Governance System

Abax DAO's governance mechanism revolves around the proof-of-stake concept and at its center is The Governor Smart Contract. Participation in governance is completely voluntary, there are rewards for participants but it involves the obligation to actively vote.

Governor Smart Contract

The Governor Smart Contract has the power to dynamically change the parameters of the Abax Lending Protocol, guiding the lending process based on the collective voice of the community. Beyond its function of overseeing the lending protocol, the contract takes on a communicative role. It serves as the messenger for the DAO, spreading position on crucial decisions— whether it involves partnerships with other DeFi entities or other statements made by the DAO.

Voting process

Participation in governance requires staking ABAX tokens within the Governor Smart Contract. Voting power is directly proportional to the staked amount, establishing a weighted voting system. Unstaking from the contract does not occur immediately but is a two-step process. Users must first initiate the unstaking process, wait for the unstaking period, and finally collect tokens. Users who have started the unstaking process will no longer be able to participate in votes. The current proposal is to set the unstaking period to 180 days.

Participants can choose from three voting options: “agree,” “disagree,” or “disagree with proposer slashing.” The latter option authorizes the DAO to punish malicious proposers by withholding their deposit and slashing their rate. If the number of ““disagree with proposer slashing” votes is greater than “agree" + "disagree,” then the proposer will be subject to punishment.

Submission of a proposal

All those who have the minimum share of all tokens placed in the governor's contract have the right to create proposals.

Voting

Voting is divided into three separate periods, and the required percentage of votes varies during these periods, starting with 100% in the initial period and gradually decreasing to 0% at the end of the final period.

• Initial Period: This period encompasses the first few days of voting. During this phase, the necessary percentage of votes to either reject or approve proposals will decrease from 100% to 50%. If, at this stage, a sufficient number of votes is gathered to either accept or reject the proposal, the finalize function will be triggered on the proposal, and the voting will not proceed to the next periods. A decisive early vote can be the game-changer.

• Flat Period: Here, a 50% majority is the key. It is crucial that all participants who have staked tokens in the governor’s contract cast their votes at the latest during this period. It's a call to action for every staker - vote or face the prospect of forced unstake.

• Final Period: During this period, the required percentage of votes will drop from 50% to 0%. At the same time, the force_unstake function can be invoked on all participants who have not voted and have been declared inactive. It's a mechanism designed to reward engagement and penalize apathy.

Penalties

Two types of penalties exist in the entire governance system:

• Penalty for making damaging /spam proposals: Voters can vote to impose a penalty on a malicious proposer - if such proposal fails & enough votes for imposing a penalty is in place a fixed portion from the proposer's stake will be burned. These mechanisms exist to reduce the damaging and/or spam proposals.

• Penalty for inactive voters: It is required that anyone who has locked their tokens in the governor's contract actively participate in the governance process. In the event of inactivity, it is possible to remove the participant from governance by forcibly unstaking the participant's tokens.