🏛️Governance

An overview of the governance module.

Overview

dYdX Chain is a proof-of-stake blockchain network and holders of DYDX can participate in governing the dYdX Chain. dYdX Chain uses the standard x/gov module in the Cosmos SDK.

The governance module empowers DYDX holders to propose and vote on proposals, directly influencing the evolution of the dYdX Chain through a democratic process. The subject matter of proposals can vary from changing a governable parameter on the dYdX Chain, spending dYdX community funds, and updating the software that dYdX Chain nodes are running, among other things.

Summary

• Proposal Submission and Deposits

• Proposal Types

  • Text Proposals

  • Community Spending Proposals

  • Parameter Change Proposals

  • Software Upgrade Proposals

  • New Market Proposals

• Proposal Voting Options

Key Concepts and Definitions

• Deposits: Unstaked DYDX tokens pledged by the proposer and potentially other DYDX holders in support of the creation of a governance proposal.

• Inheritance: If a DYDX staker does not vote on a proposal, they will inherit the vote of their validator for the respective proposal.

• Vote Weight: A DYDX holder's vote weight is equal to the amount of DYDX the user has actively staked (1-1). DYDX tokens that are not staked or are in the unbonding period will not count towards a DYDX holder's vote weight.

• Tallying: After the voting period concludes, the TallyParams aggregate the vote results to determine if the proposal was accepted or rejected by the dYdX community.

• Execution: If a proposal passes, the execution process depends on the type of proposal.

Gov Overview | Cosmos SDK

Parameters

These parameters may be adjusted by the dYdX Community with an on-chain governance proposal.

Title	Value	Description
Deposit Params		The parameters for deposits on governance proposals.
min_deposit	2000000000000000000000 adydx 2,000 DYDX	The minimum token deposit for a governance proposal to enter the voting period.
max_deposit_period	604800s 7 days	The maximum time permitted for DYDX holders to deposit enough DYDX tokens to satisfy the min_deposit for a governance proposal to enter the voting period.
min_initial_deposit_ratio	0.20000	The percentage of the min_deposit that needs to be submitted by the address that creates the proposal.
Voting Params		The parameter for vote length of governance proposals.
voting_period	345600s ~4 days	The duration of the voting period.
quorum	0.33400	The parameters for tallying votes on governance proposals.
threshold	0.50000	The minimum proportion of Yes votes for a proposal to pass. *Abstain votes are not counted.
veto_threshold	0.33400	The minimum percentage of NoWithVeto votes required to reject a proposal, regardless of the number of Yes votes.
Burnable Params		The parameters for burning or returning a proposal deposit to depositors.
burn_vote_veto	True	If True, this boolean parameter will burn the proposal deposit for any proposals that are vetoed.
burn_vote_quorum	False	If True, this boolean parameter will burn the proposal deposit if the proposal vote does not reach quorum.
burn_proposal_deposit_prevote	False	If True, this boolean parameter will burn the proposal deposit if the proposal does not enter the voting period.
Expedited Proposal Params		The parameters for expedited proposals
expedited_threshold	0.75000	The minimum proportion of Yes votes for an expedited proposal to pass. *Abstain votes are not counted.
expedited_voting_period	86400s ~1 day	The duration of expedited proposal's voting period.

Proposal Submission and Deposits

All DYDX holders have the right to create a proposal. A DYDX holder can only use unstaked DYDX tokens to contribute to a given proposal deposit.

To create a proposal, a DYDX holder needs to send a msgsubmitproposal transaction and satisfy the min_initial_deposit_ratio parameter by sending a deposit transaction.

After the proposal is created, any DYDX holder can contribute to the deposit by sending a deposit transaction.

For the voting period to start, the min_deposit parameter needs to be satisfied within the max_deposit_period. Note, (1) the proposal is in an inactive proposal queue until the min_deposit is satisfied and (2) the voting_period will start as soon as the min_deposit is reached.

The deposit is kept in escrow and held by the governance ModuleAccount until the proposal is finalized (passed or rejected).

If a proposal fails to satisfy the min_deposit within the max_deposit_period and the burn_proposal_deposit_prevote parameter is set “False”, any DYDX holder who contributed to the respective deposit of a proposal will have their deposit refunded.

Proposal Types

Governance of the dYdX Chain includes 5 distinct types of proposals: text proposals, parameter change proposals, community spending proposals, software upgrade proposals, and new market proposals.

Text Proposals

Text proposals are votes that occur on-chain without directly triggering any changes on the dYdX Chain. Text proposals can be used (1) to establish dYdX community consensus for an off-chain matter, such as a strategic plan, a dYdX DAO action, or a dYdX DAO commitment, or (2) as signalling for a future vote that will directly cause changes on the dYdX Chain.

Community Spending Proposals

Community Spending Proposals involve a request to spend DYDX from the community treasury, community pool, or any other community-controlled account. The inputs for a Community Spending Proposal are (1) the number of DYDX and (2) the recipient address.

Parameter Change Proposals

Parameter change proposals are for changing one or more of the dYdX Chain parameters that are controlled by the governance module.

If a parameter change proposal is successful, the parameter change takes effect in the block after the voting period ends.

Software Upgrade Proposals

The upgrade module facilitates smoothly upgrading a live Cosmos chain to a new (breaking) software version. Software Upgrade Proposals need to be created with a plan. Such a plan outlines when the update will occur (block height), the name of the new version of the software, and the UpgradeHandler which instructs the upgrade module on how to carry out the upgrade (the latest consensus version of each module and other software).

After the dYdX community accepts a software upgrade proposal there are two important 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.

• Switch - Once a block contains more than 2/3rd precommits where a common SoftwareUpgradeProposal is signaled, all the nodes (including validator nodes and full nodes) are expected to switch to the new version of the software.

New Market Proposals

Any dYdX Community member can propose to add a new market pair to dYdX Chain through the following ways:

• Market listing widget: users can search or choose from a list of markets they would like to add, using this tool would require a wallet containing at least 2,000 unstaked DYDX to be used as a proposal deposit. dYdX Trading Inc. ("dYdX Trading") maintains an open-sourced list of market parameters. Information on methodologies and how the compatibility of markets with the software is determined can be found here.

• Programmatic proposal submission: users can submit a new market proposal through the Command Line Interface, the markets proposed this way are not limited to the markets listed in the widget above, although users are encouraged to adhere to the parameters set out in the documentation. Submitting a new market proposal this way would require a minimum deposit of 400 unstaked DYDX, and the proposal would only enter the voting period when the deposit reaches 2,000 DYDX.

Proposal Voting Options

The voting options for governance proposals on dYdX Chain are:

• Yes

• No

• NoWithVeto - allows voters to express strong disagreement with a proposal to the extent that if burn_vote_veto is “True” and the veto_threshold is reached the respective deposit in the governance module account for the proposal is burned.

• Abstain - allows voters to signal that they do not intend to vote in favor or against the proposal but accept the result of the vote.

Expedited Proposals

A proposal can be expedited, which shortens the voting duration to 1 day and sets a higher tally threshold by default. The expedited proposal threshold is 0.75 (75%) and the quorum is 0.334 (33.4%). If the expedited proposal does not meet the threshold within the shortened voting period, it is converted to a regular proposal, and the voting restarts under standard conditions.

For example, if an expedited proposal starts on July 1st, the vote would end on July 5th if the expedited proposal fails to meet the higher tally threshold by July 3rd.

Users can set their proposal to expedited proposal by setting the expedited field in the proposal submission JSON file to true. Expedited proposals can be used for any vote type, including Text, Community Spend, Parameter Change, Adding Markets, and Software Upgrades.