Recap of CIP-1694 Workshop in Horten

Written by @Eystein_Hansen and @ThomasLindseth

Monday, June 19th, finally the date for our CIP-1694 workshop in Horten, Norway.
18 attendees from all over norway, and even the UK gathered at Midgard Viking Center, a place where some of the earliest settlements in Scandinavia held their first meetings to regulate rules and set common goals.
We all came together to engage in exciting discussions and conversations around key topics of CIP-1694 and the Age of Voltaire.

The workshop kicked off at 11:00 am with a short welcoming speech from Eystein Hansen and Thomas Lindseth highlighting why we were there and an introduction about our goals for the day, how participants should contribute and practical information about how we should achieve these goals. Our primary tool to collect ideas and create output was Miro. We worked on one topic at the time, keeping discussions short and saved most of that until the end where we held an “open mic” discussion.

First, each participant was asked to brainstorm alone and afterward to discuss and share insights with group members seated at the same table. Since there was a vast difference in knowledge amongst the participants, this actually turned out to be a mix between individual work and group efforts. Once the table discussion was over, each group presented their findings of the discussed topic on the respective section on the miro board. Once that was completed, participants were asked to vote on the findings. Each participant had a single vote to award to the input of their choosing. The process of individual, then group brainstorming followed by voting continued for the entire workshop.

During the first half of the workshop, the following topics were discussed:

CIP-1694 Insights & Opportunities:
Every attendee was asked to record insights and opportunities they gathered while reading the CIP.

A few of the insights revolved around treasury management and the potential that was there to make something sustainable over time. Some believed the governance principles we made with CIP 1694 could also be used outside of Cardano as well. A few discussed how we needed to make sure to future proof it and examples such as excessive bureaucracy and make sure also non-technical people’s ideas are picked up and realized. There was a positive mood that the CIP could be safely implemented and that every lovelace counts as a good foundation to build upon.

On-chain Deposits:
What amount of ada should be deposited to submit a governance action? What amount of ada should be deposited when registering as a DRep?

We had some interesting discussions on how to make the deposit amount be flexible with the economy of the ecosystem and to tie it up to a multiplier of the transaction costs. We also had a parallel idea to track the percentile of wallets and use that as a yardstick such as the 90th percentile of wallets holding around 15000 Ada. Granted you could change the governance action cost by the governance parameter itself but this would likely have a higher threshold since many governance parameters should not be that easily changed overall to make a stable ruleset for governance so by connecting it to the tx cost we could more flexible change this one governance parameter and we ended up with 100 ADA cost or around 1000x the basic costs (actually slightly more than this if you do the calculations but that’s the general idea). In general the mood was to try to set the cost as low as possible while at the same time preventing spam of too many governance actions. For DReps we believed this limit could be even lower since it would be a one time certificate and ideally we want to have as many bright minds as DReps as possible and we were considering between 500 or 50 ada but in that range as if we would try to target 5000-10000 DReps we need the barrier to entry to be low.

Treasury Withdrawal:
The Treasury withdrawal action stipulates three different values for a low, mid, and high value. What should be the voting thresholds and values for each?
Consider <= 100k ada, <= 1M ada, and <= 10M ada.

For the treasury withdrawals we believed a progressive Curve would be the best approach where you could withdraw up to 100K in one epoch 1 million in 5 epochs and 10 million in 10 epochs. We also discussed how there should be a hard limit on a set percentage of the total yearly withdrawals as well to make the treasury sustainable over time. Another idea discussed was to have a high floor for treasury early and as time passed it should go down as long as the proposal was active / open. This would for example allow proposals that were quickly voted yes on to get treasury and the proposals that was deliberated more would have a lower floor to withdraw from and would be a way to quickly withdraw a lot during a black swan event where everyone in the ecosystem agreed quickly to withdraw the amount. In the end we ended up with the progressive curve with a hard limit as a noteworthy idea as our recommendations for the MVG.

Community Tooling:
What tools and user experiences need to exist to lower barriers to participation and make Cardano’s on-chain governance easy to engage with?

For community tooling a clear trend among all groups where the need for good voter tools in wallets. We also voted on a framework that could be utilized for community tooling (capabilities such as making sure no language barriers, Opportunities such as summaries and categorization and Motivation such as rewards either financial or emotional or say social) and believed this would fit well into both voting and DRep center integration into wallets. We also discussed that there should be a CIP for DRep and governance action proposal metadata.

We then had a lunch break, followed by the second half of the workshop:

Action Thresholds:
What quorum and passing percentage thresholds are required to ratify a governance action (i.e., Constitution Amendments may warrant a supermajority)?
Consider all seven governance actions.

Since time was limited we went for a scatterplot of the 7 categories and decided to only vote on the parameters as a single group and if anyone wanted to add more specific thresholds for one group of parameter changes they could add a sticky for this in the Miro board. We also did a vote on the Quorum for the constitutional committee voting on new members during a regular state (as no Quorum vote during a state of no confidence). Our averages were fairly high and of particular note was trend of a supermajority for constitution update thresholds, hard for initiation, protocol parameters and even treasury withdrawals (in the 68-74% range) while no confidence we actually believed it should be less than 50% (average of 48.9%) as we believed it could be damaging to the governance system over time to allow a high threshold of voters to have no confidence. We also discussed the need for a participation rate threshold as well for these types of votes and that this would be important for legitimacy. Of note is we recognized that a subsection of the community could be marginalized too easily if we set the threshold for a vote of no confidence too high.

Action Expiration:
If a governance action is not ratified, how many epochs should a governance action stay active before it expires and the deposit is returned to the proposer?

Here we believed that there should be two periods: an information dissemination period and the actual voting period and this could be anything from 0 to 20 epochs depending on how much information that was needed and a fixed period for the actual voting of 12 epochs. By using metadata for the information given for voting and a period to consider this information we keep everything on chain and easily tracked, for example one could look back at a decision having to be made hastily because it needed to be done hastily (black swan event) and see on the blockchain that voters only had say 2 epochs to vote. This would allow some flexibility in how fast or slow governance actions were done depending on severity and need for information. The groups also agreed on the general idea of proposals requiring a simple majority could have a lower voting time than votes requiring a supermajority.

DRep Incentives:
Should DReps be incentivized? And if so, how much and how should the payments be managed?

We all believed DReps should be incentivized but worried how to avoid ADA farming from DReps even with an activity requirement. We had an interesting idea the groups all liked of having category of contributions such as DReps focusing on content creation, analysis, technical etc. this could create more specialized DReps and allow flexibility in rewards for example if more need for technical DReps for protocol parameters one could up the rewards for this group with a base level reward for all DReps. We also considered a tiered system based on reputation and history on top of the base level rewards. Numbers discussed for a base level were the same as the minfee for staking pools or half of the current minfee (170 Ada).

Observations, Implications, and Next Steps.
The Next Steps were then again voted on, and the following topics garnered the most votes:

We saw that we had a lot of diverse initial opinions and that we found agreement across the groups during the discussion. There were some concerns that without an identity solution there could be risks and a wish for this to be implemented before governance was launched. The mood was also for more workshops like this. The workshop groups wanted to stay in touch and maintain connections and work more towards contributing to the CIP 1694. The general belief was that getting 1694 out and drawing a line in the sand was important and then follow this up with gradual improvements. The groups had high hopes for all the feedback from the workshops to contribute to the final workshop in Edinburgh and were positive for an MVG that could then be improved upon and would like to continue the work : report back if more workshops are needed - repeat until almost everyone agrees - then profit! as one of the groups summarized.

Following the workshop, we enjoyed a delightful dinner at the Midgard Viking Center, situated in a beautiful replica of a 9th-century guildhall. I want to express my heartfelt gratitude to all the attendees who made this event possible.
A video from the workshop can be seen here!

This workshop was only one of many on CIP-1694, and the discussion seems to be moving along at a steady pace. There are several hurdles that need to be aired out before we are able to go live, but the overall sentiment is that CIP-1694 is worth the work and with pursuing.

We want to thank everyone who participated in the CIP-1694 workshop and took the time to discuss and debate the future of Cardano’s on-chain governance. Without community engagement, governance cannot succeed. As hosts of the event we were incredibly happy to see the passion and commitment by the nordic community in contributing to the CIP 1694 process.

We also held an online workshop the following saturday.
During this workshop, the same topics were discussed.
We will not write a recap of this, as the entire workshop was recorded and can be seen here.