Algorand governance new proposal: 3.2 billion Algo ecological resource pool decision-making power transfer to the community
Original source: Algorand Official
Algorand The foundation believes in a completely decentralized Algorand ecology. An ecosystem where everyone can influence economic, technical, and other strategic decisions is the best way to help the Algorand community shape the future of the Algorand network and projects, while preventing any one group from exerting too much influence.
We listened to the views and suggestions of our community members and worked to create a simple, inclusive and transparent system of community governance. This proposal builds on Silvio Micali's initial proposal and takes into account the discussion of governance in the Algorand Governance Forum, the Algorand Governance channel on Discord, and a number of other community debates. In the coming months, the Foundation will further elaborate on Algorand's journey towards decentralization, and corresponding community events will be held throughout the year.
We believe it is time to take a critical step in fulfilling this important mission: we plan to cede decision-making over the remaining ecological resources currently entrusted to the Foundation to the community. The following table details these resources, including participation incentives, research and innovation funds, and ecological incentive schemes, amounting to 3.2 billion ALGO. We're going to call these Algoes for the rest of the time. Algorand Ecological Resource Pool (AERP).
This ambitious new governance system will be deployed in two phases. The initial phase will begin in the third quarter of 2021, and some aspects of this will be implemented off-chain. We expect the full system to be ready by early 2022, when all aspects will be fully connected and controlled by smart contracts.
Once the following plan is approved by the community, 2 billion Algo in the AXP will be immediately locked up and the Foundation will not be able to access the money. After the initial phase is over and the smart contract takes over, the on-chain governance system is set up and the control of the 2 billion Algo will be migrated to this system. The remaining 1.2 billion or so Algo will still be available for ongoing activities in the initial phase, but they will also be locked into the same smart contract once the on-chain system is in place. At that point, the entire AERP will be controlled by a smart contract, which can only be unlocked if the controller votes for it.
This represents the next stage in the dynamic model of the long-term development of Algo tokens, which was released a few months ago. Since all accounts can vote in this decision process, we cordially invite all ecosystem participants to read this proposal carefully, become Algorand Governors and participate in the upcoming decisions. The foundation expects an on-chain governance system controlled by smart contracts to be ready by early 2022.
Governance proposals
This proposal aims to entrust the future of Algorand ecology to the participants who are committed to the Algorand Network and its vision. To achieve this goal, we invite all Algo holders to volunteer as governors and vote on some of the most important decisions in ecological development. The governor holds office for one quarter (three months) at a time, invests his ALGO holdings and receives an award in return for his time and investment in the performance of his duties. All votes will be weighted by the participant's share of governance (for example, the amount of ALGO invested).
The foundation will set up voting but will not participate in the governor program. Other Algo holders can choose to announce in advance how many Algo they want to invest in the plan. The governance plan will place decisions on the use of the Algorand Ecological Resource Pool (AERP) in the hands of the community.
AERP is comprised of five independent funds focused on supporting the various pillars of Algorand network and ecological development, with the long-term goal of building a robust and widely available decentralized public chain network. The funds are scheduled to be put into circulation between now and 2030. This is illustrated in the Algo Long Term Development Report, which describes the five funds in detail. Here is a brief introduction:
· Involvement Awards: a fund designed to support community awards. This fund supported the holding and circulation of Algo tokens in the early stages of Algorand network development. In 2022, the participation award will be abolished and replaced by the governorships award described above.
· Innovation Fund: This fund is designed to support projects on the Algorand chain that have a high potential for long-term commercial success.
· ALGO Award Program: An ongoing award program designed to support the development of Algorand ecological infrastructure and the creation of proof-of-concept use cases that demonstrate the practicality and capabilities of the Algorand network.
· Research and Social Good Program: A partnership fund to support preliminary research in key areas of blockchain development and generalized cryptography. It also supports partnerships that lead to inclusive and transformative ecological visions for global communities.
· Contingent incentives: a reserve or contingency fund for foundations and regulators to respond to unexpected trends or needs that may have a negative impact on ecological development.
The function of the governor
Governors will increasingly assume responsibility for major economic and strategic decisions. Decisions are made through regular voting, and the foundation will strictly implement the results based on the decisions of the managers to protect the interests of the entire ecosystem.
The Foundation is committed to making the voting process as simple as possible: a simple interface will be provided; Only one vote will be scheduled per governance cycle; And the governor, if he wishes, can choose to follow the foundation's position on each vote.
Governors reward
Governors can be rewarded for their efforts, the amount based on their share of participation in governance. The governance program will launch quarterly entry points where participants can join the program and invest in ALGO throughout the governance period. Governors participate in quarterly voting to determine the allocation of AERP, as long as a valid vote and maintain the amount of ALGO in the governance wallet, you can receive awards at the end of the governance period. This is a transformative step, providing mechanisms and incentives to ensure that governance is decentralized, safe and efficient, just like our consensus agreement.
The governance initiative marks a transition from the early stages of the Algorand network to a more mature stage, where communities take control of their own destinies and rewards are distributed as returns on verifiable inputs. However, the transition from rewards for participation to rewards for governance will be gradual and smooth.
From participation rewards to governance rewards
July 14, 2021, which coincides with the anniversary of the French Revolution, will also be the last day of participation in the current award scheme, and the final phase of the 21,850,000 Algoes will also be the highest allocation for the previous year. Thereafter, the Foundation will continue to distribute participation awards at the same level until the end of 2021.
The governance plan, which will begin in October, will distribute additional incentives to regulators. (Thus, the total return to participants in the governance program will be significantly higher than the current fixed level of participation incentives.) By 2022, participation awards will be withdrawn from the historical stage and completely replaced by governance awards.
Reward frequency
Rewards will be distributed at the end of each quarter to the governance wallet that voted and maintained the amount of ALGO invested. Governors who miss votes, or fail to maintain the amount of Algo they have cast, will lose their rewards for the season.
Early Exit Plan
You can quit the program at any time during the quarter, but managers who quit early will lose all rewards for the quarter. Initially, there was no additional penalty for an early exit, making it more attractive for Algo to participate in the scheme. But in the future, regulators may vote to impose additional penalties.
Governance rate of return
The governor's rate of return for a given period will be determined by voluntary participants, that is, based on the total number of tokens invested against the total prize pool for that period. As an example, about 300 million ALGO will be allocated to governance incentive allocations in 2022: i.e., about 75 million ALGO rewards will be allocated per quarter. Therefore, in a certain quarter of 2022:
· If there is any 4 billion Algo If invested in the governance account, the return on each Algo invested in the quarter is 75 million /4 million = 1.875%, the corresponding annualized return is 7.7%.
· If there is any 2 billion Algo In the governance account, the return on each Algo invested in the quarter is $75 million / $2 billion = 3.75%, corresponding to an annualized return of 15.9%.
· If there is any 1 billion Algo In the governance account, the return on each Algo invested in the quarter is 75 million /1 billion = 7.5%, corresponding to an annualized return of 33.5%.
Governance mechanism
Regulators regularly vote on a growing list of tasks, including the allocation of eco-incentive schemes, eco-partnerships and related fund transfers, node operators and governance incentives. The Foundation will announce the new tasks to be voted on before each vote. To participate in the system of governance, the quasi-governor needs to:
· Register the Algorand address intended for governance during this period (three months) with a commitment to maintain a certain Algo balance at this address at all times during this period. This address can be an existing one for the participant or a new one created specifically for governance purposes.
· Participate in polls called by the Foundation during this period.
· The voting weight of the Governors will be equal to the ALGO share invested at the beginning of the period: one ALGO one vote.
If the governor maintained the balance of the ALGO during the whole management, and participated in all voting, can be in the end of this period to receive management reward.
The Foundation will work with partners to provide tools to make these tasks as simple as possible. Initially, the various parts of the governance system will be implemented through off-chain mechanisms. Thereafter, the entire system will be implemented on the chain.
conclusion
Further decentralization of the foundation's token supply and other decision-making rights represents an important evolution of the Algorand network. We are fully committed to shaping Algorand Blockchain into a fully decentralized network, both in terms of node distribution and voting rights. However, the path to decentralization must be carefully paved at an early stage. Before promulgating the governance plan, the foundation will convene an online vote for approval.
Founded on the principles of transparency, inclusiveness and collaboration, and maintained by dedicated communities, the Algorand Network carries a shared vision of a decentralized, borderless future. Algorand's philosophy is that the system should allow for change and avoid policy rigidity, allowing both the community and the protocol to evolve. Together, we embrace the same philosophy of responsible decentralization to achieve the mission-driven future we envision.
The Foundation believes that this proposal is consistent with the goal of creating a unique, innovative and inclusive approach to public chain governance. In this proposal, all stakeholders have the right to control the direction of the Algorand ecosystem and the Algo token holder community. By making a substantial commitment to hold ALGO for the long term and voting, the governing community will benefit from participating in this governance mechanism at the same rate of return.
In this context, the Foundation is submitting this proposal for your consideration and recommends that you vote yes in the upcoming web-wide vote to take the development and maturation of the Algorand ecosystem to the next stage. If this proposal is approved, we will start with decentralized AERP decision allocation. In a word, we follow the guiding principle of "foundation contributes, governor decides" and the division of functions.
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