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cosmos-sdk/docs/spec/governance/overview.md

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Design Overview

Disclaimer: This is work in progress. Mechanisms are susceptible to change.

The governance process is divided in a few steps that are outlined below:

  • Proposal submission: Proposal is submitted to the blockchain with a deposit.
  • Vote: Once deposit reaches a certain value (MinDeposit), proposal is confirmed and vote opens. Bonded Atom holders can then send TxGovVote transactions to vote on the proposal.
  • If the proposal involves a software upgrade:
    • Signal: Validators start signaling that they are ready to switch to the new version.
    • Switch: Once more than 75% of validators have signaled that they are ready to switch, their software automatically flips to the new version.

Proposal submission

Right to submit a proposal

Any Atom holder, whether bonded or unbonded, can submit proposals by sending a TxGovProposal transaction. Once a proposal is submitted, it is identified by its unique proposalID.

Proposal filter (minimum deposit)

To prevent spam, proposals must be submitted with a deposit in Atoms. Voting period will not start as long as the proposal's deposit is smaller than the minimum deposit MinDeposit.

When a proposal is submitted, it has to be accompanied by a deposit that must be strictly positive but can be inferior to MinDeposit. Indeed, the submitter need not pay for the entire deposit on its own. If a proposal's deposit is strictly inferior to MinDeposit, other Atom holders can increase the proposal's deposit by sending a TxGovDeposit transaction. Once the proposal's deposit reaches MinDeposit, it enters voting period.

Deposit refund

There are two instances where Atom holders that deposited can claim back their deposit:

  • If the proposal is accepted.
  • If the proposal's deposit does not reach MinDeposit for a period longer than MaxDepositPeriod (initial value: 2 months). Then the proposal is considered closed and nobody can deposit on it anymore.

In such instances, Atom holders that deposited can send a TxGovClaimDeposit transaction to retrieve their share of the deposit.

Proposal types

In the initial version of the governance module, there are two types of proposal:

  • PlainTextProposal All the proposals that do not involve a modification of the source code go under this type. For example, an opinion poll would use a proposal of type PlainTextProposal.
  • SoftwareUpgradeProposal. If accepted, validators are expected to update their software in accordance with the proposal. They must do so by following a 2-steps process described in the Software Upgrade section below. Software upgrade roadmap may be discussed and agreed on via PlainTextProposals, but actual software upgrades must be performed via SoftwareUpgradeProposals.

Proposal categories

There are two categories of proposal:

  • Regular
  • Urgent

These two categories are strictly identical except that Urgent proposals can be accepted faster if a certain condition is met. For more information, see Threshold section.

Vote

Participants

Participants are users that have the right to vote on proposals. On the Cosmos Hub, participants are bonded Atom holders. Unbonded Atom holders and other users do not get the right to participate in governance. However, they can submit and deposit on proposals.

Note that some participants can be forbidden to vote on a proposal under a certain validator if:

  • participant bonded or unbonded Atoms to said validator after proposal entered voting period.
  • participant became validator after proposal entered voting period.

This does not prevent participant to vote with Atoms bonded to other validators. For example, if a participant bonded some Atoms to validator A before a proposal entered voting period and other Atoms to validator B after proposal entered voting period, only the vote under validator B will be forbidden.

Voting period

Once a proposal reaches MinDeposit, it immediately enters Voting period. We define Voting period as the interval between the moment the vote opens and the moment the vote closes. Voting period should always be shorter than Unbonding period to prevent double voting. The initial value of Voting period is 2 weeks.

Option set

The option set of a proposal refers to the set of choices a participant can choose from when casting its vote.

The initial option set includes the following options:

  • Yes
  • No
  • NoWithVeto
  • Abstain

NoWithVeto counts as No but also adds a Veto vote. Abstain option allows voters to signal that they do not intend to vote in favor or against the proposal but accept the result of the vote.

Note: from the UI, for urgent proposals we should maybe add a ‘Not Urgent’ option that casts a NoWithVeto vote.

Quorum

Quorum is defined as the minimum percentage of voting power that needs to be casted on a proposal for the result to be valid.

In the initial version of the governance module, there will be no quorum enforced by the protocol. Participation is ensured via the combination of inheritance and validator's punishment for non-voting.

Threshold

Threshold is defined as the minimum proportion of Yes votes (excluding Abstain votes) for the proposal to be accepted.

Initially, the threshold is set at 50% with a possibility to veto if more than 1/3rd of votes (excluding Abstain votes) are NoWithVeto votes. This means that proposals are accepted if the proportion of Yes votes (excluding Abstain votes) at the end of the voting period is superior to 50% and if the proportion of NoWithVeto votes is inferior to 1/3 (excluding Abstain votes).

Urgent proposals also work with the aforementioned threshold, except there is another condition that can accelerate the acceptance of the proposal. Namely, if the ratio of Yes votes to InitTotalVotingPower exceeds 2:3, UrgentProposal will be immediately accepted, even if the Voting period is not finished. InitTotalVotingPower is the total voting power of all bonded Atom holders at the moment when the vote opens.

Inheritance

If a delegator does not vote, it will inherit its validator vote.

  • If the delegator votes before its validator, it will not inherit from the validator's vote.
  • If the delegator votes after its validator, it will override its validator vote with its own. If the proposal is a Urgent proposal, it is possible that the vote will close before delegators have a chance to react and override their validator's vote. This is not a problem, as Urgent proposals require more than 2/3rd of the total voting power to pass before the end of the voting period. If more than 2/3rd of validators collude, they can censor the votes of delegators anyway.

Validator’s punishment for non-voting

Validators are required to vote on all proposals to ensure that results have legitimacy. Voting is part of validators' directives and failure to do it will result in a penalty.

If a validator’s address is not in the list of addresses that voted on a proposal and the vote is closed (i.e. MinDeposit was reached and Voting period is over), then the validator will automatically be partially slashed by GovernancePenalty.

Note: Need to define values for GovernancePenalty

Exception: If a proposal is an Urgent proposal and is accepted via the special condition of having a ratio of Yes votes to InitTotalVotingPower that exceeds 2:3, validators cannot be punished for not having voted on it. That is because the proposal will close as soon as the ratio exceeds 2:3, making it mechanically impossible for some validators to vote on it.

Governance key and governance address

Validators can make use of a slot where they can designate a Governance PubKey. By default, a validator's Governance PubKey will be the same as its main PubKey. Validators can change this Governance PubKey by sending a Change Governance PubKey transaction signed by their main Consensus PrivKey. From there, they will be able to sign votes using the Governance PrivKey associated with their Governance PubKey. The Governance PubKey can be changed at any moment.

Software Upgrade

If proposals are of type SoftwareUpgradeProposal, then nodes need to upgrade their software to the new version that was voted. This process is divided in two steps.

Signal

After a SoftwareUpgradeProposal is accepted, validators are expected to download and install the new version of the software while continuing to run the previous version. Once a validator has downloaded and installed the upgrade, it will start signaling to the network that it is ready to switch by including the proposal's proposalID in its precommits.(Note: Confirmation that we want it in the precommit?)

Note: There is only one signal slot per precommit. If several SoftwareUpgradeProposals are accepted in a short timeframe, a pipeline will form and they will be implemented one after the other in the order that they were accepted.

Switch

Once a block contains more than 2/3rd precommits where a common SoftwareUpgradeProposal is signaled, all the nodes (including validator nodes, non-validating full nodes and light-nodes) are expected to switch to the new version of the software.

Note: Not clear how the flip is handled programatically