The New On-Chain Governance in Algorand: Everything You Need to Know
Another week, another service for the Algorand community and ecosystem. As part of our ever-evolving services, the team is thrilled to reveal a new governance protocol on Algorand.
As planned in our ambitious roadmap, we believe in enabling decentralized decision-making and giving control to the community to decide on the future of the platform. In AlgoFund, we also firmly believe that innovation lays the proper foundation for long-term success. For this reason, we will be releasing this week a newly developed on-chain, non-custodial, and permissionless governance system.
The Governance service will be used by the $ALGF holders to vote on proposals for future IDO listings, new functionality to the platform, and overall global decisions that impact the project.
The protocol is a Token-Vote based protocol that does not require voters to move their $ALGF tokens or lock them in a smart contract.
Every proposal will have a body explaining the issue the community is facing and propose multiple choices representing different solutions. The chosen choice is the one with the most casted votes i.e. GALGF tokens. The voting process consists of 3 steps:
- The registration phase is where the users register their address to participate in the vote.
- A snapshot is then taken to determine the total $ALGF holding of the registrants.
- Finally, a voting phase that allows users to cast their vote.
When a proposal is live, a corresponding smart contract will be deployed alongside a custom token. On the app, users can register their addresses to participate in the proposal voting. Registration is done by opting to the governance smart contract and to the proposal’s customized token called $GALGF.
As mentioned before the governance protocol is non-custodial meaning it will not ask participants to transfer their $ALGF tokens instead a snapshot will calculate all the $ALGF holding of an address either in the wallet’s balance or in the staking pool or in the farming pool. The snapshot will be taken at a random moment after the registration ends. This mechanism was implemented with the user’s freedom in mind. It’s very important to allow participation in the voting without moving or locking funds, this gives the user great flexibility. Note that an account’s voting power is equal to the snapshot of that account’s $ALGF total balances. At this stage, participants do not need to perform any actions.
Once the snapshot stage is over, all the participants will receive a number of GALGF tokens that is equal to their total assets tracked in the snapshot (wallet balance, staking and farming pool participation shares). The token is linked and valuable only for the voting of this proposal. On the governance app, users will cast their vote by submitting the proposal tokens and responding to the proposal’s multiple choices. Note that every 1 token submitted represents 1 vote. Since the mechanism is solely handled by the smart contract, the voting is transparent and its evolution is displayed in real-time to all users.
AlgoFund believes in the importance of having a transparent decentralized decision-making process. If you are building on Algorand and need to incorporate a governance system, please drop us an email at firstname.lastname@example.org. And as always, we will keep pushing the limits of the Algorand capabilities and provide the whole community with the latest innovations.