Namada Governance Rundown

Introduction

Namada's governance system is designed to be flexible and community-driven, allowing for decentralized decision-making and protocol evolution with a focus on privacy. This article delves into the structure and discusses each part of governance's implications.

Governance Participants

The governance participants are standard when it comes to a Cosmos ecosystem:

• Validators: Responsible for voting on blocks and can vote on governance proposals.
• Delegators: Users who bond NAM tokens to validators can vote on proposals.

Voting power is proportional to the amount of bonded NAM tokens. Both validators and delegators with bonded stake can participate in governance.

Proposal System

Any user account can submit a governance proposal on-chain. Proposals can include metadata and optional code for protocol execution if accepted. Submitters must provide a minimum token amount (min_proposal_fund) to prevent spam. The funds are refunded if the proposal passes — this comes across as an "attention fee."

Key governance parameters include:

• Minimum proposal fund
• Minimum and maximum proposal voting periods
• Grace periods between proposal end and activation
• Maximum proposal latency

Voting Structure

Namada employs a tiered voting system:

• Validators may only vote in approximately the first 2/3 of the active voting period.
• Delegators can override their validator's vote if desired.
• The delegator's vote always takes precedence over the delegate's vote.

This structure ensures that delegators maintain ultimate authority over their governance representation, even when they have delegated their stake.

Types of Proposals

Default Proposals

• With a WASM payload: Grants, bug bounties, new ideas, topics that need social consensus before execution.
• Without a WASM payload: Parameter changes, state changes on-chain.

Custom Proposals

• Eth Proposal: Restricted solely to validators, as it involves executing function calls on the Ethereum smart contract that manages the ETH-Namada bridge.
• PGF Proposals: Submitted by elected Public Goods Funding (PGF) Stewards, focused on RPGF and CPGF initiatives. These are automatically approved unless vetoed by the community.
• Steward Proposals: Any Namada user can submit a proposal to nominate new PGF Stewards or remove existing ones.

Protocol Upgrades

Changes to the network's functionality that require coordination across the validator set.

Public Goods Funding

Namada places strong emphasis on public goods funding through two mechanisms:

• Continuous Public Goods Funding (CPGF): Provides ongoing support for projects that benefit the Namada ecosystem and the broader blockchain space.
• Retroactive Public Goods Funding (RPGF): Enables the community to reward projects that have already delivered valuable public goods, even if they were not initially funded through CPGF.

Approval of PGF Steward Proposals requires at least 1/3 of Namada's voting power to participate, and a majority of votes must be in favor.

Offline Governance

Proposals can be submitted offline during network issues such as chain halts. Proposals made offline are then submitted on-chain as the signature over the hash of a JSON document. The system uses a predetermined communication service for vote submission and verification.

Mainnet Launch Phases

Namada's proposed mainnet launch involves a five-phase process, each requiring community consensus to proceed:

1. Block Party: Introduces on-chain governance and proof of stake.
2. Staking Party: Enables staking rewards and public goods funding.
3. Shielding Party: Allows transfers and shielding of governance-enabled IBC assets.
4. Shielding Rewards Party: Introduces rewards for shielding assets.
5. NAM Party: Enables NAM token transfers.

Implications for the Ecosystem

• Encourages Innovation: Financial support for public goods incentivizes developers and researchers to build innovative solutions that benefit the entire community.
• Attracts Talent: A strong commitment to public goods funding is likely to attract talented individuals passionate about building a more equitable and privacy-focused future.
• Sustainability: Funding public goods helps ensure the long-term sustainability of the Namada ecosystem.
• Community Ownership: Namada's governance model empowers the community to actively participate in decision-making, fostering a sense of ownership and shared responsibility.
• Data Protection as a Public Good: Namada explicitly emphasizes data protection as a public good, using advanced cryptographic techniques to shield user data and incentivizing users to contribute to the shielded set.

Conclusion

Namada's governance system aims to be inclusive, flexible, and responsive to community needs while maintaining the protocol's focus on privacy and data protection as public goods. At Chainflow we appreciate the commitment to public goods because it helps build a strong foundation and culture within the community. This aligns with our values, especially when we focus on giving the power back to the people.

It's easier for protocol participants to see the long-term vision and pivot smoothly if needed. Due to the plethora of public goods being built and the focus on privacy, Namada can create an environment where privacy-focused problems can be creatively and efficiently solved.