About a year ago we shared 0x’s long-term governance roadmap, where we walked through the technological milestones necessary for the progressive decentralization of the protocol, together with the creation of a responsible and accountable community. Today we are excited to share full details around the 0x DAO which will launch shortly.
Before jumping into the mechanics of the DAO (short for Decentralized Autonomous Organization), let’s spend a moment recapping why decentralizing the governance of 0x Protocol is so critical.
If you’re new to 0x and want to learn more about how the protocol helps create a tokenized world where value flows freely, visit https://0xProtocol.org/
When we talk about centralization, it typically implies a single entity, whether a company, government, or individual, is in full control of all decisions related to how a technology or network is used and evolves. Centralization requires putting trust in a central authority and introduces higher risks of censorship and single points of failure. As we’ve seen time, time, and time again, it’s the users who suffer the consequences whenever these risks materialize.
Decentralization reduces these risks and transfers the ownership and decision-making authority to those who contribute to and use the technology or network. Decentralization also fosters transparent and open-source ecosystems where anyone, regardless of where they live or their background, can access, build on, and benefit from using the technology or network. Additionally, decentralization enables proper incentive alignment — those who contribute value (aka producers) receive the economic benefits from the technology or network’s adoption and growth, unlike a centralized model where typically only the central authority receives those benefits.
Creating the DAO is a significant step on the journey that 0x has been on in becoming a fully decentralized technology and network. It will enable ZRX holders to get familiar with the governance system and fully experiment while still having some safe boundaries in place. Every token holder, big or small, will have an essential role to play from sharing ideas on how to use the DAO funds, creating formal proposals and advocating for their support, and ultimately voting to implement them (or not). Successfully making it to our final destination of becoming a fully accountable community will require everyone’s active participation and collaboration. We can’t wait to see what the community can accomplish together once the DAO is live!
We created an on-chain binding governance system able to perform arbitrary actions on a 2M ZRX community-owned Treasury, seed-financed by 0x Labs. The smart contracts work in orchestration with 0x’s existing staking system, for what concerns both the voting power delegation management and votes cadence.Voting rights are exercised by holding ZRX, 0x protocol’s governance token, at the time of the vote. Alternatively, one can receive additional delegated ZRX by a third party holder, through the staking system.
The purpose of the community treasury is not enforced, and ZRX holders will be in control of what to do with the funds. The suggested usage, however, is the funding of projects that benefit the 0x ecosystem and provide positive effects to ZRX holders. Some examples of past activities led by 0x Labs include: introducing stakeholders incentives (such as Market Maker programs and ZRX staking), funding development efforts like 0x Tracker and Gitcoin bounties, and growing 0x protocol awareness through events and marketing campaigns.
We expect the 0x community members to take some time to familiarize themselves with 0x DAO’s processes and mechanics, and progressively form the necessary avenues for efficient coordination. The next step will be to expand the system’s reach to all aspects of the protocol, including upgrades that have just been made easier with the recent 0x v4 launch. Our goal is to get to full open governance by early next year, according to the roadmap.
Leaving the technical milestone aside, 0x DAO is ultimately made of people: ZRX holders, Staking Pools operators, Bootstrap Delegates, and any other individual whose incentives are aligned with the good functioning of the protocol. Through 0x DAO, you will be able to suggest, debate, and put communal funds to work — without relying on, or requiring, 0x Labs team whatsoever.
The process is still in its infancy and will mature based on the community’s preferences and needs. It always starts with public discussions on 0x’s governance forum or other communal venues. We encourage the community to engage in active and productive conversations and take ownership of proposals. We have observed promising models emerging in other protocols’ decentralized communities and are excited to see the same happening for ours. Our governance forum has polling functionality currently being used to signal community support on different topics (example), but this may evolve to include using platforms such as Snapshot.
Anyone can submit a proposal by calling the smart contracts
propose on-chain function, but realistically you should rely on Bootstrap Delegates to perform this action (see next section). Over time, we anticipate that the process for initiating a proposal to become more user-friendly. At the onset, there will be a minimum voting power requirement of 100k ZRX (0.01% of the total ZRX supply) for a proposal to be successfully moved to a public vote. This parameter is in line with what we have observed from other governance systems, such as those from Compound and Uniswap. Bootstrap Delegates are delegated enough voting power to submit proposals autonomously.
The proposal goes live after 1 full epoch waiting period. This will allow ZRX holders to react to the proposal, and potentially change their delegations based on the prospective vote of their representatives. Each vote will last 72 hours, and it will be possible to vote directly on ZRX Portal, which will be updated to support the new system. It will cost approximately 80k gas to cast a vote.
If a majority and at least 10M ZRX in voting power are cast in support of the proposal, it is queued in the (optional) Timelock. The proposal can be executed immediately or in any subsequent epoch, depending on the
executionEpoch parameter. The proposal can perform any arbitrary operation, including utilizing its controlled funds (the treasury).
All the parameters mentioned above can be upgraded via a vote.
Over the past few weeks, a few individuals and teams offered to help to shape 0x DAO’s first steps. As a result, we formalized a group of 0x DAO Bootstrap Delegates.
The following individuals and teams will be delegated additional voting power from 0x Labs, in order to be able to create proposals independently based on discussions with other ZRX holders. They will not have the power to unilaterally make decisions, but they will have the ability to influence decision-making through their reputation and advocacy.
The initial group of 0x DAO Bootstrap Delegates will be:
sha-2048 (BUILD and Metric)
volleyfire (KeeperDAO and 0x market maker, VolleyFire)
Apart from VolleyFire (which has already 50% of the Pools’ staked amount in voting power), each of them will receive delegated voting power from 0x Labs. This is an initial proposal allocation of voting power aimed at enabling the members to have agency in their role.
In the next few weeks, we will deploy the contracts, delegate voting power to the bootstrap delegates, and update ZRX Portal to support the new voting system. Stay tuned for the launch update!
We are excited to hit this significant milestone in 0x’s progressive decentralization and look forward to seeing how our system evolves along with other leading open protocols. We are collectively walking into the uncharted territory of human coordination. The biggest collective challenge will be transitioning from “engaged” to “accountable” communities. With the incredible growth in public blockchain adoption and blossoming interest in open project governance, we are confident that 0x’s community will transition to a fully accountable one in the years to come.