What is a governance proposal?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
A governance proposal is a document submitted so that holders can decide on a protocol parameter change, a use of treasury funds, or a similar matter. It usually starts as a draft in a discussion forum and moves to a formal vote once it meets the requirements. On some chains, passage triggers execution automatically.
Key points
- A document putting a change or spending decision to holders
- Moves from forum draft to formal vote
- Submission usually requires a threshold holding or deposit
- How a passed proposal executes differs by chain
Definition
A formal motion submitted for a holder vote on a protocol parameter change, an allocation of funds, or a matter of operating policy.
Proposals cover a wide range: changing numeric parameters such as fee rates or collateral ratios, adopting a new feature, spending from a shared treasury, or altering the operating structure. Technical protocol changes themselves may additionally require a network upgrade process.
Most projects do not jump straight to a vote. A draft goes up on a public forum, the issues get aired, the text is tidied into proper form, and required endorsements or a deposit are gathered before formal registration. The staging exists to filter what reaches a vote.
Submission thresholds — a minimum token holding or a deposit — are the norm, and the deposit is sometimes forfeited if the proposal fails. This deters spam proposals, but it also tilts who can propose toward those with means.
What happens after passage differs too. Some designs have a contract rewrite the parameter automatically; others rely on developers or a foundation to implement it. In the latter, a gap remains between passing and taking effect.
Watch out for
- · A passed proposal changes nothing until someone implements it, so check who executes
- · In some designs large holders effectively decide the outcome on their own
- · Fake sites imitating votes exist to harvest signatures, so verify what you are connecting to