At Element Finance we believe that delivering on the true promise of decentralized finance doesn’t stop at the protocol. It requires a broad, decentralized community of thoughtful stewards as well. We’ve been working on the details of our governance launch for the last year, and the time to launch it is now. Our approach melds the best of both worlds: the familiar “everybody votes” system of direct democracy most DAOs currently use, as well as representative democracy through vote delegation and a Governance Steering Council. A flexible system of voting vaults ties it all together, allowing different voting criteria to back various types of voting power. This is built on the back of the Council Protocol, a new open source governance protocol that Element Finance built from the ground up for anyone to use.
As part of the distribution, we’re proud of a few innovations we pursued, which we cover in the following sections.
Ethereum Core Developers and DeFi Ecosystem Projects
We’ve chosen to distribute voting power not just to Element users, but also to Ethereum Core developers. We believe it is important to give a say in the direction of DeFi to those who make it all possible. We’ve also chosen to give voting power to core L2 developers, DeFi projects on which Element was built, and other DeFi ecosystem projects. We’ve analyzed a number of GitHub repos and the contributors who committed code to situate the voting allocation. We’ve also deployed a ZK claim process so these users can claim without being doxxed. We dive into more specifics below.
Claiming Through ZK Dashboard for Privacy
Since rewarding contributors requires association with a GitHub or Discord profile, we’ve developed a claim flow using Zero Knowledge Proofs which allows for privacy. Claimants can collect their voting power without associating their profile with an Ethereum address. We’re excited for this innovation which was implemented on Sam Ragsdale’s smart contract work.
Elfiverse and the Intersection of DeFi and NFTs
The Elfiverse is a gift for the Element community to commemorate the launch of the Element DAO. It serves to represent, reflect, and amplify the community involvement in Element. This thread gives a bit more context on some of the goals of this project.
The first 4,700 claimants who delegate to themselves or to another person in the Council UI will be whitelisted to mint an ELF NFT. There will be no minting fees and users only need to pay for gas. We’ll follow up quickly with details on distributing the remaining 5,300 ELFs.
DAO Overview
In order to encourage participation in voting and governance, we’ll soon launch a Governance framework which outlines the path to take a proposal or idea to on-chain finality.
We’d like to see the DAO involved in a number of initiatives. Onboarding new assets and terms, launching new yield sources, supporting research or product initiatives, and helping the development and growth of Element, such as grants, hackathons, meetups and more are some suggestions that could be implemented by the DAO. But while these are ideas, those decisions will be made by governance as a whole. And – more importantly – we’re excited to see what new ideas and proposals that others in the community will bring and offer. This is the promise of decentralization, and why we’re thrilled to see the DAO take center stage.
Initial Parameters
Proposals will require the support of at least 55k (0.45%) tokens to go to a vote and a simple majority voting to approve with a quorum of 1.1m tokens or 9.1% of initial circulating supply.
In order to make it into the Governance Steering Council, you should receive at least 110k or 0.9% of circulating supply delegated to you.
These parameters can be updated by Governance.
Voting Distribution
The contract address for ELFI is: 0x5c6D51ecBA4D8E4F20373e3ce96a62342B125D6d
There will be 100 million total ELFI, with 51% allocated to the community. The distribution is as follows:
- 10% Retroactive
- 21% Team, Advisors and Strategic Partners
- 21% Investors
- 7% Foundation
- 41% Treasury
Team and investors will be subject to a one year lockup followed by a 2 year linear vesting period.
Retro
The intention of the retro is to distribute voting power broadly across the Element community. 10% of the total ELFI distribution will be retroactively distributed to 15,870 addresses as follows:
- 7.5% Votes to 9,989 Element Users
- 2.50% Votes between 500 Element Community Members and 5,381 Ethereum Ecosystem Contributors:
Snapshot Date: March 1st, 2022.
Element Users
Element Users are divided into the following categories:
- 3.5% to Liquidity Providers: This is distributed to users proportionally based on the length of time x the amount of Liquidity Provided
- Minimum requirement to qualify: greater than $500 LP’d for 90 days
- 3.5% to Traders: This is distributed to users proportionally based on the amount traded
- Minimum requirement to qualify: greater than $500 traded
- 0.5% to Minters: This is distributed to users proportionally based on the amount minted
- Minimum requirement to qualify: greater than $10k minted
Element Community
With some filtering (e.g., to filter stop words) to ensure meaningful contributions, the distribution is grouped into three tiers:
- Top 50 get 819 votes each
- Next 100 (rank 51-150) get 409 votes each
- Next 350 (rank 151-500) get 205 votes each
If you are eligible for the community distribution, there is a ZK claim process so you can maintain privacy and prevent doxxing of your Ethereum address.
Ethereum Ecosystem Contributors
The distribution is grouped into four tiers:
- Ethereum Core Devs: 2,250 users get 614 votes each
- DeFi projects that Element built on: 1,586 users get 409 votes each
- L2 Projects: 850 users get 205 votes each
- Other DeFi Ecosystem projects: 695 users get 205 votes each
We analyzed a number of GitHub repos and allocated voting power to their contributors. If you are eligible for the ecosystem distribution, there is a ZK claim process so you can maintain privacy and prevent doxxing of your Ethereum address.
How to Claim
There are three different claim flows depending on your allocation. We have a guide for each. The claiming process will go live later today.
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Element User Guides here.
Expiry: One year to claim
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Element Community Guide here.
Expiry: Users will have one week to generate a public ID using the ZK flow. A merkle root will be posted and after a week they can claim. If users miss the first week window, we will follow up with a 2 week window after and continue to follow up with claim opportunities for one year.
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Ethereum & DeFi Ecosystem guide here.
Expiry: Users will have one week to generate a public ID using the ZK flow. A merkle root will be posted and after a week they can claim. If users miss the first week window, we will follow up with a two-week window after and continue to follow up with claim opportunities for one year.
Keep in mind that if you claim early and delegate, you’ll have a chance to earn an ELF NFT as part of our Elfiverse community initiative.
Voting Vaults
Voting vaults are a core part of the Council Governance Framework. They allow for redefining what constitutes a vote and how a vote operates. We’re launching with two voting vaults, the Vesting Vault and the Locking Vault.
Vesting Vault
The vesting vault applies to investors and team members. It applies a multiplier on unvested tokens, giving this group reduced voting power. We’ve initialized the voting vault at a 5% multiplier. As a result, team voting power will be only 8.7% of the circulating total at launch.
Locking Vault
When claiming your voting power or ELFI, it will be automatically staked in a locking vault. Your ELFI cannot be removed from this vault and is intended to keep the utility of ELFI as a voting tool.
In terms of future voting vaults, there are many ideas to explore and consider such as the concepts highlighted in this blog post.
Next Steps
The launch will occur on March 31, 2022, at Ethereum block number 14496292, at approximately 5 pm ET. Stay tuned for announcements on our Discord or Twitter. We’re excited to welcome the new governing entities of the Element Protocol. We’re so proud of the team that has brought us this far; and now we’re thrilled to see the future in the hands of governance as this next chapter begins. We’re optimistic the future governors will steward the protocol in a responsible, thoughtful, and ethical way.