About the author: Frank, a core contributor for CFG community, a product and operation expert, has many years of experience in technology development, artificial intelligence, big data, search engines, and smart contract development. He previously worked in Alibaba as a senior engineer and has accumulated over 6 years of product/operation experience in the blockchain industry. He has solid professional skills in the field of WEB3.0. His points of interest are community governance, Web3.0 product tools, and on-chain data architecture.

Content contributor Andy: With many years of experience in the products of major Internet companies, he is currently working in the core product position of a leading global blockchain company. He has deep minds and logic on Web3.0 products and governance.

Overview

Our governance philosophy comes from traditional enterprises and emerging organizational structures (DAOs) including on-chain + off-chain, Chainlink's DAO research reports, etc., which are valuable for our in-depth thinking. MakerDAO is a pioneer in the industry. Its underlying protocol Maker is one of the largest Defi protocols in the space developed based on Ethereum, and its stable currency is Dai. They learnt from the way traditional companies operate. The Constitution is similar to the Articles of Incorporation, and committees are designed in much the same way as a company's board of directors. The current company's board of directors is composed of stakeholders such as shareholders, and the committees in MakerDAO are not necessarily Maker holders, but professional experts (such as lawyers, risk management, technology management, operations) elected by Maker token holders). The mechanism here is similar to the people's Congress, professional talents and full participation from Optimism's Two token house model, Osmosis will also soon adopt it. MakerDAO's existing voting mechanism is to use off-chain signatures tools (such as snapshots), and collect corresponding wallet addresses and balances using on-chain snapshots, obtaining corresponding voting weight, activity and other information. Although the mechanism itself is still a game controlled by big players, and at the same time the committee consisting of professionals also has significant power. Maker DAO is still a very good DAO prototype in the industry. So in conclusion, the governance of DAO is relatively flat organized where smart contracts are deployed on-chain, while the governance for the company is more focused on the hierarchical structure .Cosmos's minimalism, altruism, modularity and other characteristics are the evolution and progress from the monolithic chain. Ethereum is essentially a block competition, which is of great significance for the value capture of the protocol itself (fat protocol, thin application thesis), but it is not very friendly from the user's point of view. We believe that when the next bull market comes, it may still be difficult to achieve an order-of-magnitude drop in Ethereum gas costs . The previous Twitter discussion on Ethereum by Three Arrows Capital and Paradigm engineers (Flashbots) was quite forward-looking. Cosmos probably focuses more on developer/user friendly. It tries to solve the problem of block competition through the design of the application chain, and reduce the impact gas has brought about, so as to provide on-chain governance efficiency and greatly improve the voting participation (average 50% vs single digits on Ethereum). The governance of Ethereum is still centralized off-chain , and involves nodes/players. It implements the corresponding governance process through less direct on-chain behaviors (such as the Genosis Safe tool, which uses multi-signature for governance).

An trablizer for this within Cosmos is the Cosmos Hub, which focuses on credit neutrality. The number of nodes expanded from 125 to 150, and then to 175 . Cosmos Hub introduced the incentive model of stakedrop (airdrop), incentivizing Atom stakers to delegate to nodes (rather than exchanges). Osmosis, Evmos, and Juno are the pioneers for Stakedrop. For all the appchains, we can divide them into Permissionless Chain and Permissioned Chain. Both Evmos and Juno focus on permissionless, as well as some new projects such as Lido, Neutron, Archway (which focus on developer friendliness, incentive consistency, etc.), while Osmosis belongs to the Permissioned one.

DAOcentral tries to classify the DAOs currently on the market, investment sector, protocol sector (MakerDao), product-driven DAO (Party DAO), social networking (DAO), Grants DAO (donations to project parties Osmosis DAO, Gitcoin DAO), NFT collection, education, media, enterprise services (DeveloperDAO does talent output and training for projects, etc.).

Before we discuss DAO cases and governance issues in detail, here are some questions raised by Andy Hall of Stanford University about DAOs that are more centralized in the market today :

1.Participation: Low participation of token holders in governance

2.Information and expertise: Most token holders are unlikely to have sufficient time or the requisite expertise to make informed decisions on complex governance topics such as complex technical issues.

3.The problem of robot voting, which happened a lot for Juno. Osmosis is also more frequent, with more than 300 proposals already.

4.The stakers, committees, and multi-signature wallet signers in the DAO have different rights and incentive mechanisms. During the development of the DAO, it is necessary to actively adjust the corresponding incentive measures. For example, how to motivate people discussing the chain, For example, for Commonwealth discussions on Osmosis, users are connected to the Keplr wallet. The Osmosis can be incentivized through data sampling, for example, for active activity. Other channels such as discord are also good places to incentivise through either robots/points upgrade. Governance of the Cosmos Hub In the past more than three years of operation of Cosmos Hub, the number of nodes has been expanded twice from the initial 125, to 150 first, and to 175 second. Each node expansion requires a permissioned governance proposal. Each proposal requires a draft by a community such as the threshold for node sets, the geographical location of the node server , the audit standards of the Interchain Foundation, etc., and then initiates a formal proposal on the chain , and Atom stakers can participate. At present, Cosmos Hub has two governance modes: the first is the internal governance of active nodes, similar to the traditional company shareholders meeting mentioned above. It is generally used to deal with crisis events and discussions on governance proposals on the chain. Major nodes/talents express their own different opinions. This is similar to the voices of Members of Parliament in different regions representing the voters in their own regions. The second is to initiate proposal governance on the chain, and all stakers can vote. For example, Proposal 69 and 72 are governances with relatively high community participation this year. In Proposal69, it is proposed that the Cosmwasam module should be added to the Cosmos Hub. For those who are interested in this piece, you can read our previous article Cosmos12 Fireside Discussion: A Cosmos Community Event You Can't Miss - with Cosmwasm Proposal69 Interpretation , CosmWasm on Osmosis, Cosmoverse Cross-chain smart contract engine and others. Jae Kown used Gnoland to try to bribe votes, and only those who voted No could get the airdrop, and the proposal was rejected (in May). However, after only 2 months, there was a change. Proposal 72 is about using the treasury funds for ICF to support the consumer chain, and the launch of the contract consumption chain (vs customized consumption chain ) requires CosmWASM to be deployed on the Cosmos Hub, so the CosmWasm function will eventually be launched thanks to the introduction of consumption chain . The consumer chain testnet will be launched in the second half of the year, and the official launch will be in January next year. The consumer chain maintains security via Cosmos Hub validators. The launch of cross-chain security will bring value capture to Atom and give the corresponding value (25% of total revenue) to Atom stakers. The results of these two proposals have far-reaching implications for the future direction of the Cosmos Hub.

The value capture of Atom tokens is one of the most challenging aspects of the Cosmos Hub. At the recent meeting in Seoul , ICF members also stated that their three pillars as the Cosmos Hub mainly include: Currency (payment), public goods (Bitcoin, Ethereum), Cross-chain security. Many people will continue to debate the issue for value capture, which goes back to the question of how to define value capture. Is value capture a simple reflection of the price of Atom or a reflection of the overall value of long-term ecological development? Although Atom token price itself was not particularly prominent in Layer 1 mafia , Hub has always maintained its trustworthy and neutral principle which other app-chains find it's hard to be replaced. At the same time, this also allows us to see the altruism in "Atom", which is a trade off of short-term pain for sacrifice of its own price vs long-term win for the ecosystem benefits.

Governance of Osmosis

OsmosisDAO was the first team to fund CFG Labs . Its core protocol, Osmosis, is the first Interchain DeFi liquidity protocol and the core application chain within the Cosmos ecosystem. It is launched through the Fair Launch, and 25% of the tokens are airdropped to Atom stakers. The main forms of Osmosis's first step of governance include internal discussions among nodes (which have not yet introduced expert teams), as well as open public discussions. The current process and method are similar to Cosmos Hub, which is currently happening in Commonwealth (a governance Web3 product), and Osmosis motivates on-chain users who participate in governance according to the activity for posting proposals. After a discussion of 3–7 days, voting will happen on the chain. Analyzed based on the recent Osmosis voting, among a total of 135 validators, an average of 50–60 validators did not participate in voting. More than half of the top ten nodes did not vote for more than 50% of the proposals, which may be related to the frequent voting by Osmosis. However, compared to other protocols, the overall participation of the top 20 nodes is still relatively high, exceeding 40%? There are several nodes that are good at governance, such as Notional , Emperor Osmo (Hathor Nodes, Imperator, Oni validator ) who often express their opinions, and their voices on social media have a greater impact on the outcome of governance proposals. The mechanism/strategy of posting relevant political opinions/interactions is similar to the democratic election. The results for the recent proposals 307 and 309 are also unexpected. The big players voted No, and other investors voted Yes. The final result is No. Here we think there are still a lot of bots getting involved. Whether it's airdrops, trading, or voting , bots are very common in this industry. I think this form of open discussion is ultimately positive for the long-term development of the protocol, including the previous CosmWasm protocol 69. Finally, a module (Protocol 72) was added. At present, Osmosis's proposal is still greatly influenced by the top 20 nodes/big players. Of course, this centralization problem is expected to be alleviated by the design of Citizen House (introduced below). Osmosis has plans to implement the Two token house model from Optimism. At present, it is mainly divided into Citizens house and Token house where it's similar to the House of Lords and House of Commons in democratic elections. Token house is a regular DPOS/PBFT mechanism for the selection of representatives, then the representatives vote. Citizen house, on the other hand, mainly promotes and manages the distribution of funds for retrospective public goods. Professional Citizen status will be granted by "soulbound", the collection of citizens will grow over time, and there will be corresponding incentives. The mechanism for allocating citizenship will be determined by the Foundation based on the opinion of Token House. (

https://gov.optimism.io/t/working-constitution-of-the-optimism-collective/55 ) The current problem is that although the OP proposed this model, the mechanism for assigning citizenship has not yet come out. The current governance is also the conventional DPOS voting governance. The recent discussion https://gov.optimism.io/t/lets-talk-about-identity-in-the-citizens-house/2170 . It seems that there are still many issues to be discussed and unresolved, such as how to prevent corruption,sybil attacks etc. The plans for governance of Osmosis is as follows: governance proposals are mainly proposed by some professionals such as technical experts/theoretical experts/economic experts/protocol experts/governance experts/active community members/legal governance who will together manage the direction of the chain , and they will also put the discussions on the Commonwealth for discussion. Only after the certain threshold has been reached, on-chain voting can be accessed by the community. Osmosis currently has three sub-DAOs: 1) Osmosis Grants, which use USDC/Osmosis to fund ecosystem projects. 2) Marketing DAO, such as meeting, producing content. 3) Operation DAO, to help users use the product. There may also be a developer DAO, CosmWasmDAO, etc. in the future.

Governance of the Juno Network

Juno Network is the most representative permissionless blockchain in the Cosmos ecosystem, with a relatively high degree of decentralization. The governance activity on the chain is relatively high, and the number of real users is also considerable. The number of developers is 50–100 (some are from Terra, Terra developers either stay, or build another App-chain (Mars protocol) or contribute to Juno, Osmosis. The main active nodes include Notional DAO, Strangeloves, Oni, Dimi @dimiandre (Core 1 contributor), etc. Up to now, it has been attacked many times by the Wasm contract. There was one in April this year, and one most recently. The reason is that the team knows that there is a bug that needs to be updated. Before the update, someone took advantage of this bug and attacked through the contract. Because of the underlying characteristics of Wasm consensus, the mechanism of Tendermint in Cosmos is changed. This will lead to the stop of the chain. As a result, every time the chain is restarted, all nodes of Tendermint are required to participate in the operation, ( this is the design that Tendermint pays more attention to security vs. Ethereum that pays more attention to liveness ). Although user funds will not be threatened, it will greatly affect the user experience. We think the two downtowns might be the spoofs from the core team. Some of the current governance issues with Juno DAO include:

Juno DAO's Proposal16 is one of the most controversial governance proposals in the history of DAO. The content of the proposal is to deal with the stakedrop amounts of a centralized institution called Game participating through the Sybil attack, using 50 accounts, each of which has 500,000 Juno. It was widely discussed on twitter, and the proposal was finally passed. Later on the corresponding proposals on how to allocate the funds such as returning to the treasury were raised.

The proposal 9 is about the decision to close the chain of Cerberus. Although the vote did not pass, it reminds everyone that it is immature to directly upload the proposal without deep thinking and pre- discussion. The community has also proposed some solutions. For example, the Evmos team said that only some proposals with an intensive community discussion will be considered to be put further on-chain for voting. To sum up, there are four points:

The governance of Juno DAO has a lot of power, and the code can be directly modified by governance or released by the new one. The power of Cosmowasm can directly change the state of the blockchain. Juno has been attacked twice by malicious Wasm smart contracts before, causing the chain to stop running.

Some controversial proposals are less discussed on internal forums, but are discussed as hot topics on twitter ( Is it possible to do off-chain governance through Twitter Discord, crawler? )

Regarding the governance for some crisis events, nodes and core teams normally skip the governance.It is difficult to find the right person for bugs issues. Juno is ready to solve existing problems with SubDAO. Proposal25 (Juno SubDAO Principles: https://www.mintscan.io/juno/proposals/25 ) has passed relevant proposals and is managed by DAODAO ( the cross-chain function of DAODAO is expected to be launched after interchain security ) . For example, the recent proposal 27, " Hack Juno SubDAO " is the first SubDAO, developer DAO, it's transparent and easy to manage. It can initiate proposals, vote, through the DADAO. The management right of SubDAO belongs to Juno community DAO (that is, Juno Chain Governance), that is, the establishment of SubDAO, fund request, management , etc. all require the approval of Juno's on-chain proposal. SubDAO is mainly responsible for the execution of specific issues, and SubDAO's behavior represents the Juno community DAO. (Reference: Juno SubDAO Principles: https://www.mintscan.io/juno/proposals/25 ). Disadvantages of this model include:For some core issues, such as fund processing and chain upgrade, SubDAO cannot be passed well alone to improve efficiency, it's still required to vote on the main chain.

• Insufficient user participation, although Juno's participation rate in the entire ecosystem has been relatively high, its part-time feature for majority core developers has also made Juno a legend in the industry. Under the DPOS mechanism, the node obtains the ownership of the staker by default, but if the user's vote is inconsistent with the node's stakers, the user's vote can always override the node's stake. For this part of governance in Cosmos , you can check our previous article , the pioneer of Cosmos - Osmosis, after IBC, see how ICS and ICA reconstruct the encryption industry , Cosmos Thesis- The rise of Osmosis application sovereign chain Osmosis Beyond Coinbase? What are the cutting-edge technologies and new features in 2022. The future governance direction will introduce weighted governance (including voting based on 1) nodes vs. user voting , 2) based on content, such as chain upgrades, contract deployment, use of funds etc. vs. others , 3) such as governance through the main DAO or SubDAO ) . Ultimately the weighted governance will be based on the comprehensive score . This is also a way to improve decentralized governance.

  Governance of Evmos

  Evmos' stakedrop covers most wallets in crypto history (most of them are Ethereum wallets) (2 million addresses). At present, 25% of the 100 million tokens have no claim (if everyone forgets to claim it, it should be still available now, but subject to decaying function along the time). In addition to the basic governance plan, Evmos will have a governance chat every week in the Comonwealth, Discord channel, where community members can ask questions, and proposal proposers will answer questions. Normally tens of people will participate in each meeting. At present, proposals are mainly made by active community members, teams, and stakeholders (proposals related) . The voting participation of Evmos is relatively high. About 2/3 of the nodes participate in the each proposal, and many nodes discuss the governance proposal in the discord governance channel. Their governance has recently been a lot about products, for example ERC20 modules, and the launch of ecological dapps. Recent controversial proposals include 32 (

1. https://www.mintscan.io/evmos/proposals/32 ) Evmos dapps' Bootstrap Liquidity Proposal, which was voted on-chain a month after being proposed on commonwealth, but not enough discussion on Commonwealth. Because the proposal is too general and the content is not detailed enough, it has caused a lot of discussions and questions. This also shows a problem, most people do not have the time and energy to pay attention to the proposals on commonwealth. Proposals tend to attract everyone's attention only in the voting stage of on-chain either through twitter or other channles. Proposal 30 ( https://www.mintscan.io/evmos/proposals/30 ) Exswap Bootstrap Proposal (Uniswap V2 folk) ended up being Yes: No 40% : 42% were rejected. Chinese community participation is high. Some of the team's actions have led to suspicion among members of the Chinese-speaking community. Although the Chinese community reminded some validators of some potential risks at the first time, several major ones insisted on voting Yes. Less than two hours before the end of the proposal, a Chinese community member found a core piece of evidence and issued evidence that the Exswap developer's wallet address was associated with a rug project wallet previously. Then the results changed for the last minute. The result of this proposal is not important, but we can feel the relatively active atmosphere for the Evmos community is still relatively active. Also the participants are relatively focused on governance of their interests (this may be a common problem that needs to be solved in the industry, vote yes if it benefits me, vice versa) . Participating in governance is meaningful, and individual community members can even influence the outcome of governance proposals. Of course, the degree of centralization of Evmos governance is relatively high but it's normal for an early stage protocol in the industry. A total of 19 nodes voted yes for this proposal, and 50 nodes voted no. In the end, the ratio of yes and no is very close, which shows that the big players still have a lot of control over the voting results. Summery Some of the above governance views on several protocols in the Cosmos ecosystem come from Stakefish and the slim validator ; Optimism's Two house model gave us a lot of inspiration where Osmosis Dao intends to take the inspiration on the model as well. Juno instead directly uses Sub Dao to refine governance. In the future for governance, we will focus on the following solutions such as:

2. The Sub DAO will use the DAO DAO. After the interchain security is launched, the on-chain governance of the entire Cosmos ecosystem can be governed by DAO DAO tools. 2.Some education should be done during the period after the draft discussions but before the formal chain-proposals, in order to make sure the people understand what they are voting for, especially for more complex governance proposals.

3. Discussion for controversial topics tends to have more strategic reasons to be voted on-chain instead of using the voting for all strategy.

4. How to prevent governance attacks: vote bribery, node collusion, bot swiping, sybil attack Reference What can DAOs learn from traditional corporate governance? https://forum.makerdao.com/t/research-driven-insights-about-dao-governance/12471 https://whimsical-lightning-304.notion.site/Osmocon-Panel-Osmosis-SubDaos-and-Governance-Mike-Barb-OSL-mod-Stephen94K-OMM-EmperorOsm-3694234fd3c5498caa39ffed5fbea78d Better Governance With SubDAOs - Andrea Di Michele https://medium.com/a41-ventures/governance-memo-osmosis-july-week-4-2022-ec2f51bec523 https://blog.chain.link/daos/ https://silentvalidator.com/