# Concepts

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.

If proposal's deposit does not reach MinDeposit before MaxDepositPeriod, proposal closes and nobody can deposit on it anymore.

# Deposit refund

There is one instance where Atom holders that deposits can be refunded:

• If the proposal is accepted.

Then, deposits will automatically be refunded to their respective depositor.

# 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.

Other modules may expand upon the governance module by implementing their own proposal types and handlers. These types are registered and processed through the governance module (eg. ParamChangeProposal), which then execute the respective module's proposal handler when a proposal passes. This custom handler may perform arbitrary state changes.

# 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.

# 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).

Proposals can be accepted before the end of the voting period if they meet a special condition. Namely, if the ratio of Yes votes to InitTotalVotingPowerexceeds 2:3, the proposal 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. This condition exists so that the network can react quickly in case of urgency.

# 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 urgent, 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 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

At present, validators are not punished for failing to vote.

# Governance address

Later, we may add permissioned keys that could only sign txs from certain modules. For the MVP, the Governance address will be the main validator address generated at account creation. This address corresponds to a different PrivKey than the Tendermint PrivKey which is responsible for signing consensus messages. Validators thus do not have to sign governance transactions with the sensitive Tendermint PrivKey.

# 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 programmatically