Background

Behind every aspect of a group is a leader, or a group of leaders. In a household, it tends to be the parents. Schools have principals or headmasters. Companies have a CEO, a president, and a board of directors. Countries have dictators, oligarchies, parliaments, and representatives. However, all of these organizations are centralized. How does governance and leadership work in a decentralized ecosystem, such as DeFiChain? This chapter explores this question.

Concept

In theory, a decentralized ecosystem would give one equal vote to each person in the community. In practice, this has never been achieved and the system eventually became corrupted. Applying the theory to modern-day crypto, each wallet should get one vote. The blockchain does not know a person, but each wallet must belong to someone. The obvious problem with this is that a user can have more than one wallet, and malicious users can create a massive amount of wallets to gain voting power. Even if wallets had to have a certain balance of coins to vote, users with more coins could create new wallets and spread their funds to gain more voting power. Therefore the most common method of voting adopted by communities is a variation of one coin, one vote. In DeFiChain voting, one masternode gets one vote. Although this system isn't the ideal version of voting, it is the closest that communities have gotten to true decentralization.

Voting on DeFiChain

With the current scheme of one masternode, one vote, there will never be more than 60,000 votes on DeFiChain as there is a maximum supply of 1.2 billion DFI and a masternode requires 20,000 DFI to operate. 

What are users voting for?

There are three types of proposals, but only two of them are really used. CFPs are proposals created to fund a project. DFIPs are proposals created to change a feature of DeFiChain. An example of each:

CFP: A user wants to fund a new dashboard which helps users keep track of their liquidity mining positions, but they need 50,000 DFI to do it, which they request from the community fund.

DFIP: A user believes that vaults should be able to contain any dToken in the ecosystem.

A successful CFP requires over half of the vote to be in favor of the proposal. A DFIP requires over two-thirds of the vote to be affirmative to pass. Additionally, at least one percent of all of the masternodes must have voted on the proposal (regardless of what type of proposal).

How do users vote?

A user votes using on-chain commands. The command has four parts: "votegov" to show that the user is voting, the transaction hash of the proposal they are voting on, their masternode ID (a 64-character string), and what they want to vote, with one space between each parameter. Some examples of a correct voting command include:

votegov 71cdbc26d7595982775132fb2d4f5ed061b2644aab1d5ec426f2ecdfeabd700a 0000000000000000000000000000000000000000000000000000000000000000 no

votegov f6cbf8c9722b24bed824326ac9e207e940173bf25ab27214898b5a0c3d7512ae 0000000000000000000000000000000000000000000000000000000000000000 yes

By going to DeFiScan and navigating to "Governance" and then the proposals, users can also have the website automatically generate the command for them. The command should be entered into the CLI (console) of a desktop DeFiChain wallet.

Masternode ID(s) can be found by using the "getmininginfo" command in the console.

What is the voting timeline?

DFIPs are eligible to be voted on for 130,000-260,000 blocks (~45-90 days), depending on where in the cycle it was submitted. They are required to stay in a full cycle (130,000 blocks) before they expire and the results finalized. CFPs are also subject to the previous rule, but they can be voted on for 100 full cycles if proposed.

How are proposals created?

Here is a guide to create a proposal:

• Let others know what the goal of the proposal is.

  • Open a GitHub issue at https://github.com/DeFiCh/dfips/issues.

  • Write a Reddit post at https://www.reddit.com/r/defiblockchain/

• Use the DeFiScan governance page to get the command to create the proposal.

  • https://defiscan.live/governance/create

  • Proposals need a title and a discussion URL (DFIPs). CFPs require the user to type the amount of DFI they are requesting, the wallet address that DFI would be sent to, and how many cycles they want their proposal to be active for voting.

• CFPs need to pay 1% or 10 DFI, whichever is higher, as a fee when submitting their proposal.

• DFIPs need to pay 50 DFI when submitting their proposal. Fees are not refunded.

• With the DeFiScan command, copy and paste it into a console and pay the required fees.

Check out our tutorial on DeFiMetaChain next!