Lisk DAO constitution

Proposals General
1

Introduction

Amendment

Lisk DAO constitution v1.0

Preamble

The Lisk DAO Constitution is a living yet lasting record of the DAO’s purpose, values, and decision-making processes.
Every word has been added as part of the governance processes detailed below, and every word can be changed using those same processes.

Mission

The Lisk DAO provides the opportunity for LSK token holders to participate in the overall governance of the Lisk project, including allocation of funds, protocol updates, or strategic directions. Decisions are made via proposals.

Scope

We commit to Lisk being part of the Superchain and therefore are subject to the Law of Chains. Any governance proposals that would imply changes violating the Law of Chains will therefore be ignored.

Proposals that are not feasible due to technical, legal or budget constraints, or endanger the security of Lisk ecosystem participants, may be ignored.

Community

Membership

Every holder of LSK tokens is able to become a member of the Lisk DAO by staking their tokens for a specific time, which grants voting power in the Lisk DAO.

Delegation

Delegation is a key feature of the Lisk DAO, as it allows token holders to participate in the governance of the Lisk project passively by entrusting a representative with voting on proposals in a way that aligns with their own beliefs and values. By delegating their voting power to a delegate of their choice, token holders can influence that their interests are represented in the decision-making process.

Additionally, anyone can decide to become a delegate in the Lisk DAO to influence the direction of the DAO more directly.

Governance

The Lisk DAO is secured onchain by several smart contracts, based on the Governor framework.

Users can interact with the Lisk DAO through its Tally instance, which offers a convenient web UI.

Additionally, the Lisk Governance Forum offers a place for DAO members to discuss broader governance topics and draft proposals.

Through the Lisk Portal, users can manage the staking of their LSK tokens in order to receive voting power.

Smart contracts

Name Purpose
L2Governor Manages proposals
- Create proposals
- Vote on proposals
L2TimelockController Holds the DAO treasury
- Executes actions
L2VotingPower Handles voting power of DAO members
- Tracks voting power including historic values
- Handles delegation
L2Staking Handles the staking functionality for the L2 network
- Enables locking/unlocking
- Enables modifying locking positions
L2LockingPosition Handles the creation, modification and deletion of locking positions as requested by the L2Staking contract.
- Informs VotingPower contract about updates
- Stores data about locking positions
L2Reward Manages staking rewards

Security Council

The Lisk security council is a 3-of-5 multi-signature wallet with key members of the Lisk team and Onchain Foundation.

The purpose of the security council is to be responsible for smart contract upgrades in case a security vulnerability is discovered.

The security council controls the following governance-related contracts:

  • L2Governor
  • L2VotingPower
  • L2Staking
  • L2LockingPosition
  • L2Reward

The L2TimelockController is not upgradeable and therefore not controlled by the security council.

Onchain Foundation

The foundation will have an administrative role and will take care of the following:

  1. Removal of draft proposals that reasonably appear to be fraudulent, spam-oriented, defamatory, hateful, or otherwise inappropriate.
  2. Management of mutually contradictory proposals that are submitted simultaneously or in close proximity to one another.

Treasury

The Lisk DAO has an associated treasury, which resides in the TimelockController contract.

The treasury is NOT managed by the Onchain Foundation. Instead, the funds from the treasury can only be transferred via successful funding proposals.

Vesting

Tokens for the Lisk DAO fund were already minted. They are added to the treasury according to the following vesting plan:

Year Amount (LSK) Description
2024 15,000,000 6,250,000 LSK liquid at migration, 8,750,000 LSK are linearly released in 2024, starting from the migration.
2025 15,000,000 LSK are linearly released over the year.
2026 15,000,000 LSK are linearly released over the year.
Total 45,000,000

Voting

Any decision in the DAO is made through proposals that members can vote on.

The weight of a vote is dependent on the voting power of the voting delegate.

Voting Power

Every account holding LSK is able to stake a specific amount of LSK tokens to get some voting power.

Voting power calculation

Locked tokens provide a voting power proportional to the amount of locked tokens.

Concretely, 1 locked LSK provides one unit of voting power (= 1 vpLSK).

Boosting the voting power

Users have the option to pause the countdown of the locking period. This means that the counting towards the end of the locking period is paused until the user decides to resume it.

In the case of pausing, the user receives a boost of the voting power.

It is set to lockedAmount * (1 + remainingLockingDurationInDays/365).

Hence, the voting power can be increased by up to 200%, which is achieved at the maximum locking duration of 2 years.

Proposals

Proposals for the Lisk DAO are created on Tally.

Threshold

For creating a proposal, the voting power of the proposer must be at least 300,000 vpLSK, i.e., the value corresponding to 100,000 LSK locked for 2 years where the countdown is paused.

Approval

The following requirements must be fulfilled for a proposal to pass:

  • Quorum: For a proposal to pass, the “yes” and “abstain” votes must sum up to at least 24,000,000 vpLSK.
  • Majority: There must be strictly more “yes” than “no” votes.

Proposals types

  • Funding proposals: A proposal for receiving a certain amount of funds to an address. If approved, the recipient receives the amount given in the proposal.
  • General proposals: General proposals about protocol parameters or the project direction in general that may be followed by the Onchain Foundation or not, depending also on feasibility and cost.

Process

The lifecycle of a proposal consists of the following steps:

  1. Discussion & draft
  2. Proposal creation
  3. Voting

1. Discussion & Draft

​​Ideas for proposals can be discussed in the #lisk-dao channel on Lisk Chat or on a new discussion thread on the Governance Forum. Once an idea results in a concrete proposal, create a new draft proposal thread in the forum:

Please fill out the provided template when you open a new thread in the above categories. You can add additional fields if required.

The discussion should be kept open for at least 2 weeks before moving to a proposal on Tally.

When the author wants to incorporate feedback from the discussion, the original draft proposal (typically the first message of the discussion thread) should be modified, instead of adding an updated proposal in a new message. The updated proposal should contain a “change log” or “updates” section at the top where the updates are documented.

2. Proposal creation

Anyone who considers the proposal mature enough and who has enough voting power to meet the threshold can create a proposal on Tally.

3. Voting phase

Once a new proposal is created, the community has exactly 1 week time to vote on the proposal on Tally. Delegates should use the time to read and consider the proposal carefully, and place their vote according to their conclusion.

Execution

Proposals with actions

The transfer from the Lisk DAO treasury can be executed by anyone, once a funding proposal is approved. Funding proposals are binding, which means that no one, not even the Onchain Foundation, can prevent the transfer if the proposal passes.
General proposals can sometimes include actions, too.

Proposals without actions

For approved general proposals, the Onchain Foundation will determine whether the proposal is safe, secure and consistent with the scope of the Lisk DAO. If it is, the Foundation will act diligently and in a commercially reasonable manner to cause the proposal to be implemented.

2 Likes
2

I want that community read this 2 articles. First and Second.

I’m opposite to accept boosting the voting power in constitution. I’m pretty sure that we need to deprecate this option. I already tell the way what it’s give to potential attackers.

And I want to add to constitution that who working to Lisk team, or linked with them or Onchain foundation, can’t vote at any type of questions, but can vote in other types. I even opposite that they can vote for 100M DAO in 2025. They already choose the way, and community should accept this way or decline it. It will be voice of community then.

3

The boosting mechanism is fine as it rewards people who stake for longer periods. However, tying the boost to the pausing mechanic (or any other manual input) is bad. The boost should either be automatic, or not implemented at all if it’s not feasible for technical reasons.

1 Like
4

I agree, let me clarify my thoughts. I’m against implementing this feature as it is now. However, I’m not against a version where the voting power gradually increases over the entire lock-up period. In other words, there’s no need for a pause. The voting power would be calculated automatically based on the declared formula. In this case, the pause would only be used when the user wants to keep both the reward and voting power at their maximum. For convenience, the user could pause their position so they don’t have to extend it daily by one day.

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5

As a discussion about boosting/pausing happened already on Discord, I wanted to link to

Also, I could imagine that a discussion about boosting/pausing could take quite some time. Especially when the outcome of the discussion will be to make changes to the system. Most of all, if the decision goes into the direction The boost should be automatic as this is quite complex. To make the approval of the first constitution not timely depended on this discussion, we could do the following:

  1. Remove the specification of the voting power computation from the first version of the constitution. Specifically, remove the sections Voting power calculation and Boosting the voting power.

  2. Move the discussion about boosting/pausing to a separate thread.

  3. Once the discussion about boosting/pausing settled, amend the constitution.

1 Like
6

Whoever decided to reschedule lisk token burn or allocate to 1st July 2025 is so dumb. Token burn is the last opportunity for this project and you decide to reschedule it to take place after bull run when nobody will give a … about it anymore because price of lisk will go below 0.5 dollars per token!

No vote for lisk team is allowed and I see it now very clearly that you want to have all the power to do whatever you want with your project giving no real decission for community. You will end up with worthless lisk and others will have bad opinion about it and laugting at your face how stupid decissions you make.

7

@Filmmaniak Please use the appropriate topics for this; this one doesn’t relate to what you’re talking about.

1 Like
8

To be honest, a fixed quorum value (rather than a relative one) also has its limitations, particularly what we are seeing now: the lack of DAO power, as well as the fact that the founders and the team hold 35-55% of all votes (depending on the pause), which results in us not being able to pass any vote needed by the community. I would make it a combined approach, for example, 18 million(or keep it at 24M) or 33% of all voting power, whichever is greater.

9

I think the 24m fixed value is stopping us from progression. Any other fixed value won’t be ideal as well. Could we just make algo that will take into cosideration current distribution of tokens and voting power and calculate average value optimal for voting? This way we will solve problem with votes once and for all allowing to vote at any time.
Check out how arbitrum is doing it:

Looking at their proposals they are successful with executing voting meaby you will find some improvements to lisk voting there.

10

Arbitrum has a relative quorum value, i.e. a fixed percentige of ARB tokens must vote.
A relative quorum would be problematic for us, as the quorum would be relative to the total amount of vpLSK which depends on the total staked amount (and pausing). Therefore, if the total staked amount of LSK is low also the quorum in terms of vpLSK is low such that an attacker could reach the quorum by staking only a small amount. This would have been very problematic shortly after launching the DAO and the staking system, but could also become problematic in the future if the total staked amount should become low.

Any more advanced quorum mechanism is possible, but not straighforward. The Governor framework from OpenZeppelin does not provide this kind of feature. Only a fixed or relative quorum is supported. Hence, such a change requires modifying the Governore contract and an audit of the modified system. Tally would still support such a change though as long as the quorum can always be expressed in terms of vpLSK for any timestamp.

I would make it a combined approach, for example, 18 million(or keep it at 24M) or 33% of all voting power, whichever is greater.

@grumlin Wouldn’t that make it even harder to pass a proposal?

Having the complexity in mind, I’m not sure if the first version of the constitution should wait for a decision on it. Similarly to what I proposed for boosting/pausing, we could move the discussion about the quorum mechansim to a separate thread and have the first constitution either with the current quorum specification and adapt it when ever we change the quorum mechansim, or even leave the quorum specification out and amend the constitution once there is clarity. I would favour the former option.

1 Like
11

To maintain transparency and reliability any changes about voting rules must be voted using the old voting version. Changing how project works on the forum without voting will always be a bad idea.

So develop new better voting system first that will allow voting at any given time and if you come to an agreement here pass it on for a vote.

12

yes, sure. Changes regarding the voting system must be based on an approved proposal. My question was rather if we can agree on and approve a first version of the constitution, without waiting for changes regarding quorum and boosting/pausing. It is to be expected that the DAO evolves such that the constitution needs updated more than one time anyways. Therefore, I would favor to approve a first version without waiting for the other topics to be settled.

1 Like
13

Hi,

Let’s test the Constitution.

Every holder of LSK tokens is able to become a member of the Lisk DAO by staking their tokens for a specific time, which grants voting power in the Lisk DAO

Additionally, anyone can decide to become a delegate in the Lisk DAO to influence the direction of the DAO more directly

The treasury is NOT managed by the Onchain Foundation. Instead, the funds from the treasury can only be transferred via successful funding proposals.

Any decision in the DAO is made through proposals that members can vote on

For creating a proposal, the voting power of the proposer must be at least 300,000 vpLSK

Anyone who considers the proposal mature enough and who has enough voting power to meet the threshold can create a proposal on Tally

The proposal: Burn or Allocate to DAO Fund: Vote Now or Postpone

1 Like
14

I believe it would be beneficial to amend the Constitution to require the Lisk DAO/Onchain Foundation to actively promote discussions around proposals and the proposals themselves. This would ensure broader community engagement and transparency in decision-making.

1 Like
15

I believe we need to add a provision to the constitution stating that if the community has made a decision, it can be reviewed (or never reviewed, which in my opinion is a bad option) after 1-2 years, but not sooner. I think this period should be set at 2 years. This means that any decision can be reviewed after this period if the majority changes its mind, and a new vote is conducted in accordance with the constitution, which, by the way, also needs to be approved through voting and a quorum.

I also think it’s important to add to the constitution that if the issue is significant or involves spending/transferring (which can be a potential attack) more than 100,000 Lisk, the quorum should be increased to 50% of all votes in the ecosystem. Only in this case will the vote be considered fair.

The same should apply to proposals not involving transfers, but this is more difficult, as there is no clear point of reference. All of this needs to be built from scratch. But for now, I suggest simply adding a condition for spending/transferring funds.

1 Like
16

You want the law to be retroactive? I believe that something that was voted positively should be implemented without subsequent re-verification after 1-2 years. I think this is an unnecessary complication. Something that has been voted on and implemented should not be changed. If suddenly something starts to bother you, you can always create a new proposal on a new vote. I believe that in case when something was voted and became wrong you should ask community for their opinion and give them all voting power to vote if they want to change it or no. This way, we will reduce the influence of the cartel, i.e. people with large amounts of tokens. At least they will have no power to change something already voted on without community approval. You insolently suggest rules that favours you and diminish community importance. You own 2.2M vpLSK and have 9.16% of the quorum voting power. In case of re-verification you position yourself in such a way as to have additional influence on voting, to have greater influence than in the primary vote. If we continue going that direction of reducing community importance lisk will be worth not dollars but cents and way lower than half dollar. Below 0.25 usd if we fail miserably in upcomming year that’s why time is the key to success. The longer we discuss on something the slower project is. In crypto world we need to be quick or be dead.

1 Like
17

To clarify the issue, it doesn’t matter how much someone owns because only the decisions that can be revisited are those where it’s possible. If the community votes to send you 10 million Lisk, the contract will automatically execute this without anyone’s involvement. There’s no way to reverse this unless you choose to send the tokens back yourself. That’s why I’m proposing a safeguard in the form of an increased quorum for large transfers, regardless of the purpose.

Regarding the review, of course, this refers to holding a new vote on an issue if the community suddenly decides to reconsider. However, this new vote could only be held after 1-2 years, for example.

18

I think that is an interesting idea, how exactly would you formulate that?
We could probably add more content to the section about the role of the Onchain foundation.

19

@grumlin @przemer are you agreeing to the suggestion to leave the topic out of constitution for now, and start a separate discussion? Or are you OK with it staying in the constitution?

20

regarding review I agree with @Filmmaniak - this sounds like an unnecessary complication to me.
If a decision needs to be reconsidered, a new proposal can be drafted to change that decision already at any time. I don’t see a benefit of adding a rule that this can only be done 1-2 years after the original proposal.