RRC-14: Continuation of Rarible Protocol Transfer to Community

Proposals Parent DAO Proposals
#1

Proposal draft for community discussion:

RRC-14: Continuation of Rarible Protocol Transfer to Community

Authors: JanaBe, Eugene Nacu

Reviewers: Alexander Salnikov, Alexei Falin

Abstract

This draft proposal establishes a path for the RARI DAO to govern more parts of the RARI ecosystem, namely the Exchange contracts bundle of the Rarible Protocol. As such, it outlines the role of governance and maps the veto and upgrade functions of the Security Council as they relate to this contract. Additionally, this RRC 14 proposes enlargement of the Security Council from 3 to 5 members and granting them emergency upgrade powers.

Motivation

Transferring the ownership and control of the Rarible Protocol contracts to the community is a continuation of the decentralization of the Rarible Protocol and the RARI Foundation’s mission of building decentralized NFT infrastructure.

Rationale

The Exchange contracts bundle is an essential component of the Rarible Protocol, which allows its owners to set fees on transactions powered by the protocol. Currently, these fees are set to 0%. Once this contract is DAO-governed, the community may decide how to set fees, if any, in the future. With this increased scope of governance, we propose strengthening the Security Council by expanding the number of seats and expanding their remit from veto to also emergency upgrades.

Key Terms

Rarible Protocol - multichain indexer and order book with SDK

RARI Ecosystem - applications utilizing the Rarible Protocol

$RARI - ERC 20 token, used in the RARI DAO governance

Specification

The Exchange contracts bundle ownership transfer consists of 3 key components:

  1. Governance design for the Exchange contracts
  2. DAO commitment to not exceed protocol fees beyond a certain threshold
  3. Expansion of the Security Council to 5 seats and granting of emergency upgrade powers

1.Governance design for the Exchange contract

1600×1109 175 KB

This diagram shows every contract/wallet which is used in DAO-related contracts. Also the diagram shows every role and dependencies between contracts/wallets.

UpgradeExecutor will be owner or admin in shown contracts. This will allow to control these contracts using 2 addresses:

  • Security Council multisig (4/5)
  • Timelock contract (which executes proposals)

UpgradeExecutor will be able to execute arbitrary actions on all contracts. This will be implemented using Action Contracts which will be deployed prior to doing action. DAO will be able to review Action Contracts before execution

UpgradeExecutor has an Executor role. Executors can execute arbitrary actions. Only 2 addresses will have an Executor role: Security Council multisig (4/5 threshold) and Timelock contract. Thus there are only 2 ways to perform ownership related actions on DAO-related contracts: by making and executing a proposal, or by 4/5 vote of the Security Council.

  1. DAO commitment to not exceed protocol fees beyond a certain threshold

By approving this RRC, the DAO commits to keeping any future protocol feel at a reasonable level in order not to impede the protocol’s adoption and to continue providing a stable environment for applications built with it. This reasonable transaction fee shall not exceed 0.5%.

  1. Expansion of the Security Council to 5 seats granting of emergency upgrade powers

RRC 11 established a 3-seat Security Council that, in Phase 1 was permitted to exercise veto power over proposals that would be malicious or exploitative to the DAO. The proposal included a plan to expand the Security Council’s powers to include emergency upgrades in Phase 2.

Phase 2 commences with the Exchange contracts bundle ownership transfer, as this poses the need for a failsafe mechanism for scenarios such as emergency actions in critical security scenarios (e.g. hack or serious bug) or minor routine maintenance on the contracts. With this increased remit of powers, the Security Council shall be expanded to 5 seats.

Specifics:

  • Veto function will be performed with a 3/5 majority vote

  • Upgrade function will be performed with 4/5 majority vote

  • The first three members will continue serving on the Security Council until their term is up

  • The additional two proposed members are:

    1. Jafett Sandi, current delegate of the RARI DAO and core member of the Push protocol
    • Hardware wallet address: 0x636e1f9A9Cb926a69441DcE54Aa9e490CFe6D4D6
    1. Eugene Nacu, current CTO of Rarible
    • Hardware wallet address:
      0x978EBcd18c5A0d829C061566AA84227e9618C1A4

Steps to Implement

The solution is ready to implement upon proposal passing.

Budget: 10,000 USD for security audit.

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RRC-18 Raise Proposal Quorum
#2

Not a part of the above proposal, but something we can discuss is increasing the quorum threshold to raise the participation bar for proposals to pass. The current threshold is 10% or locked RARI, we could raise it to e.g. 12.5%. Would love to hear the community’s thoughts.

2 Likes
#3

Thanks for the proposal and glad to see expansion of the responsibilities to the DAO.

  • The image shows two security councils but the proposal talks about only one of them. If the timelock owner multi-sig is not meant to be the same as the updateexecutor, maybe we can consider renaming to avoid confusion.

  • Could you please help us understand how the 50bps fee threshold could be enforced?

  • While I understand the rationale for increasing token weighed quorum, that’s a bad metric to measure decentralization and gauge community consensus especially when the top two delegates can pass the suggested quorum threshold with individual votes. Less than 20 addresses vote on proposals right now, I’d recommend speaking with the tally team if it’s possible to set quorum to number of voting addresses such that each voting address has a minimum number of tokens to be considered for quorum.

3 Likes
#4

I fully support this proposal!

I commend the authors, @JanaBe and Eugene Nacu, as well as reviewers, @insider0x and Alexei Falin for their dedication to decentralizing the RARI ecosystem.

The proposed enlargement of the Security Council and granting of emergency upgrade powers align with the evolving needs of governance. The detailed governance design for the Exchange contracts, and commitment to maintain reasonable transaction fees demonstrate a really thoughtful approach.

The inclusion of @Jaf and Eugene Nacu in the Security Council, who are both actively involved in the RARI DAO and Protocol, adds valuable expertise.

I also support a slightly higher quorum threshold, as it might encourage greater community participation, and more community members need to actively engage in voting to reach the increased quorum.

2 Likes
#5

hey @jengajojo, thanks for the feedback!

  1. good call! it is two multisigs indeed, as each has a different threshold requirement. The signees are however the same as it’s the same security council members.
  2. The protocol fee threshold is more of a social contract. Although the Security Council may veto proposals considered malicious or exploitative to the DAO. Setting a high fee that impedes the Protocol adoption or financially harms projects built with the Protocol could be considered as such.
  3. It is possible to create a ‘number of addresses’ threshold along with the token quorum requirement, but it’s fairly easy to find a way around this by creating new wallets and voting with multiples. To your point, though, increasing DAO participation is the main objective here, and we continue running programs to attract new voices. The idea behind increasing the quorum is to make it harder for the first one or two delegates to reach it alone and drive a need for a wider consensus. That said, there will still be the requirement for majority ‘for’ votes that should keep the bigger delegates in check.

Let me know if the above helps and if there are any other points you’d like to see addressed!

3 Likes
#6

Conversations around this have been on for a while and I am glad to see it live on Forum.

I am in support of the additional 2 security council members and generally in support of this proposal.

I only need clarity here. Which audit process we are looking to adopt and what is the reasoning behind its cost?

2 Likes
#7

Agree to raise the threshold to have proposals pass. I’m aware that a 30% participation rate in governance proposals is considered good, so a percentage in the range of 10-30% makes sense to me.

If possible, it would be great to have higher quorum requirements for proposals that have a high risk and high impact to the protocol, and lower quorum requirements for low risk initiatives (eg: hosting a local hackathon)

3 Likes
#8

hey @WinVerse - thanks for the words of support and your questions.

As discussed in the community call yesterday, the leaned on Rarible’s network of smart contract auditors, have inquired quotes from 5 potential partners and compared costs + timings. The 10k reflects this process and covers 1 audit.

1 Like
#9

Thank you, @da0uch - for the purpose of this proposal, we’ll decouple the quorum threshold aspect, but it does deserve its own discussion (and proposal) as our governance is becoming more robust.

2 Likes
#10

We successfully transferred ownership of the protocol contracts to DAO.
Now we want to test if everything’s working ok.
For this we need to create a proposal which will do some action on the governed contracts.
I suggest to do some action which actually does nothing: sets protocol fee to zero.

Here’s the link: Placebo proposal to test if DAO voting process works with Protocol Contracts

5 Likes