Partners: Community Governance is here

Starting October 1st, the Algorand ecosystem will move to a decentralized Governance model.

Community governance will enable all Algo holders to participate in the decision making process on the growth and development of the Algorand ecosystem. The governance approach for the Algorand community is designed for simplicity and maximum participation:

  • Four quarterly governance periods per calendar year.
  • Each governor must commit to keeping a certain Algo balance for each quarterly  governance period.
  • There will be at least one voting session in each period.
  • Governors must vote in each voting session, but can choose to use a simplified UI to “vote with the Foundation”.
  • Every measure to be voted on will have an information pack explaining it.
  • Compliant Governors claim rewards for their service at the end of each quarterly  governance period.
  • Reward levels are tied to the Algo commitment of a Governor.
  • Specific Rewards pool for each period, decided by Governance vote.

Following the launch of Governance and Governance rewards, the existing participation rewards program will end early in 2022. As Governance is a much more engaged process, with commitment periods and a vote that all Governors must participate in, it is expected that not all Algo holders will participate in governance. This should lead to higher governance rewards levels than is currently the case with participation rewards.

How Governance Works:

The main tenet of the Algorand governance program is that any Algorand address can sign up to serve as a governor by committing (some of) their Algos to the program for a three month period and participating in voting during this time. Governors are rewarded for their service to the Algorand community: At the end of the three-month period, compliant governors can claim their governance rewards, which will be deposited into their governing address.

Signing up as a governor and voting involves sending a zero-Algo payment transaction with some specific messages encoded in the Notes field. The Foundation will provide a web-app that enables anyone to obtain the Notes field content in the right format. This Note can then be pasted to virtually any Algo supporting wallet or custody service.

For every voting session, the foundation will publish its recommendation for all the measures on the ballot, and the UI of the web-app will include a "vote with the foundation" checkbox that lets governors easily vote according to these recommendations.

The Algorand Foundation will also work with our partners to provide governors with rewards-claiming services. We envision a one-click service that enables any governor to claim rewards to their compliant governing address, without requiring any support from their wallet or custody provider.

The official Algorand wallet, as well as some other leading wallets, will seamlessly integrate the governance program. Wallet providers and custodians that want to integrate Algorand governance, are encouraged to read the technical description in the document below, and contact the Algorand Foundation with any questions.

A detailed technical description of the implementation of this program is available here.

Special Consideration for Exchanges:

Allowing exchange customers to participate in Algorand governance and enjoy its rewards may be challenging, since these customers usually do not have their own designated Algorand address. Exchanges may need to perform the governance actions on their customers behalf in order to enable them to participate in Algorand governance.

Signing up on behalf of customers is easy enough, but voting is harder since different votes must come from different Algorand addresses. We thus recommend that exchanges offer their customers a middle ground option, where they can sign up as governors and receive rewards, but can only vote “with the foundation”. Specifically, to allow their customers to participate in Algorand governance, exchanges can take the following approach:

  • Establish an internal process where customers can sign up as governors with some Algos from their account at the exchange. These governors must be informed that they are thus voting with the foundation on all measures within a governance period.
  • The exchange will submit an Algorand governance sign-up transaction from one of its addresses, committing to governance the sum of all the individual commitments of the customers.
  • The exchange will also submit a vote transaction from the same address, utilizing the vote-with-the-foundation option.
  • Finally, the exchange will claim governance rewards to the same address, and will distribute these rewards among its customers.

Summary

The introduction of decentralized, community governance is a significant step in the maturation of the Algorand ecosystem. The Governance rewards program will be an important aspect of the Governance program and we expect our community to be highly motivated to participate. As a result, we believe it will be critical for partners within the Algo ecosystem to ensure that their customers will be able to participate in Governance.