0x 2020 Governance Route: Improve Community Voting Participation and Staking
Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from
Crypto Valley Live (ID: cryptovalley)
Crypto Valley Live (ID: cryptovalley)
, Author: Theo Gonella, translation: Ziming, reprinted by Odaily with authorization.
It’s been two years since we published the 0x governance roadmap, which outlined the need for coordinated upgrades to minimize market disruption and be handled by stakeholders who capture economic value directly from the system. From the beginning, our vision for the 0x protocol has been that all aspects of decision-making will ultimately be handled by the community, including the management of token funds used to continuously fund protocol development and ecosystem growth.
We conclude that, combined with properly designed incentives, on-chain token voting schemes can achieve effective decentralized governance. ZRX is one such token. Governance of the 0x protocol will need to operate like politics, in which stakeholders with different needs and incentives will use on-chain mechanisms to propose and agree on changes to the 0x smart contract pipeline. It's worth noting that other projects, Compound being the latest example, are moving towards this model.
We have taken a major step in this direction by introducing the new ZRX tokenomics. ZRX token economics incentivizes token holders to delegate their voting rights to market makers, who in turn can share in protocol fees based on trading activities on 0x.
It’s been two months since the beta launch of ZRX Portal, a simple user interface where token holders can stake ZRX, share protocol fees from their staking pools, and vote on governance proposals. The Beta phase has been successfully completed and over 1600 addresses currently have more than 14 million ZRX staked into the system. Protocol fees have steadily increased each Epoch as transaction activity transitions to 0x v3.0, totaling over 65 ETH to date.
As a major outcome of the new token economics, market makers running staking pools dramatically increase their voting power. Now, the top two staking pools have reached nearly 5 million ZRX voting rights. The operators of these two staking pools have positioned themselves as professional market makers. To sum up, the vote count for v3.0 is 6 million ZRX, which means that the top two staking pools (in terms of the number of ZRX) will have the ability to play an important role in the vote.
first level title
The diagram below outlines our ideal roadmap for the next few years:
This year's focus is on increasing engagement in our community. We will measure success through community voting participation and staking, which is directly tied to 0x stakeholder commitment. We launched the ZRX Portal as a central hub for voting and staking activity to complement our current channels (ZEIP, developer calls, open source repositories, discord)
Below we share the actions we plan to take to achieve this goal.
secondary title
Create a new ZEIP process
We recently released ZEIP-76, which aims to formalize a new ZEIP process. ZEIP stands for "ZeroEx Improvement Proposal" and will function as a public square where anyone can propose and reach consensus on changes to the 0x smart contract pipeline. This ZEIP gives more specific guidelines for the creation of new ZEIPs in the future based on feedback from peers in the ecosystem.
The main changes introduced by this new proposal are:
ZEIPs must have formal categories and phases with corresponding tags on Github;
Indicates a specific type and pre-implemented version of ZEIP. A poll to ask the community to assess the early specification of ZEIP and its potential impact;
Set up a committee to facilitate the ZEIP process and manage the ZEIP queue. The committee will initially consist of core team members, but we intend to gradually open it up to all interested/qualified individuals over time.
secondary title
Governance through staking economic parameters
The PoS-based liquidity incentive mechanism introduced in 0x v3.0 has begun to transfer voting rights to market makers. Some parameters reflect how ETH is distributed to market makers and token holders through 0x smart contracts. These parameters are intended to be updated by the community. From the feedback we've had from the community so far, there's been a lot of interest in experimenting with these parameters through governance. We are planning to gather feedback, make proposals, and launch a vote to allow stakeholders to modify these parameters (e.g. epoch length, alpha, weight of delegated stake) over the next few months.
secondary title
We are planning to develop a specification that will be presented to the entire community. The proposal will need to be accepted in an initial survey, then implemented, and finally accepted again by the community before being deployed. It will greatly reduce breaking changes due to protocol upgrades in the future.
On-chain governance
On-chain governance
We plan to maximize the on-chain portion of the governance system in 2021 to reduce trust critical points in upgrade deployments. Although this depends on the completion of other projects in the plan, we can start testing such a system for cases where minor stake changes do not require the deployment of new smart contracts.
text
secondary title
Continue to monitor the growth and health of the staking ZRX liquidity incentive
While ZRX staking is just getting started, the system already shows dynamics converging towards our targeted game-theoretic equilibrium. We are planning to develop the ZRX Portal to make it easier and clearer for ZRX token holders to delegate their voting rights to the best staking pools. We will also work with staking pool operators to help them maximize the rewards collected and shared with token holders and further bring the market into equilibrium.
