[DISCUSSION] Working draft of Cosmos Hub Charter

Lots of questions and thoughts being raised here don’t have clear answers - this is a community effort so if there is a concern over an article, please make a PR and start working on it yourself!

Some clarification to questions I see in the thread:

@bIllYTHeSQuid

Article 34 – Can someone elaborate on the last sentence in this article? “The proposal must include the voting weight that the council will have in the Assembly”

When a council applies to join the Assembly, they must identify how much voting power they will have in the Assembly as a whole (and thus how all other councils’ voting weight will change). For example, if the Community Council and Bootstrap Council each start off with 50% voting weight, a third council applying to join may specify that they want 20% voting power while the Community Council and Bootstrap Council each retain 40% voting weight.

Article 53 (renumbered) - What does a fully fledged council look like? Can someone paint me a picture?

We don’t have examples in the context of the Cosmos Hub right now, but there are examples on other networks. Optimism for example has a bicameral governance structure, where there are two houses (Citizen House and Token House) that keep each other accountable. We can imagine the Community Council becoming a larger entity made up of Cosmos Citizens that keep the other councils in check.

@abozanich

Article 25: How does the yearly budget relate to the treasury funding? If a yearly budget is passed, is the release of funds throughout the year still subject to governance approval? If so, how? Can ATOM stakers veto specific items in a budget?

The yearly budget is how funds from the Treasury are to be allocated for that year. The Treasury itself is funded by issuance and returns from the Allocator and Scheduler. As-written right now, ATOM holders can veto the entire budget but not specific line items. The Community Council’s role is to ensure that the budget meets the standards of the community.

Article 27: What are assembly proposals? Does releasing funds from treasury require an assembly proposal, similar to a community spend proposal? If so, how would Article 28 (treasury asset management) be implemented? How would Article 40 (streaming funds) be implemented?

We can think of assembly proposals as mimicking our current tokenholder governance system except that councils vote instead of individual tokenholders. Tokenholders, as a group, hold veto power over assembly proposals. Yes, releasing funds from the Treasury would require an assembly proposal just like a community spend proposal in tokenholder governance. In this case, a council would make the proposal and all councils would vote, with tokenholders able to veto.

Implementation details are yet to be decided.

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From a recent Twitter discussion here is a summary list of values mentioned by various individuals within the Cosmos Hub community & listed here in no particular order:

a home for visionaries
accountability
$atom stakers always have final say (no constitutional or Assembly level blocks to staker decisions)
decentralization
empowerment of communities
equitable
ethos
freedom thru sovereignty
honesty
market anarchy philosophy
minimalism & predictability of cosmoshub
neutral
neutral w/ no expression of values
pragmatism
privacy
quasi-libertarian free mkt spirit
right to fork
right to hire contractors
right to shared security
right to use IBC
robustness
safety
scalability
security
simplicity
sustainability
transparency, all community funds will be dispersed on chain
transparency for institutions, privacy for the individual
values should be emergent, logical, quantifiable & defined in an enforceable way
wholeness in the totality (of the federation)

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Hi, this is Gorany from Cosmostation team.

I’ve got some questions and thoughts on the Charter as I was reading through it.

  • It seems the purpose of the Community Pool encompasses the purpose of the Treasury. Why is there a need to establish the Treasury instead of utilizing the Community Pool? And what would the “public works” mentioned in the Article 20 be like? Are wallets and block explorers considered “public works”?
  • What’s the purpose of limiting the flow back to the Distribution module? I thought the whole point of the flow back proposal is to take back left-over funds in the Treasury after serving its purpose.
  • Please correct me if I understood this Article wrong. I understood this Article 27 as having all proposals passing if quorum of 40% is not reached or a simple majority does not veto. If this is correct, here’s my thought below:
  • It’s much harder to get people to vote than to not vote. Fund release decisions should not be “yes” by default. Instead, a strong and sound proposal should be resonating enough to persuade the community to come and vote “yes”. But Article 27 is the opposite of this. It will discourage the Assembly from advocating proposals. Bad proposals kept low-key can pass without the community noticing them. Don’t you think the Assembly will be discouraged from being transparent and publicly spoken under this veto system?
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Hi, VK from S16 here.

I have some questions:

What’s the definition of the value of the treasury? Is it the total value? Remaining value? Profit?

In the Allocator, we have Covenant and Rebalancer. Who will create the strategies, and who will run this? Suppose we made a bad investment. Who is responsible for it?
I read the charter definition of each role, but it’s not very clear to me.

Thanks.

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Article 4 and 5 is problematic because it may be more prodent that at the point in time to decide whether a slash or fork would be more appropriate. For example if a number of malicious events occur it might be more sensible to slash at each event than to fork each event…

@Gorany

Article 16, Article 20: It seems the purpose of the Community Pool encompasses the purpose of the Treasury. Why is there a need to establish the Treasury instead of utilizing the Community Pool? And what would the “public works” mentioned in the Article 20 be like? Are wallets and block explorers considered “public works”?

The structure of having both the Treasury and the Community Pool follows from the ATOM 2.0 vision document; it’s not a new proposal in the Charter. The Charter seeks to define the purpose of both of them, so if you think it’s not clear enough, please go ahead and make a PR!

A major difference is that the Treasury can’t be directly accessed by tokenholder governance the way the Community Pool can. The definition of ‘public works’ is up to the Assembly (i.e., The councils that make up the Assembly) since that’s the body that will vote on allocating Treasury funds (subject to token holder veto). I also think there’s a PR in the works to better define the mission of the Treasury, so maybe that will become clearer as people continue to work.

Article 23: What’s the purpose of limiting the flow back to the Distribution module? I thought the whole point of the flow back proposal is to take back left-over funds in the Treasury after serving its purpose.

The Treasury serves an ongoing purpose of funding R&D, Assembly councils, and the Scheduler-Allocator flywheel. A limit on the flow back to the Distribution module protects it from being drained because profit from the Treasury also needs to be re-invested in the Allocator.

The flywheel can be envisioned as: The Scheduler monetizes IBC economic activity, revenue goes to the Allocator, Allocator invests in new Cosmos chains and expands the market for the Scheduler, and the Scheduler continues to monetize IBC economic activity.

Article 27: It’s much harder to get people to vote than to not vote. Fund release decisions should not be “yes” by default. Instead, a strong and sound proposal should be resonating enough to persuade the community to come and vote “yes”. But Article 27 is the opposite of this. It will discourage the Assembly from advocating proposals. Bad proposals kept low-key can pass without the community noticing them. Don’t you think the Assembly will be discouraged from being transparent and publicly spoken under this veto system?

The Assembly is not a single entity - it ought to be composed of many councils that may not align (and probably shouldn’t align on everything). While a proposing council may be incentivized to not promote a proposal in the hopes that something sneaks past the community, other councils should be incentivized to vote ‘no’ and to promote the proposal to the community so that it is vetoed. The Community Council in particular is responsible for representing the interests of the community as a whole, to keep the rest of the Assembly accountable. That’s my thinking, anyway. I’d be interested in hearing from others on this topic.

@VK_S16

Article 23: What’s the definition of the value of the treasury? Is it the total value? Remaining value? Profit?

Total current value of the Treasury, the same way we can see the total current value of the Community Pool.

In the Allocator, we have Covenant and Rebalancer. Who will create the strategies, and who will run this? Suppose we made a bad investment. Who is responsible for it?

Allocator DAOs are responsible for the Covenant and Rebalancer. These DAOs are represented in the Assembly like all the Cosmos councils will be, and have the same accountability to the Assembly.

I would like to request an additional document to go along with the charter when this proposal is put up for a vote.

The community has been worried about misuse of funds and conflicts of interest. However I think those are nonstarters. Its more important to focus on collusion and insider trading laws. As such, I think the concerns of the community could be assuaged with the following information in a document:

  1. An example of an assembly structure with budget projections.

    • In the bootstrap council: How many lawyers, how many treasury managers, how many tech people?
    • Salaries for each member & Hypothetical Allocator investments with hypothetical budget proposal
  2. Insight into payment and law

    • How does payment work? (Does the treasury set up an LLC or S-corp?)
    • Will council members be covered by labor laws?
    • Will council members be subject to insider trading and collusion laws?
    • Are these laws enforceable?

I understand that the council structure (1) is up to the community to decide. However, there is nothing concrete to discuss. Having an example would be helpful in guiding the community’s direction regarding councils and in dispelling gripes around conflicts of interest.

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After reading through everything here, I want to try to contribute some thoughts. Whatever you make out of my half baked criticisms, the endeavor of creating the charter is in my opinion not even a great, but necessary undertaking. Hats off to what you already did!

  1. Some general remarks

I think the first 19 articles contain a lot of good ideas. However they seem to be a weird mix of negative (art. 1, 2, 3, 4) and positive freedoms (Positive and Negative Liberty (Stanford Encyclopedia of Philosophy)) and some duties (art. 5, 8, 9 ,12). The headlines though implicate that only positive freedoms are discussed. Besides the technical ambiguity, I think aiming to distribute negative freedoms might be a bit ambitious given that this power currently still sadly lies with our different national states. A declaration of strong alignment with for example the basic humans rights (containing mentioned freedom of speech or property rights) should still be a very good starting point.

Nonetheless I agree with the general idea of proposing some positive freedoms or maybe values as already suggested in the thread. As a society with voluntary affiliation it’s reasonable to formulate sophisticated terms of participation.

An exception is Art. 14, which in my opinion should not be part of the first draft at all. I try to explain my reasoning in the next point.

  1. The charter should only represent the status quo

As rightly mentioned the charter should be a living document. Therefore it is not necessary to incorporate future elements. Question marks still exist regarding a lot of design choices and social contracts aiming to regulate such elements by design have to be vague and are prone to corruption.

The main point I have in mind here is the discussion about councils. I think it’s undeniable that at this point in time the tooling in governance is not advanced enough to support such a system of councils. It’s not possible with current governance mechanisms to hold council members accountable in real time and that would be a minimum requirement for such a system. Even the more specialized DAODAO on Juno still isn’t there yet and we can already witness a huge power grab on the chain dividing several former decentralized duties between small groups of insiders. It’s not my intend to suggest any ill intend, but it’s a necessity that opportunities like that always trigger the paradox of power and end in vicious cycles. As long as there are no better checks and balances in place, centralized institutions will be the result of this foiling the whole intention of blockchain in the first place. My advice therefore would be to not include anything about councils yet and focus on improving tooling for governance first.

This also includes everything regarding the treasury. My criticism here goes even further. I didn’t hear one convincing argument so far why we should even found a treasury besides the community pool. I agree that we should strengthen the community pool, though. However, instead of starting a treasury from scratch we should think about more precise rules for funds out of the community pool. The standards for funding proposals should be more sophisticated and funds in general should only be given out in rates with the necessity of quarterly reports or something similar of receiving projects to track proceedings and if necessary stop further funding. Specific governance tooling for such procedures would also be a great asset.

  1. Defi apps should not be part of the charter

To be honest allocator and scheduler excite me personally not in the slightest and I have to admit to a deep feeling of distain about the current state of Defi. However, I acknowledge that it might be interesting projects and as long as a majority of atom holders agrees they should be deployed on consumer chains. That said, why there is a chapter about the allocator in the charter is a complete mystery to me. There should be a strict hierarchy between the hub and its consumer chains. While there might be a reason to establish some general rules about interaction between the hub and dApps on consumer chains, a foundational document like a charter can’t discuss every detail regarding a specific dApp.

  1. Positioning towards foundations

I’m only 1 1/2 years in the space and there is a strong possibility, that I miss something elementary here. As far as my struggle went so far to understand foundations like the ICF or AiB, it seems like there is no transparency regarding them (I’m not speaking about the topic of unclear delegations spearheaded by Jacob, but their spendings in general). Their members are deeply enrooted in the community and part of the group of biggest contributors to the space, though. I believe, it is necessary to solve this moral dilemma and restrict those entities and their members to influence votings disproportionate again and again. Therefore a charter should demand total transparency of this institutions to give all community members the opportunity to evaluate politics with the same amount of knowledge or treat those organizations as alien entities like e.g. cexes. I really hope that I’m missing something here, but it looks like the founders of many chains in the cosmos decided to give substantial amounts of power over the chains to opaque organizations while staging themselves as fighter for decentralization and transparency. This is not sufficient to found a real grassroots movement. If this charter wants to achieve legitimacy, it has to confront this obstacle, I believe.

What happened to the charter discussion after prop 82 was vetoed?

Do you guys think we can still come back to this discussion? Is it still relevant?

I do think the Charter is still relevant, although not in its current form since prop 82 was rejected. It will likely need to be revamped.

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