pre-SIP 001 - Sui Governance Structure

Sui Improvement Proposals SIP Ideas (pre-SIPs)
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Sui On-Chain Community Governance Structure

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Sui has no on-chain community governance structure.

This is a problem, but having a bad on-chain governance structure is worse.

Existing governance structures in cryptocurrency have two problems:

  • Centralizing governance processes (typically a ‘democracy’ where 1 token = 1 vote)
  • No real incentives to participate in governance (participation also goes down over time, especially during bear markets)

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The solution to both Sui governance and crypto governance in general is to model governance after the consensus mechanisms of most cryptocurrency blockchains: leaders are randomly selected, and participation in the network is incentivized through coin/token rewards.

  • A ‘leader’ of the Sui DAO is randomly selected from DAO participants (taxpayers)

  • The job of the leader is to table proposals for the community to vote on

  • The leader is given some significant reward if the proposal is passed (e.g. 100k worth of SUI)

  • The leader can also distribute additional rewards to active DAO participants

  • A leader is selected periodically, perhaps once every 7 epochs (once a week)

  • Sui Foundation and/or Sui validators can help the leader draft proposals and can veto harmful ones

  • The goal of all proposals ought to be the development of products and services that benefit Sui

  • DAO participants votes on proposals, where one taxpayer = one vote

  • To become a DAO participant, you must pay ‘taxes’ to the Sui DAO (ideally in SUI)

  • Taxes are the same for everyone, and can be adjusted - goal is to model a subscription service

  • Taxes are voluntary, and are paid during the same period as the leader’s rule (e.g. 7 epochs)

  • Upon becoming a DAO participant, a unique, non-transferrable NFT is issued

  • This NFT collects non-transferrable community points based on participation

  • Higher points increases the likelihood of receiving rewards from the leader

  • Community points are destroyed when rewards are received - 50% loss when taxes unpaid

  • NFT is revoked when taxes are unpaid, but is re-issued when they start being repaid

It’s a working idea, but it should increase the organic demand for SUI while incentivizing community participation and expanding Sui’s ecosystem. If done properly, it can create a positive feedback loop that will make Sui sustainable regardless of crypto market conditions.

With some luck, it can even turn Sui into the first on-chain nation state. After all, what else is a government but a means of directing community pooled funds? And what creates demand for a currency, if not the economy of its country - what it offers, and the taxes paid by its citizens?

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Can members of the DAO submit proposals to the leader or is it only the foundations & validators involved in the proposal process? I do like the opt-in idea of participating in governance as a taxpayer, it incentivizes participation. What would community points be for, a form of social currency? Side note: when you say “table” proposals I’m understanding it as “postpone/delay,” but using the context around it, did you mean “bring up.”

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I agree with the idea of having on-chain governance, and I especially like the idea of incentivizing on-chain voting for taxpayers.

One thing I would like to discuss is the selection process for leaders in the DAO. If participation in the DAO is solely based on paying taxes, there is no guarantee that the selected leader will be capable of fulfilling their tasks.

Even with incentives for leaders, there is no assurance that a randomly selected leader from the DAO participants will fulfill their duties if the incentives are not attractive enough. Additional conditions are needed to ensure that responsible participants who genuinely want to contribute to the community are chosen as leaders.

Similar to other networks that use a PoS consensus mechanism, we should be able to reward (incentivize) and punish (slashing) participants simultaneously.

Here is a simple idea I’ve been thinking about:

Before the leader selection:

  • Open a ‘Leader pool’ five epochs before the previous leader’s term ends.
  • Allow any DAO participant who wants to become a leader to deposit their SUI into the ‘leader pool’.
  • Set a fixed amount that can be deposited per account (e.g. 1000 SUI).
  • Close the ‘Leader Pool’ two epochs before the previous leader’s term ends.
  • Select one of the accounts that deposited SUI into the ‘Leader Pool’ as the new leader.

After the leader selection:

  • Return 99% of the deposit to depositors who are not selected as leaders (1% remains in the ‘leader pool’).
  • Provide non-transferable leader points to depositors who are not selected as leaders.
  • Accumulate leader points to increase the probability of being selected as a leader in the future.
  • Burn all leader points once a depositor becomes a leader.
  • Provide non-transferable NFTs (Officer NFTs) to depositors who are not selected as leaders.
  • Hold the Officer NFTs for eight epochs, after which they have no effect.
  • Depositors who are selected as leaders cannot retrieve their deposited funds and must fulfill their leader duties.

Leader Evaluation Vote (LEV):

  • Officer NFT holders will monitor and evaluate the leader.
  • Conduct a Leader Evaluation Vote (LEV) two epochs before the end of a leader’s term.
  • If a leader receives more than 70% ‘No’ votes in the LEV, slash 50% of the SUI deposited in the ‘Leader Pool’ and provide no incentives.
  • If a leader receives more than 40% and less than 70% ‘No’ votes in the LEV, provide all SUI in the ‘Leader Pool’ without slashing.
  • If a leader receives less than 40% ‘No’ votes in the LEV, provide all SUI in the ‘Leader Pool’ and additional SUI incentives.

The core concept is that if there are ‘incentives’, there should also be ‘punishments’. I hope this proposal sparks meaningful and lively discussions about SUI.

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DAO members could submit proposals, of course.
The leader is also not obligated to table proposals written by the foundation or validators.
It would be completely up to the leader as to which proposal is tabled.
They can come up with their own or use an existing one.
The catch is that if they table a proposal the community doesn’t pass, they don’t get a reward.
Also, if they table a proposal that is vetoed by the foundation, then they don’t get a reward either.

The purpose of community points would be to provide additional incentive to participate in governance, including discussion and voting.
In theory, the possibility of being selected as a leader should be enough financial incentive.
In practice however, you’re going to need a bit more.
I imagine something like a leaderboard where the top 100 people by community points are listed.
The leader has to choose say, 10 people with the highest community points to receive a reward.
Once these participants receive a reward, their community points are partially or entirely destroyed
This gives an opportunity to other long time contributors to receive a reward

Hope this makes sense

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IMO, random selection gives you the best sample of ideas from the community.
Besides the fact that ransom selection only occurs among those actively paying taxes to the DAO, the foundation can serve as a back up in case anything goes wrong.
Leaders could be identified well in advance to ensure they’re ready to play the role.
If not then they can be replaced with another randomly selected person who can participate.

The process you outline makes sense, except that it may not be necessary - if you are actively paying taxes to the DAO, chances are you are already ready to be a leader, otherwise you wouldn’t be paying
Putting an additional price on this will be too exclusionary, and decrease the incentive for paying taxes.

What you describe will arguably result in the same centralization of ‘1 token = 1 vote’, and create an upper class of DAO participants that will always have an edge over others in becoming a leader and receiving rewards. This is not ideal IMO, but of course it’s something that could be tried.

Slashing is also not necessary - if a leader doesn’t fulfill their roles, they don’t get a reward.
Any slashing should also be done against community points, not SUI holdings.

In any case, I hope I’ve provided something the Sui community can work with as far as governance goes. The key is to ensure people are incentivized to pay taxes to the DAO. The way you do that is by giving them all an equal opportunity of being selected to become a leader and earn rewards, and by incentivizing them to participate via community points which increase chances of additional rewards.

Anything else will create the same issues we see in other governance processes, to Sui’s peril.

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Thanks for your comment.

Indeed, implementing community points as non-transferable tokens can provide opportunities for various roles and applications beyond the DAO mentioned. The use of non-transferable tokens allows for the creation of unique assets that are tied to specific user accounts, providing a way to track and reward individual contributions and achievements within a community.

These community points can be utilized in several ways:

  1. Reputation System
  2. Rewards and Incentives
  3. Access and Privileges
  4. Gamification

By implementing community points as non-transferable tokens, the potential for expanding their usage and applications becomes broader, allowing communities to explore innovative ways to incentivize, reward, and recognize the members.

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