The Algorand Governance Program: A More Detailed Exposition

The purpose of this document is to provide more detail about the governance program that was recently announced by the Algorand Foundation, and its implementation.

The main tenet of this program is that any Algo holder can sign up to serve as a governor by committing Algos to the program for three months 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. Importantly, the Algorand Foundation will yield to the governors the decision-making power over the Algorand Ecosystem Resource Pool (AERP), a pool of Algos that was identified in the initial announcement and currently has more than 3 Billion Algos. The program includes three processes:

  1. 1

    Governors recruitment and rewards. This process will allow governors to sign up at the beginning of every three-month period by committing Algos to the program and collect their rewards at the end of the period. Governors are considered compliant (and hence eligible for rewards) if they maintained their committed Algo balance throughout the period and participated in all the votes during this time.

  2. 2

    Voting. This process encompasses deciding on the topics to be voted on in each voting session, the governors voting on these proposals, and the finalization of the results of the votes.

  3. 3

    Execution of the decisions. After the results are finalized, they are executed by the Foundation.

These three processes are described in more detail in the rest of this document. The description below pertains to the inception phase of the program, which is expected to start in Q4 2021. Some of the operations of this program will still be handled off-chain during this inception phase. They will be migrated to on-chain implementation later, when the final system is deployed, which is expected in the first half of 2022.

Governors Recruitment and Rewards

The rewards pool. Just prior to each governance period of three months, the Foundation will establish and fund an on-chain escrow account to hold the governance rewards for that period. The rewards pool for the first governance period (Q4 2021) will be announced by the end of Q2. 

Governors sign-up. During the inception phase, any Algo-holding account can sign up by sending a zero-Algo pay transaction to a designated sign-up address, with the committed number of Algos encoded in the Notes field. The final system will have the governors sign up by making smart-contract calls.

The Algorand Foundation will work with our partners to provide support for these sign-up transactions in the official Algorand wallet and other leading wallets. In addition, during the inception period the Foundation will provide a web portal that enables anyone to generate a sign-up transaction with the right format, this transaction can be ported to and submitted from virtually any Algo-supporting wallet.

Governance tracking system and dashboard. The Algorand Foundation will maintain a system that keeps track of the Algo commitments from all the governors’ accounts in each period. The Foundation will provide a public dashboard that lists all the governors’ accounts and their commitment for the period and indicates whether each account has maintained its Algo commitment and whether it participated in the votes so far. This dashboard will also list the total number of Algos committed and the total rewards pool available in this period. The Foundation will work with our partners to display similar information directly in the official Algorand wallet and other leading wallets.

Claiming Governance Rewards. Once the governance period is over, the Algorand Foundation will prepare and sign a list of all the compliant governors' accounts, namely those who maintained their committed Algo level throughout the period and participated in all the votes. The rewards rate for governors in that period will be calculated as the ratio between the rewards pool for the period and the number of Algos committed by compliant governors' accounts.

The signed list will be used by compliant governors' accounts to claim their rewards. A compliant governor will claim their rewards by making a smart-contract call to the escrow account that holds the rewards pool. For the benefit of governors whose wallets do not support smart-contract calls, the Foundation will work with our partners to establish a service that can make those smart contract calls on their behalf. Governors will be able to login to the service and click a simple Claim-my-rewards button, which will make the appropriate smart-contract call and have the rewards sent to their account.

A technical point. In conjunction with the signed list of compliant governors' accounts that the Foundation will publish, the rewards-claiming application will also maintain an evolving state to record the accounts that already claimed their rewards. Maintaining this evolving state is somewhat technical and involves some tradeoffs. A detailed description of this aspect of the implementation will be provided separately.

Voting

Proposing topics for votes. For the inception phase, the Foundation will call votes for all the fundamental choices regarding the allocation of the AERP (partnerships, grants, reward policies). Later on, when the system burned in, we plan to introduce a mechanism to vote on specific community proposals. In order to be accepted, a proposal will need to be supported by a certain amount of Algos committed (locked) for a period of time. This component is still under design and will be described at a later date. The governance dashboard will also include details of all the topics that are up to a vote.

Announcing a voting session. The Algorand Foundation will announce each voting session ahead of time, including a full list of the topics that are included in this voting session. Once announced, the voting session will be open for governors to vote for 3 days. 

Together with the voting session details, the Foundation will also announce its own recommendation for all the topics in this voting session. The governance dashboard will provide information on all the voting sessions, past, present, and future.

Voting in a session. A compliant governor's account can vote in any voting session, and in fact is required to vote in all of them to remain compliant.

In the inception phase, compliant governors will vote by sending a zero-Algo payment transaction from their governor's account to a designated voting address, with the details of the vote encoded in the Notes field. The weight of this vote will equal to the number of Algos that this governor's account committed to for the current period.

The Algorand Foundation will work with our partners to provide support for these voting transactions in the official Algorand wallet and other leading wallets. In addition, during the inception phase the Foundation will provide a web portal that enables governors to generate a voting transaction with the right format. This transaction can then be ported to and submitted from virtually any Algo-supporting wallet.

The governance dashboard will track and display the partial results as they accumulate during the voting session.

A Vote-with-the-Foundation option. The UI provided in the web portal for governors will include a simple vote-with-the-foundation checkbox. Governors can check this box, and this will generate a voting transaction that agrees with the Foundation’s recommendation on all topics. We plan to extend this delegation feature to allow all participants - that will satisfy precise objective requirements in terms of transparency and commitment - to become delegates. This feature will be particularly useful for supporters who hold Algos at exchanges or custodians and want to choose a delegate and automatically transfer a fixed fraction of their rewards to their chosen delegate.

Finalizing the results of a voting session. Once the voting session is concluded, the dashboard will display the final results of this voting session. The results will become official in  3 weeks, and will consist only of the vote of the governors who remain compliant at this time. These cooling weeks are introduced to be sure that voters remain committed if they want their decisions to be officialized and implemented. Governors who violate their Algo commitment before the end of this cooling period will have their vote rescinded.

Execution of the Decisions

During the inception phase, execution of the governors’ decisions will be done off chain by the Foundation. For example, if the governors decide to use some portion of the AERP to fund some activity, it will be up to the Foundation to carry out this decision and actually fund that activity. In the final system, releasing AERP funds from their locked wallets will be implemented on chain via a smart contract.