Governance
Solistic Finance Governance System Documentation
The Solistic Finance governance system empowers SLS token holders to participate in the decision-making process for protocol upgrades, risk parameter adjustments, and resource allocation. This system implements a tiered approach, combining on-chain voting mechanisms with off-chain processes to ensure secure, efficient, and decentralized governance of the protocol.
Governance Components
1. Overseer Contract (SLS-Overseer)
The SLS-Overseer contract provides a method to elect an "overseer" via an approval voting system. It can be combined with other contracts (e.g., SLSAuthority) to govern the Solistic protocol.
Key Features:
Continuous approval voting
Token locking mechanism
Delegation token issuance for locked SLS
2. Safeguard Contract (SLS-Safeguard)
The SLS-Safeguard is a delegate-based proxy with an enforced delay, allowing scheduled function calls to be executed after a predetermined waiting period.
Key Features:
Configurable delay for governance actions
Protection against immediate, potentially malicious changes
3. Decree Contract (SLS-Decree)
SLS-Decree contracts are single-use, ownerless objects that perform one action or a series of atomic actions. They are used for executing governance decisions.
Governance Process
Solistic Improvement Proposals (SIPs)
Solistic Improvement Proposals (SIPs) are the primary mechanism for introducing, discussing, and implementing changes to Solistic's governance, operations, and protocol.
SIP Lifecycle:
Community Discussion
Ideas are discussed on the Solistic governance forum (https://forum.solistic.finance)
A Solistic moderator confirms proposal guidelines conformity
Proposal Drafting
Authors use the SIP template (detailed below)
Categories: Treasury, Protocol Development, Structure, Process, Operations
Proposal Discussion
30-day discussion period on the Solistic forum
Proposal Submission
Submitted to the Solistic Governance Portal (https://gov.solistic.finance)
Minimum 1,000,000 SLS tokens required for submission
Voting
15-day voting period
3-day delay period (only "No" votes allowed)
Implementation
Tiered approval process: a) Community vote results b) Executive member review and approval c) Security council review d) Technical implementation planning e) Gradual rollout with monitoring
Voting Power
One (1) SLS token equals one (1) vote. This allows token holders to participate in governance proportionally to their holdings.
Solistic Core Contributors
The Solistic Core Contributors plays a crucial role in the development, maintenance, and governance of the Solistic protocol. Its responsibilities include:
Developing and maintaining the core protocol infrastructure
Providing technical support for the governance process
Facilitating community engagement and education
Conducting research for protocol improvements
Assisting in the implementation of approved SIPs
Ensuring compliance with relevant regulations
Managing partnerships and integrations
The Foundation serves as a steward for the DAO, working to align the protocol's growth with the community's vision while maintaining the highest standards of security and efficiency.
Solistic Security Council
Composition and Responsibilities
At least five members
Can bypass ordinary procedures for emergency proposals
Veto power on SIPs under specific conditions
Meeting Procedures
Regular Meetings: Every four weeks
Advisory Meetings: Irregular schedule, smaller groups
Emergency Meetings: For imminent security threats
Technical Description of Key Contracts
Overseer Contract
The Overseer Contract manages the voting process, token locking, and overseer election. It maintains a record of votes, deposits, and the current overseer. Key functions include locking tokens, releasing tokens, casting votes, and elevating a new overseer.
Safeguard Contract
The Safeguard Contract implements a time-delay mechanism for governance actions. It allows for the scheduling of actions (plots) and their execution after a specified delay. This contract helps prevent immediate, potentially harmful changes to the protocol.
Decree Contract
The Decree Contract is a single-use contract for executing specific governance decisions. Once a decree is cast, it cannot be reused, ensuring that each governance action is distinct and traceable.
Governance Considerations for Dual Product Categories
Staking and Liquid Staking Governance
Proposals related to staking rewards distribution
Liquid staking token (SLS) parameter adjustments
Validator selection and delegation strategies
Interest rate proposals for staking rewards
MEV (Maximal Extractable Value) distribution strategies
Upgrades to the liquid staking protocol
Advanced Lending Market Governance
S-Lend Governance
Risk parameter adjustments for the unified liquidity pool
Interest rate model modifications
Collateral factor changes
Leverage ratio modifications
Addition or removal of supported assets
Iso-Lend Governance
Modification of isolated lending markets
Asset-specific risk parameter adjustments
Leverage ratio modifications
Collateral requirement changes
Liquidation threshold adjustments
Potential Risks and Mitigations
Governance Attacks: Risk of malicious proposals gaining traction. Mitigated by the tiered approval process and security council oversight.
Low Participation: Risk of unrepresentative decisions due to low voter turnout. Addressed by setting appropriate quorum requirements and encouraging community engagement.
Smart Contract Vulnerabilities: Risk of exploits in governance contracts. Mitigated through rigorous auditing, formal verification, and gradual implementation of changes.
Regulatory Risks: Potential legal challenges to certain governance decisions. Managed by maintaining regulatory compliance and seeking legal counsel when necessary.
Centralization Risks: Potential for power concentration among large token holders. Addressed through delegation mechanisms and consideration of quadratic voting for certain decisions.
Execution Delays: Risk of critical updates being delayed due to the governance process. Mitigated by the security council's ability to act swiftly in emergencies.
Economic Attacks: Risk of governance decisions being influenced by short-term economic incentives. Addressed through careful economic modelling and long-term incentive alignment.
Future Improvements
Implementation of quadratic voting for certain decisions
Integration of on-chain/off-chain hybrid governance models
Development of modular governance plugins for extensibility
Enhanced analytics for proposal impact assessment
Integration with cross-chain governance protocols
The Solistic Finance Governance System is designed to be robust, flexible, and community-driven. By leveraging the power of decentralised decision-making while maintaining necessary safeguards, this system aims to guide the protocol's evolution in a manner that best serves its users and the broader DeFi ecosystem.
As the protocol grows and matures, the governance system will continue to evolve, adapting to new challenges and opportunities. The ongoing engagement and vigilance of the Solistic community will be crucial in shaping the future of the protocol and ensuring its long-term success and sustainability.
Through this governance framework, Solistic Finance strives to maintain its position at the forefront of decentralised finance, fostering innovation, security, and value creation for all stakeholders.
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