/canceled. When a state of no-confidence is declared, the committee must be replaced through a governance action requiring approval by a vote of both DReps and SPOs.

It is important to note that the Constitutional Committee will help bootstrap this new governance framework as it ensures that the system can transition to a fully decentralized on-chain governance in due course.

DReps

The proposed plan for DReps is that any ada holder can either register themselves as a DRep or delegate their stake to an already registered DRep. Registering as a DRep will follow the current stake delegation mechanism that stake pool operators use, such as registration and retirement certificates.

It’s important to note that DRep votes are required to ratify/confirm every governance action. Each governance action will require a specific Active Voting Stake Threshold (AVST), a percentage to determine if there is sufficient active voting stake (ada) to ratify a governance proposal.

Although DReps will play a role in the future, there are still some uncertainties. One question is whether DReps should be paid for their work, and if so, what kind of incentive system could be implemented to guarantee an efficient process.

Difference between DReps from Catalyst and DReps from CIP-1694

DReps mentioned in CIP-1694 and DReps from Project Catalyst have to be considered completely separately, as DReps from Project Catalyst are only responsible for voting on the vast majority of proposals within Project Catalyst.

SPOs

Stake pool operators are one of the three groups responsible for ratifying governance actions by voting on them. SPOs have to vote on the following governance actions:

  • Motion of no-confidence
  • New Constitutional Committee and/or quorum size (state of no-confidence)
  • Hard-Fork initiation

SPOs are only required to participate in the remaining governance actions if the DReps do not meet the AVST. In this instance, the actions can only be adopted if a sufficient number of SPO votes are in support. This includes the following governance actions:

  • New Committee/quorum (normal state)
  • Update to the Constitution
  • Protocol parameter changes
  • Treasury withdrawal

Furthermore, it is important to note that nothing in CIP-1694 limits the SPOs from becoming DReps.

A special thank you to @Lovecoach & @adatainment for contributing to this text.

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For your information, the two reference articles for this
Shelley ledger specification.
and
Alonzo ledger specification
are broken.