NewsBlogAlgorand Community Governance: Continuing our Path to Decentralization

Algorand Community Governance: Continuing our Path to Decentralization

By

Staci Warden, Algorand Foundation CEO

Dear AlgoFam:

What a couple of weeks it has been. I hope you are all staying safe out there! In these difficult times for crypto, I can’t help thinking how blessed we all are to be members of such a healthy ecosystem. Unbelievably to me, I am also coming up on the end of my first year at the Algorand Foundation. The time has passed in an instant, and I want to say to you all that it is the privilege of my life to be working for such an engaged and vibrant community, and on the advancement of such a transformative protocol. 

Our mission at the Foundation is to empower a vibrant ecosystem of builders and entrepreneurs based on the Algorand blockchain. The things we do, and ways we try go about this, are wide-ranging, and run the gambit from the technical (ensuring a secure and decentralized network of relay and participation nodes, enhancing developer tooling, and developer relations) to community education and engagement, to marketing, to making grants and investments in entrepreneurs, and, of course, to incentivizing participation in governance voting. And it is this last topic that has probably attracted more AlgoFam attention and lively debate than any other.  

And so, as we will soon propose our governance framework for 2023, on the one-year anniversary of the governance program, I thought it might be appropriate to share some of our broader thoughts on the program here. 

First, some news . . .

It is clear to all of us at the Foundation that one of the most important requirements for a well-function governance program is the need for clear and responsive lines of communication between the Foundation and you, the community. And there are definitely times where we could have done better in this regard.  To address this need, we have created a full-time role dedicated to managing community engagement and all other aspects of the 2023 governance program. And I am thrilled to announce that Adriana Belotti has taken on this important challenge. Those of you that know Adriana in her past role as community manager for Australia know that she believes deeply in the power of the blockchain to enable communities to organize and make collective decisions. She is already working on some ideas to better engage with you, and we are excited for what we can accomplish next year. Please join me in welcoming Adriana to this exciting new role!

. . . and then some background 

As you all know, our founder, Silvio Micali, conceived of a brilliant consensus mechanism for the Algorand protocol: one which enables our blockchain to be at the same time secure, decentralized, and scalable. A fundamental part of this model has been that, unlike proof-of-work and proof-of-stake mechanisms, Algorand’s pure-proof-of-stake mechanism does not pay participants for consensus. 

 

Given this, and because it is fundamental to our mission that we distribute Algos to our community, we began by simply distributing Algos to every Algo investor on a pro-rata basis. This system worked reasonably well, but because it was indiscriminate, it did not recognize the work that certain community members do to support the ecosystem and our network. And, it did not further our goal of decentralizing Algorand Foundation decision-making. 

So, last year we took the important step of beginning our formal transition to decentralized governance in our 2022 governance program, and we are pleased to say that the response of Algorand Governors was enthusiastic. Participation increased over the course of the year, going from 1.7B Algos to 4.2B Algos in this last quarter, and Governors made a range of important decisions, particularly around the framework for xGovs, whose measures passed with overwhelming support during each voting period.

 

Today and Moving forward

By the end of 2022, the Algorand Foundation will have distributed ALGO 342mm (over $120mm at current market prices) as governance rewards. This has generated increased participation in voting, as I mentioned above, with the participating community being by far the largest recipient of Foundation resources. 

We have also made important progress on decentralization. You, the community, voted in an xGov process to provide for community decision making; supported a system of liquid governance; enacted a system of targeted rewards to support Defi; and - perhaps as the most obvious example of decentralisation – you voted down a Foundation proposal on voting. 

But there is more to be done to hand over more decisions to the community, in particular around implementing xGovs and establishing a robust system for voting on and funding community proposals. As we go forward into our 2023 governance program, we will build on our successes and learn from our missteps. And reflecting on this past year, we believe that fundamentally we need to be focussed on three main things:

  1. Continuing deliberately on our path toward decentralization;
  2. Rewarding a wider range of ecosystem participants who work actively to support the health of the ecosystem and that of the protocol itself;
  3. Holding ourselves accountable in the way that we spend resources to make sure that those resources are deployed most effectively in support of our mission and our community.

We will soon put forward our voting measures for the first governance period of 2023, but I wanted to lay out some broad proposals below, to support these three goals.

Broad proposals for the 2023 governance program
  1. Governance rewards. We propose to continue to allocate substantial funds to governance rewards for Algo holders not involved in other ecosystem activities, but at roughly half of the current level. We propose implementing this on a pilot basis for the next two quarters while we assess the impact and gather community feedback. The remaining resources will be used for other kinds of productive community participation.

 

  1. Increase DeFi support. Given the success of the recent DeFi rewards initiative, and our sunsetting of the Aeneas program, we propose to roughly double DeFi support for the next two quarters through the governance program.

  1. Support for additional activities. In addition, we know that there are other productive activities that also contribute fundamentally to our ecosystem, such as running relay nodes or providing NFT infrastructure, so we will propose support for these activities as well. We want the community to be directly involved in the allocation of these resources, and you can expect further proposals from us in this regard. 

 

  1. Expedite MVP and xGov. To enable all of this, we propose to complete the implementation of MVP community proposals and the xGov system asap. These measures will allow community proposals to be filtered and upvoted in a transparent and consistent manner, as well as provide a route for the community to direct various programs, e.g. a fund for NFTs or specific project grants. Watch out for an ARC (Algorand Request for Comment) on xGovs as we intend to decentralise the design. 

We envisage that these will develop over time into the primary route for decentralized decision making, but we also see value in these kinds of activities being given the right but not necessarily the obligation to vote, as the mechanics of voting is not straightforward in some instances. We will solicit community help and participation to make these proposals and execute on this goal. 

I hope this note has helped frame our thinking and our ideas for decentralizing and improving the governance program in 2023. We will proceed carefully, though, mindful of our role as the long-term stewards of ecosystem resources on behalf of the entire community. 

As Adriana takes on her new role, she will be accountable to all of you to make sure we have good communication and engagement on these issues. You can find her at adri.algo on the blockchain, on her greatest ever twitter handle @nonfungibleab (Be sure to follow her!), or at governance@algorand.foundation, which goes directly to her.

We at the Algorand Foundation are deeply grateful to all of you. Algorand has the best blockchain technology out there, period, and we will grow with you, our amazing community, to transform the world. 

 

With gratitude,

Staci and team

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