This post outlines a governance proposal that the Eco Association plans to submit onchain in the generation running from November 13th-27th.
This is the third in a sequence of governance actions setting the protocol up for The Next Eco Era, migrating Eco from a two-token system to a single-token protocol — and moving the project from its ‘Currency’ Era into its ‘Stablecoin’ Era.
The first proposal, which removed the active Trustee group from their roles and implemented the ‘v1.5’ technical upgrade to the protocol, was enacted in May.
The second proposal, which executed a one-off batch of Trustee payments due to a technical issue, was enacted in October.
This next proposal seeks to set the foundation for governance in the new era. Specifically, this proposal seeks to:
- Move Community Governance voting from our bespoke governance construct over to a simpler Snapshot-based system
- Create the construct of a Security Council, which would be responsible for implementing and overseeing the Snapshot-based system, as well as overseeing emergency procedures
- Provide approval for the Security Council to enact a set of cleanup proposals immediately after being initiated into the governance system
- Provide approval for adopting Eco Foundation, a Cayman Foundation, as a DAO wrapper
Proposal Details: Governance & Security Council
Why change Community Governance?
In the original version of the Eco Protocol, all voting was done onchain and the voting construct was limited to two-week generations with very specific timing guidelines. The design of this construct was largely due to the existence of Monetary Governance and the Eco Currency system as a whole and is no longer needed in the new era.
In entering the new era, we have the opportunity to immensely reduce technical overhead and complexity of governance actions.
Snapshot is a simple, widely-used system for governance in Web3 and we propose using it for Community Governance instead of the bespoke Eco Protocol-based system — for the early days of Era 2 at the very least while the protocol is in transitionary flux, and potentially keeping it on a longer-term basis if it’s working well.
How will Community Governance work now?
In short, governance will be much simpler — and more people will be able to vote, more cheaply (it’ll be free now!).
What’s changing:
- Snapshot, rather than the previous onchain system, will be used to collect votes. With Snapshot, since voting will be done off-chain, it will become gasless by default. Proposal executions will continue to occur onchain.
- Token-based voting will become less restrictive: Tokenholders will now be able to vote with ECOx without staking it, and tokenholders will be able to use their Layer 2 balances to vote (previously limited to Ethereum Mainnet balances only)
- We will no longer have two-week generations — proposals will be able to be submitted at any time, and will be able to overlap (i.e., there could be two voting cycles running at once)
- We will no longer have separate Support and Voting phases
- Proposal enactment will be initiated as soon as the Snapshot vote closes (no 1-day delay)
- There will be no fee for proposal submission. A minimum ECO or ECOx balance may be required for proposal submission; this threshold will be decided upon by the Security Council.
- ECOx → ECO conversion, which was possible at a flat rate in the old system, will be removed as this token construct will become irrelevant in the new protocol
What’s not changing:
- Token-based voting will persist with ECO & ECOx as the voting tokens, with the same weights as before, for the time being
- As with Voting Phases in the past, more “for” votes than “against” votes will be required for any vote to pass.
- Delegations will persist. Tokenholders will still be able to delegate and undelegate their tokens to allow others to vote on their behalf.
- Proposals will still go up on the Community Governance forum prior to initiation of voting.
While much of this new construct may persist for awhile, it is specifically intended to be an interim configuration, since it will need to be re-visited when token migration is complete. At that point, we expect to submit a new governance proposal to make any further adjustments and revisions.
Why create a Security Council, and what will its role be?
In order to implement Snapshot-based governance, we need to re-assign the protocol’s ‘governor’ role from the bespoke contracts (specifically, the existing Root Policy Contract) to a multisig that can facilitate the plug-in to an oracle system like SafeSnap or oSnap.
Furthermore, a Security Council is a common construct for protocols in Web3 — Security Councils are groups of independent actors that can freeze or upgrade the protocol without explicit governance approval, in the case of emergency. They are important constructs in achieving a combination of both security and decentralization.
So, we propose the creation of a Security Council — to both:
- Oversee governance and make sure votes are being properly enacted onchain, and
- Be on standby in the event of an emergency to freeze or upgrade the protocol, only if absolutely necessary
How will the Security Council be structured?
Given the nascency of the new Eco Protocol, the Security Council will be gradually phased in — serving as a more bare-bones structure to begin with, and then increasing in rigor and decentralization as the Council gains its footing and the protocol matures.
The details of the Security Council will evolve over time, and will be documented in the Eco Security Council Overview.
What will the Security Council’s immediate actions involve?
After their election, the Council would enact the following actions to clean up the Protocol:
-
Create and implement a Snapshot strategy to capture multichain votes from ECOx, sECOx, and ECO.
Note: From the time this proposal is executed, should it pass, until this first action is taken, Community Governance will be completely paused — there will be no way to capture votes for a brief period. Completing this action will be the first and utmost priority of Council once enacted. -
Remove Monetary Policy from the Protocol Completely – This would unbind all actions on Eco that allow the Monetary Subsystem to enact changes to Eco’s supply, or to rebase the currency. As part of this transition, the Council will need to clean up: a) any outstanding lockup contracts with Eco deposits, and b) any outstanding Trustee claim contracts
-
Sweep the Vending Machine on Optimism – this would sweep the funds out of the vending machine contract on Optimism and send the USDC and ECO to the Protocol Treasury
-
Perform any additional actions required to satisfy the “what’s changing” and “what’s not changing” in the Community Governance rundown above.
The protocol is then only left with the core tokens, the root policy contract to manage the treasury, and governance through a multisig and the Council. This is an excellent staging for any future upgrades.
In addition to the cleanup mentioned above, the migration will also include the cleanup of peripheral infrastructure like dApps and services that run to support old instantiations of the protocol. These actions may involve the Eco Association, the Helix Foundation, or other entities in the system.
Proposal Details: Eco Foundation as a DAO Wrapper
What is a DAO wrapper and what would it do?
Wrapping a DAO means using a legal entity that gives the DAO a recognized real-world identity, allowing it to interact with traditional legal and financial systems while preserving decentralized governance. Many other communities have adopted DAO wrappers.
Eco Foundation, the wrapper for the Eco community, would hold title to intellectual property relating to the Eco Protocol as well as title to the community treasury. In addition, to the extent desirable, the wrapper would be able to administer grants (for example, to supplement the Association’s grantmaking) and the onchain governance process, as well as facilitate protocol development, governance proposals, voting, and Security Council processes—all activities commonly conducted by other DAO wrappers.
Why would a wrapper be beneficial?
The principal benefit is eliminating ambiguity. Traditional legal and financial systems are ill-equipped to interact with decentralized collectives. The DAO wrapper provides these systems with something they’re familiar with. The benefits to the community include:
- Redirecting liability of token holders: Because the wrapper would be the entity taking action in relation to the Eco Protocol, there are practical and legal arguments for directing liability away from token holders and to the wrapper.
- Asset management: The wrapper can hold recognizable legal title to assets like the Eco Protocol’s code and the community treasury, and can conduct transactions in offchain markets.
- Legal recognition: The wrapper can enter into contracts and otherwise engage with offchain entities.
- Tax compliance: The wrapper provides a framework for proper tax compliance while maintaining operational flexibility.
- Global operations: The wrapper can operate from a neutral jurisdiction to support the community worldwide.
What is a Cayman Foundation?
Cayman Foundations, also known as Foundation Companies, are corporate entities existing under the laws of the Cayman Islands. A notable feature is that Cayman Foundations can be ownerless, and consequently they are often used for nonprofit/public goods entities like protocol foundations.
Currently, Eco Foundation exists and has a single professional director that is independent. Over time, the slate of directors is expected to be expanded to include additional community members and independent directors.
Eco Foundation is currently governed by a pro forma set of corporate documents that would be amended and supplemented upon passage of this proposal. It has entered into a services agreement with Eco, Inc. to facilitate development of the Eco Protocol and expects to engage further service providers to support itself and the Protocol.
What’s the difference between Eco Foundation and Eco Association?
Eco Association is an independent nonprofit member of the Eco community with a mandate to support the development of the community and the Eco Protocol. It is not a DAO wrapper in the sense that it does not, and has never, owned the intellectual property of the Eco Protocol or the community treasury. It is also not an entity subject to the governance proposals of the community. The Association is fundamentally not an identity for the Eco community. While Eco Association historically has hosted the front-end for governance of the Eco Protocol itself, that responsibility would move to Eco Foundation following this proposal.
What would happen upon passage of this proposal?
- Approval of Eco Foundation as the legal wrapper for the DAO;
- Eco Foundation would implement requisite corporate and operational infrastructure, including establishing Security Council processes and governance mechanisms for community protocol improvement proposals; and
- Eco Foundation would take steps necessary to hold title to intellectual property and other assets relating to the Eco Protocol, as well as the community treasury.
