Governance framework

Moving from team control to community governance requires careful design. The transition must maintain protocol direction while gradually distributing decision-making power to stakeholders.

Overview

The Dwarves+ Protocol governance framework is designed to transition from centralized team control to community-driven decision-making while maintaining operational efficiency and strategic direction. This document outlines the governance structure, voting systems, and implementation roadmap for progressive decentralization.

Governance philosophy

Core principles

1. Progressive decentralization: Gradual transition from team control to community governance
2. Stakeholder alignment: Decision-making power proportional to long-term commitment
3. Expertise recognition: Mechanisms to leverage domain knowledge and experience
4. Transparency: All governance processes publicly auditable and documented
5. Adaptability: Governance systems that evolve with protocol maturity

Governance objectives

• Protocol direction: Strategic decisions on research focus and partnerships
• Resource allocation: Treasury management and funding distribution
• Parameter optimization: Token economics and reward mechanism adjustments
• Community standards: Quality assurance and contributor guidelines
• Risk management: Security measures and emergency response protocols

Comprehensive governance voting systems

The Dwarves+ Protocol implements a sophisticated voting system that evolves through three distinct phases, each designed to address different stages of protocol maturity and community development.

Voting system overview

Purpose and scope

• Primary function: Facilitate decisions on research funding, partnerships, profit allocation, and protocol upgrades
• Governance token: DFG with staked tokens receiving enhanced voting weight (2x multiplier)
• Transition goal: Move from 100% team control to 50% community governance by Q2 2026
• Long-term vision: Achieve 75%+ decentralized governance while maintaining strategic coherence

Governance token (DFG) mechanics

• Total supply: 1,000,000 DFG (fixed supply)
• Voting power: Base 1 DFG = 1 vote, with staking multipliers
• Minimum proposal: 1,000 DFG required to submit proposals
• Eligibility: All DFG holders can participate in governance

Phase 1: Initial governance (Q3-Q4 2025)

One token, one vote (1T1V) system

Core mechanics:

• Voting weight: 1 DFG = 1 vote (no staking multipliers)
• Council oversight: 5-member team-appointed council with veto power
• Veto threshold: Council can block proposals that drain >20% of treasury
• Quorum requirement: 10% of total DFG supply (100,000 DFG)
• Approval threshold: Simple majority (51%)

Implementation details:

// Simplified voting calculation for Phase 1
function calculateVotingPower(address voter) public view returns (uint256) {
    return dfgToken.balanceOf(voter);
}

function isProposalApproved(uint256 proposalId) public view returns (bool) {
    Proposal memory proposal = proposals[proposalId];
    uint256 totalVotes = proposal.forVotes + proposal.againstVotes;
    
    // Check quorum (10% of total supply)
    if (totalVotes < (dfgToken.totalSupply() * 10) / 100) {
        return false;
    }
    
    // Check majority approval
    return proposal.forVotes > proposal.againstVotes;
}

Proposal categories:

1. Research funding: Up to $50,000 per proposal
2. Partnership approvals: Strategic alliances and collaborations
3. Parameter adjustments: Minor tokenomics modifications
4. Community initiatives: Events, bounties, and engagement programs

Council veto powers:

• Treasury protection: Prevent proposals that risk protocol solvency
• Security measures: Block potentially harmful technical changes
• Quality control: Ensure proposals meet minimum standards
• Strategic alignment: Maintain focus on core mission

Phase 2: Transition governance (Q1-Q2 2026)

Staked-weighted voting with quadratic adjustment (SWV-QA)

Enhanced mechanics:

• Base voting: Unstaked DFG = 1 vote
• Staking bonus: Staked DFG = 2 votes
• Whale mitigation: Quadratic adjustment for large holders
• Council evolution: Elected by DFG holders, reduced veto power (25% override)
• Quorum increase: 15% of total DFG supply (150,000 DFG)
• Threshold variation: 51% for standard, 66% for profit reallocation

Mathematical model:

$Vote_{weight} = \begin{cases} DFG_{unstaked} & \text{for unstaked tokens} \\ DFG_{staked} \times 2 \times \sqrt{\frac{1000}{DFG_{staked}}} & \text{for large staked holders} \\ DFG_{staked} \times 2 & \text{for unstaked tokens < 1000} \end{cases}$Voteweight​=⎩⎨⎧​DFGunstaked​DFGstaked​×2×DFGstaked​1000​​DFGstaked​×2​for unstaked tokensfor large staked holdersfor unstaked tokens < 1000​

Example calculations:

Implementation code:

function calculateVotingPower(address voter) public view returns (uint256) {
    uint256 unstakedDFG = dfgToken.balanceOf(voter) - stakedDFG[voter];
    uint256 stakedTokens = stakedDFG[voter];

    uint256 baseVotes = unstakedDFG;
    uint256 stakedVotes;

    if (stakedTokens > 0) {
        if (stakedTokens >= 1000) {
            // Apply quadratic adjustment for large holders
            stakedVotes = stakedTokens * 2 * sqrt(1000) / sqrt(stakedTokens);
        } else {
            // Full 2x multiplier for smaller holders
            stakedVotes = stakedTokens * 2;
        }
    }

    return baseVotes + stakedVotes;
}

Governance split mechanism:

• Team allocation: 400,000 DFG (40% of supply)
• Community earned: 400,000 DFG via ICY staking
• Reserved pool: 200,000 DFG for future distribution
• Effective control: ~50% community, 50% team by Q2 2026

Phase 3: Decentralized governance (Post-2026)

Delegated quadratic voting (DQV)

Advanced mechanics:

• Vote weight: $\sqrt{DFG_{held} + DFG_{delegated}}$DFGheld​+DFGdelegated​​
• Delegation system: Token holders can delegate to expert representatives
• Automated execution: Smart contract-based proposal implementation
• No council: Fully decentralized decision-making
• Higher quorum: 20% of total DFG supply (200,000 DFG)
• Threshold maintained: 51% standard, 66% for critical changes

Delegation framework:

$Delegate_{power} = \sqrt{\sum_{i=1}^{n} DFG_{delegated,i}} + \sqrt{DFG_{owned}}$Delegatepower​=∑i=1n​DFGdelegated,i​​+DFGowned​​

Where:

• $n$n = number of delegators
• $DFG_{delegated,i}$DFGdelegated,i​ = tokens delegated by user $i$i
• $DFG_{owned}$DFGowned​ = delegate's own tokens

Representative categories:

1. Research leads: Domain experts in specific technical areas
2. Community managers: Focus on contributor experience and engagement
3. Economic advisors: Specialists in tokenomics and treasury management
4. Security experts: Focused on protocol safety and risk management

Implementation architecture

Smart contract system

Core contracts:

1. GovernanceToken.sol: DFG token with delegation functionality
2. Governor.sol: Main governance logic and proposal management
3. Timelock.sol: Execution delay for approved proposals
4. VotingPowerCalculator.sol: Phase-specific voting weight calculations

Proposal lifecycle:

flowchart TD
    A[Proposal Submission] --> B{Minimum DFG Check}
    B -->|< 1,000 DFG| C[Rejection]
    B -->|≥ 1,000 DFG| D[7-Day Review Period]
    D --> E[Council/Community Feedback]
    E --> F[14-Day Voting Period]
    F --> G{Quorum & Threshold Met?}
    G -->|No| H[Proposal Fails]
    G -->|Yes| I{Council Veto?}
    I -->|Yes| J[Proposal Blocked]
    I -->|No| K[48-Hour Timelock]
    K --> L[Execution]

    %% Styling
    classDef success fill:#d4edda,stroke:#155724
    classDef failure fill:#f8d7da,stroke:#721c24
    classDef process fill:#e2e3e5,stroke:#383d41

    class L success
    class C,H,J failure
    class A,D,E,F,K process

Proposal types and requirements

Voting process implementation

Step 1: Proposal submission

function propose(
    address[] memory targets,
    uint256[] memory values,
    bytes[] memory calldatas,
    string memory description
) public returns (uint256) {
    // Implementation details
}

Step 2: Voting

function castVote(uint256 proposalId, uint8 support) public {
    // Implementation details
}

function castVoteWithReason(uint256 proposalId, uint8 support, string memory reason) public {
    // Implementation details
}

Step 3: Proposal execution

function execute(uint256 proposalId) public payable {
    // Implementation details
}

Governance dashboard and analytics

Key metrics:

• Voter participation rate: Percentage of DFG holders voting
• Proposal success rate: Percentage of approved proposals
• Quorum attainment: Frequency of meeting quorum requirements
• Delegation rate: Percentage of DFG delegated to representatives
• Treasury allocation: Funds distributed via governance

Features:

• Real-time voting dashboard: Live updates on ongoing proposals
• Historical data: Archive of all past proposals and voting results
• Delegate leaderboards: Rankings of top delegates by voting power
• Transparency reports: Regular audits of governance actions

Governance incentives

Contributor rewards for governance

• Voting rewards: 10 ICY per vote cast (capped at 100 ICY/week)
• Proposal bounties: 50 DFG for successfully approved proposals (>75% support)
• Delegate compensation: Share of protocol fees for active delegates (Phase 3)

Reputation and recognition

• Governance contributor badge: Awarded for active participation in proposals
• Leaderboard ranking: Public recognition for top voters and delegates
• Exclusive access: Early access to research, events for active governors

Risk management and safeguards

Governance attack vectors

• Whale dominance: Mitigated by quadratic voting and delegation
• Voter apathy: Addressed by voting rewards and engagement programs
• Malicious proposals: Council veto (Phase 1-2), emergency pause (all phases)
• Sybil attacks: KYC for DFG holders (Phase 2), reputation scores

Emergency procedures

• Protocol pause: 75% DFG vote to temporarily halt operations (30 days)
• Treasury freeze: Council (Phase 1-2) or 75% DFG vote to freeze treasury
• Bug bounties: Continuous programs for smart contract security

Formal verification and audits

• Smart contract audits: Regular third-party audits of governance contracts
• Formal verification: Mathematical proof of protocol correctness
• Bug bounty programs: Ongoing incentives for security researchers

Governance roadmap and milestones

Phase 1 (Q3-Q4 2025): Initial setup

• Launch 1T1V: One token, one vote system activated
• Council establishment: 5-member initial council nominated
• Basic proposal flow: Research funding, minor parameter changes
• DFG distribution: Initial allocation to team and early contributors

Phase 2 (Q1-Q2 2026): Transition and growth

• SWV-QA implementation: Staked-weighted quadratic voting online
• Council elections: First community elections for council members
• Expanded proposal types: Partnerships, major treasury allocations
• 50% community control: Governance power shifts gradually

Phase 3 (Post-2026): Full decentralization

• DQV activation: Delegated quadratic voting fully implemented
• Council dissolution: Automated execution via smart contracts
• Self-sustaining governance: Community-driven evolution
• Cross-chain governance: Integration with other blockchain networks

Legal and compliance considerations

Regulatory environment

• Jurisdiction: US/Singapore compliance framework
• Security vs. utility: Legal opinion on DFG (security) and ICY (utility) classification
• AML/KYC: Compliance for DFG holders (Phase 2)

Legal structure

• Decentralized autonomous organization (DAO): Formal legal wrapper (if applicable)
• Foundation model: Non-profit entity supporting protocol development
• Legal counsel: Ongoing consultation for regulatory changes

Conclusion

The Dwarves+ Protocol governance framework is a dynamic system designed for progressive decentralization, balancing initial team guidance with long-term community control. By empowering DFG holders through fair voting mechanisms, robust incentives, and transparent processes, we aim to build a resilient, innovative, and truly decentralized research and development ecosystem.