Effective governance in the web3 space is essential for coordinating actions and decisions among people. The ‘civil war’ in Bitcoin or the Ethereum DAO Hack serve as prime examples of this. It illustrates that even with a ‘code is law’ mentality and a highly technical system, the coordination by humans — aka governance — is still vital.

As the web3 space continues to evolve, decentralized governance is becoming an even more important topic in 2023.

What does bad governance mean?

Bad governance can refer to various situations where decision-making is organized in a way that does not result in the “best outcome” for the community. To avoid such situations, it is important to have safeguards in place when it comes to voting and proposals. For example, a common tactic used to manipulate voting is to wait until the end of a vote to borrow a large number of tokens and vote for a proposal, giving the fake appearance of a sudden surge of support. Another example are governance designs, where a high voter participation is assumed and once this assumption does not hold anymore, the system is essentially ruled by a governing minority.

How does Q support good governance?

In the Q protocol, many safeguards exist. For example, any governance decision that has substantial protocol effects is subject to an objection period. Only a specific group of stakeholders is allowed to object and only if it is against the Q Constitution. This ensures that any decision that may be harmful to the protocol is thoroughly evaluated and avoids that decisions are implemented due to a lack of transparency.

The Q Constitution is the fundamental rulebook of the Q protocol. It is written as a private contract, which is an important aspect to understand. In addition to validators, the Q protocol also has a distinct set of independent full nodes called root nodes. These entities are publicly known and can only be elected as root nodes after revealing their identity and receiving votes from Q token holders. This also gives the ability to initiate a private arbitration process in specific situations.

Q’s dispute resolution process has integrated with the International Chamber of Commerce (ICC). They offer private arbitration as a service. This allows for the resolution of on-chain disputes through an off-chain private arbitration court. The enforcement of this process is possible via Q’s root nodes, which are publicly known entities. Not only does this ensure that root nodes are accountable, but also provides a counterbalance to the per default pseudo anonymous protocol’s validators, which are responsible for processing transactions.

How can projects benefit from Q’s governance framework?

Any project can opt in to Q’s governance modules and use them. So the Q protocol is creating a market for governance-as-a-service. When projects use Q’s governance framework, they pay a share of their revenue back to the ecosystem in exchange for these governance features.

Constitutional Slashing

The first thing we built with opt-in governance on Q’s mainnet was validator slashing. Slashing on Q is not based on code-is-law, it is based on the Q Constitution. We call this “constitutional slashing” — as opposed to “social slashing”, which is being discussed on other networks. As a validator, the big advantage is that you know exactly what the rules are and you can defend against unjustified slashing. You can challenge a decision and as a last level of escalation of a dispute, you can initiate a private arbitration process. In Q this is called ‘enforceable governance’.

Cross-Chain-Governance

One future direction for Q is cross-chain governance. For example, let’s say you built a DEX, and the DEX runs on Solana because you want to have high throughput and low fees. But your treasury or DAO could run on the Q blockchain where you can build a more robust governance system, e.g. with a solid dispute resolution mechanism to ensure that some ground rules are enforced and all participants are treated fairly.

Governance Enforceability

To enforce the DEX’s rules, they would need to be a part of the Q protocol’s rules — i.e. its Constitution. Now, let’s say the members of the DEX’s DAO want to change some of the rules. How would that work? Well, this is also specified in the Q Constitution! It typically requires a Q token holder vote with a specific quorum and majority requirement. Any proposal that does not follow the rules can be objected to by the root nodes. This system of checks and balances is a protection against abuse.

Who are the root nodes in Q’s governance?

In Q, there is a distinction between validators and root nodes. A validator has tokens at stake but can be pseudo anonymous, while a root node’s identity is publicly known, while also having tokens at stake. If you take a look at the ecosystem map of Q, there is a section for some of our root nodes like Deutsche Telekom (Announcement | Root Node Application) and Greenfield One (Announcement | Root Node Application). You can find the full list of root nodes here. As you can see, the set of root nodes is very diverse: For example, it includes infrastructure providers, lawyers, universities and spans multiple continents and jurisdictions.

In Q, root nodes provide one of multiple levels of checks and balances. They ensure that both, minority interests and the non-voting majority, are adequately protected.

The role of Q token holders

Q token holders have the right to submit proposals and vote on them at any time. To avoid voting fatigue and low voter turnout for important decisions, there are two mechanisms: delegation of voting power and expert panels. Delegation of voting power means that token holders can delegate their vote to other token holders without giving up custody of their Q tokens (QGOV). For example, root nodes could be seen as a trustworthy party. If they have a lot of knowledge and are invested in this space, there is a possibility as a token holder to give the voting power to them so that they represent more token holders. This is in no way limited to root nodes however. The emergence of professional voting delegates in other DAO structures indicates this will be a longer trend in web3 governance. Expert panels, on the other hand, handle a defined set of governance decisions, typically those within a specific domain which occur more frequently. Experts on those panels are voted in by Q token holders. Of course, Q token holders give up a little bit of sovereignty when electing expert panels. However, they make the system manageable and provide expertise in areas where the wisdom of the crowd reaches its limits.

Overall, Q protocol’s governance design ensures that decision-making is organized for the best interest of the community and safeguards against bad governance.

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