The road to decentralization
This article marks the official start of 1inch Network governance implementation stage 2!
As discussed in earlier articles, the implementation of the 1inch DAO involves two stages:
- Stage 1: This was kicked off in December 2020 with the initial distribution of 1INCH tokens to protocol users and the launch of Instant Governance. The goal was to start the process of decentralization by giving community members direct control over specified protocol settings via the Instant Governance UI.
- Stage 2: The introduction of full-fledged DAO functionality by providing the community direct control over extended governance mechanisms. The end-goal of this stage is for the 1inch Network protocols and the 1INCH token to be completely decentralized, owned and governed by the DAO.
1inch Network DAO proposal
A huge thanks to all who took the time to participate in the 1inch Network DAO discussions on the forum! There were great community comments in the Stage 1 discussion and much of that feedback was directly incorporated into the Stage 2 1IP. The community demonstrated overwhelming support for the Treasury 1IP, with 90% of the participants in the sentiment poll voting in favor of the change!
The Treasury is a core piece of infrastructure — the DAO needs a way to allocate funding to its proposals. It is for this reason that the 1inch Foundation has taken the initiative to deploy the 1inch Network Treasury for the DAO.
The 1inch Network DAO Treasury is under the direct domain and ownership of the community. At launch, all protocol revenues are redirected from existing governance incentives to the Treasury.
1inch Network DAO Treasury overview
A Gnosis Safe smart contract wallet with multi-signature (multisig) functionality on the Ethereum mainnet has been created — this address functions as the 1inch Network DAO Treasury. 12 multisig owners have initially been selected by the 1inch Foundation from the core contributor team and other well-known projects, such as Synthetix, Opium, NEAR protocol, and zkSync, to name a few. These signers are able to veto malicious transactions in a 7 of 12 fashion.
Gnosis Safe + Snapshot + SafeSnap
Snapshot allows for gasless voting and has already been incorporated into the 1inch’s Network governance process. SafeSnap is a Snapshot module that allows for on-chain execution of off-chain voting. The combination of these tools gives the DAO’s votes direct control over the Gnosis Safe that holds the Treasury funds.
With the incorporation of this Treasury upgrade, referral rewards remain unchanged and will still be paid out in their source token on the chain they were earned. However, the part of the revenue stream that previously went towards Governance rewards distribution, will instead be sent directly to the newly formed DAO Treasury in the form of USDC on the Ethereum mainnet. Governance participants will be able to control the revenue split of the Aggregation protocol and Liquidity protocol by voting with Instant Governance.
There will no longer be yield earned from staking on the governance contract, though the DAO will have full control over the funds and all aspects of the Treasury.
1inch Network DAO Treasury revenue stream
To ensure a smooth rollout of Stage 2, additional upgrades are being made to the 1inch DAO governance process.
In June, 1inch rolled out the integration of Snapshot into the governance process. This upgrade makes it possible for governance participants to vote in a gasless fashion off-chain and delegate their voting weight to other addresses.
All future 1inch Improvement Proposals (1IPs) will be voted on through this Snapshot interface.
The rationale behind these voting changes is that they ensure that the individuals with direct control over the protocol have a vested interest in its long term success, while also limiting the power of backers and core contributors.
- st1INCH: This is the non-transferable ERC-20 which represents 1INCH staked within the 1inch protocol’s governance contract. This has a voting weight of 100%.
- v1INCH: This is an ERC-20 which represents 1INCH tokens that are currently locked in the vesting contract. These tokens are held by backers, advisors, and core contributors but are not yet fully-vested. Each v1INCH has 1/5th (20%) the voting weight compared to st1INCH.
- Delegation: Both st1INCH and v1INCH have the ability to delegate their voting weight to other addresses.
- Quorum: The minimum quorum has been increased to 10 mln votes (previously 4 million votes). This change was made to reflect the growing supply of circulating 1INCH.
The 1inch Foundation is currently developing proper documentation for all aspects of the governance process. This will be a living document that will further formalize the 1IP creation process, the voting procedures, the treasury mechanics, and how voting weight is calculated. A full documentation site is scheduled to roll out in the coming weeks. In the meantime, the Help Center has been updated with guides on navigating these governance changes. Be sure to check them out.
All 1inch Network contributors have never been more excited about the future of the 1inch Network. The goal is to iterate on the governance processes and move towards total decentralization.
Feedback from all community members is highly appreciated. So, please be sure to stop by the 1inch Network governance forum and join the discussion!