Governance
Governance Model
Perpetual Protocol is governed by the community via forum discussions and voting on proposals. We welcome any discussion about how the governance model works, as well as discussion on any topic relevant to protocol development, management, operations etc.
Governance forum
Current: Discord governance forum
Archived: https://gov.perp.fi
Currently governance of Perpetual Protocol operates under a hybrid model.
Community governance: Covers all aspects that can be reasonably handled via community discussion and voting.
Use of Perpetual DAO funds, including PERP tokens
Exchange parameters, such as insurance fund threshold, fee level & distribution, etc.
Foundation team: Covers aspects that cannot be reasonably handled via governance at this time, or are of a sensitive nature.
Short- and mid-term strategy
Protocol design & development
Website (UI) development and maintenance
Emergency updates, fixes and operations
As the protocol develops and more governance tools become available, community governance will take over more aspects of protocol development and operations.
Perpetual DAO
The core of the project is the Perpetual DAO, which controls the DAO treasury including PERP tokens, excess DEX income. All PERP holders are DAO members with voting rights (assuming they self-custody).
To streamline DAO governance, operational tasks are divided among a set of sub-DAOs. New sub-DAOs may be proposed and added / removed as required.
Sub-DAOs
Sub DAO activity is currently reduced due to the bear market and the shift in focus to Perp v3. Regular Sub DAO activites are expected to resume as community interest returns.
The vision for Perpetual Protocol is to decentralize gradually over time, eventually dissolving the foundation and transitioning it into a fully fledged Decentralized Autonomous Organization (DAO) so that the community has complete stewardship of the protocol.
Following the lead of DAOs such as Yearn Finance, one of the first projects to successfully partition itself, Perpetual Protocol is working towards compartmentalizing different aspects of the protocol, where each sub-DAO is responsible for making decisions and managing their own budgets independently.
These sub-DAOs sow the seeds for grassroots participation, enabling new forms of coordination and creating a user-centric network. Currently, a committee model is used across sub-DAOs, where token holders periodically vote for a committee, which will then make the decisions for a particular focus area.
However, the plan is for sub-DAOs to be self-organizing, allowing individuals who share a common view to create a group and then work together for the Perpetual Protocol DAO. This approach to governance is inspired by MakerDAO’s ‘The Endgame Plan’.
The current sub-DAO structure is shown below. Any use of the DAO treasury funds must be first approved by token holders, through community dialogue, governance forum proposals and voting via Snapshot.
Below, we detail the sub-DAOs that currently exist or are being proposed. The formation of further sub-DAOs in the future across different areas (e.g., engineering, marketing, partnerships, etc.) will help the project achieve its goal of decentralization and immutability.
Grants DAO
The Grants DAO was introduced in August 2021 and updated September 2021. The DAO was funded initially by DAO vote, and a second round via the Optimism community.
Business solutions/integrations: anything that utilizes Perp as a base layer (e.g., structured products).
Tooling: building out any tooling that may be helpful for either makers, traders or token holders.
Marketing: anything that focuses on explaining Perp and how it works, as well as getting the word out to the community. This can be anything from design to written content.
The Grants DAO is currently dormant, but proposals can still be submitted via the Partnership form.
Depending on the ask, proposals will have to either go through the Grants DAO (<$50K) or submit a public proposal through the governance forum (>$50K).
All grants are priced in USD and then paid out in PERP, using a 7-day TWAP price at the time of payout. For example, if we payout a milestone, then we take the USD amount / TWAP price and send out the required amount of PERP. We expect there also to be up-front payments to kick start grants, but this will be at the discretion of the committee.
Token Listing DAO
The Token Listing DAO, created in November 2021, was updated in April 2023 as an interim step to facilitate building in the bear market. With the launch of Perp v3, a new token listing mechanism will be developed and launched.
Community DAO (concept)
Future community management should be handled by a Community DAO to decentralize community initiatives and build the Perpetual brand in areas such as marketing, localization, community moderation, and more.
Similar to other sub-DAOs, a committee would steer the direction and control the budget. This committee would be responsible for reviewing, evaluating and planning the execution of campaigns to increase the number of active traders and raise awareness about the Perp brand. Quarterly reviews would be used to gauge the effectiveness of these campaigns.
Treasury DAO (concept)
Future Treasury management would be delegated to a sub-DAO whose members are elected periodically and given a mandate by token holders to manage the Perpetual DAO treasury and fund all other sub-DAOs. At some point in the future, the foundation team would transition into its own sub-DAO and receive funding from the Treasury DAO.
Market Making Entity (MME)
Established in April 2022, the Market Making Entity is an arms-length sub-DAO initially funded by the Perpetual DAO with a mandate to provide market making services for Perp products, such as the Perp v2 DEX.
The MME was allocated 20MM PERP and the allocation was completed as of Q1 2024.
Security Entity (SE)
Established in May 2023, the Security Entity is a sub-DAO that is responsible for maintaining a high starndard of security in protocol development and operations. This includes
Funding third party audits of production code
Funding bug bounties
Maintaining staff to perform internal audits of code and operations systems, manage bug bounty programs, etc.
PERP as Governance Token
The PERP token is used by its holders to vote on governance proposals.
The governance forum is the main place to propose and discuss new ideas as well as their pros and cons (such as new collateral types, new features, etc.). Snapshot, a third party off-chain voting platform, is used for voting on governance proposals.
vePERP Vote Boosting
The 1 token-1 vote model clearly has drawbacks, where voting power is concentrated in the hands of the few and majority rules is the default. To improve the governance process, we have transitioned to a veToken model where token holders can lock PERP into vePERP for up to 52 weeks to boost their voting power. The longer the tokens are locked for, the greater the boost to voting power, similar to veCRV.
The amount of time tokens are locked into vePERP and the quantity of tokens held jointly determine voting power, reducing the likelihood of governance attacks (such as voting using borrowed tokens).
The vote boost can be approximated as follows:
Voting power = PERP x 4 x 1/52 x remaining weeks locked
Note that this is an approximate as the voting boost decreases every block, not every week.
Governance Proposal Lifecycle
Create an account at gov.perp.fi and submit a proposal (see proposal template here).
Proposals must be discussed for at least 7 days and generate meaningful discourse. Go to this page to check and discuss current proposals.
Author or (author’s delegate) must submit their web3 address to a forum mod to be added to the Snapshot account.
Author/author’s delegate creates a vote, to last 7 days.
Votes are subject to a minimum 10% quorum.
If the proposal passes the voting stage with majority support (>50% of the vote), then it will be accepted as actionable by the Core team.
Any vote that doesn’t pass or cannot reach the quorum will be rejected, and can restart at the proposal stage.
Snapshot Voting
Snapshot voting calculates voting power based on the number of PERP/vePERP that you have locked up, and allows stakeholders to support proposals without any gas costs.
Follow the steps below to cast your vote:
Head over to https://snapshot.org/#/vote-perp.eth
Click on “Connect Wallet” and connect with an account that holds PERP/vePERP
Browse the active proposals
Select your preferred choice(s): for weighted voting, you can vote for more than one option.
Sign the message using your wallet and submit your vote.
Once the vote has enough support, the foundation team will implement the proposal.
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