Proposer – Terraform Labs
Disclaimer – I am employed by TFL.
To initiate an on-chain governance vote on Terra, the proposing party or parties must submit a minimum deposit of 512 LUNA collateral for the 14-day voting period to go live. Should the vote subsequently pass, the 512 LUNA deposit is returned to the proposer(s). Deposits are refunded if all of the following conditions are met:
- The minimum deposit of 512 LUNA is reached within the two-week deposit period.
- Quorum is met – the number of total votes is greater than 40% of all staked LUNA.
- The total number of NoWithVeto votes is less than 33.4% of the total vote.
- A vote returns a majority of Yes or No votes.
If the vote fails to meet the above conditions, then the 512 LUNA deposit is slashed – meaning it is not returned to the initiator(s) of the proposal. The deposit is burned if one of the conditions manifests:
- The minimum deposit of 512 LUNA is not reached within the two-week deposit period.
- Quorum is not met – the number of total votes after the two-week voting period is less than 40% of all staked LUNA.
- The number of NoWithVeto votes is above 33.4% of the total vote.
The 512 LUNA deposit functions as a safeguard against spamming the voting process by embedding risk into the initiation of a governance vote in the form of at-risk value (i.e., LUNA) should the vote fail. With a minimum deposit, poorly construed votes that don’t meet standards set by the community are dissuaded from being initiated, facilitating more constructive votes that have undergone rigorous discussion on Terra’s Agora Research forum, and the proposers believe have a higher chance of passing.
However, as LUNA’s price has increased significantly since the initial 512 LUNA deposit parameter was set, it has prevented more active governance participation from the community. At current prices, 512 LUNA is equivalent to roughly $23,000, precluding many users from initiating potentially net-positive, successful governance votes since the at-risk value cost if the proposal fails is simply too high. Consequently, Agora proposals that stand to benefit the Terra ecosystem and have undergone thorough community discussion tend to remain solely Agora posts of community ideation rather than actionable on-chain votes.
In the first part of this proposal, TFL proposes reducing the minimum LUNA deposit to initiate on-chain governance votes from 512 LUNA to 50 LUNA.
At a current equivalent value of $2,200, the 50 LUNA deposit will lower the barrier for many parties to submit constructive governance votes without excessive risk while still maintaining adequate safeguards against spamming the on-chain voting process. The idea is to facilitate more active governance engagement from users that would otherwise be disincentivized to submit on-chain votes with the current deposit amount.
The second part of this proposal focuses on the voting period itself, which is 14 days once the current 512 LUNA deposit is made and the voting period commences. The voting period enables sufficient time for stakeholders to consider and discuss how to cast their votes across diverse time zones and schedules.
However, multiple proposals over the past year have either met, exceeded, or failed to meet “Yes” or “No” vote quorum requirements within a much shorter period. By the time the 14-day voting period concludes, the results of many proposals have already been firmly in hand for up to a week or more. The result is a delayed initiation of the effects of governance proposals, particularly those that pass successfully and are significantly beyond the required quorum threshold. In a hyper-paced crypto ecosystem, the speed of shipping and activating community votes can often make a meaningful difference in outcomes.
Recent community discussions indicate that the 14-day voting period hinders the rapid deployment of successful governance vote actions. In particular, more prominent votes like initiating IBC and Col-5, which both passed with nearly unanimous approval and whose quorum was reached within days.
In the second part of this proposal, TFL proposes reducing the voting period from 14 days to 7 days.
The result will be a voting period that ameliorates the delay issues associated with the current 14-day period while concurrently maintaining sufficient time for stakeholders to discuss active vote proposals and cast their votes accordingly. A shorter on-chain voting period also encourages more deliberate engagement from stakeholders, since the reduced window to discuss and vote on proposals can produce more active social signaling and public discourse on the subject matter at hand without topics being buried under new developments.
This proposal will be initiated as a single on-chain vote since it requires a parameter change to both aspects. The on-chain vote will include:
Reducing the minimum LUNA deposit during the “Deposit” period from 512 LUNA to 50 LUNA.
Shortening the on-chain “Voting” period from 14 days to 7 days.
Should the proposal pass, the new voting period and minimum deposit parameters will go into effect immediately once the voting period concludes for the above on-chain vote.
Please allow for open discussion regarding the proposal above.
An on-chain vote for the above will follow within the next 48 hours.