Klaytn believes that its contributors who build and grow the platform with their interests aligned with the platform’s long-term development plans are the most qualified entities to undertake Klaytn governance. Service providers who support mass adoption by delivering new services to Klaytn, Ecosystem builders who introduce and promote Klaytn to the world, or contributors of any other kinds, are potential members of Klaytn Governance Council. In other words, Klaytn Governance Council is the governing body that will generate long-term growth of Klaytn. For detailed information on governance, please refer to Token Economy & Governance Paper (to be made available on https://www.klaytn.com/technology).
To make the platform trustworthy in its initial stages, only trusted entities are considered as potential Klaytn Governance Council members. This is designed to improve the protocol in a rapid manner for the development and stabilization phase.
The main topics that can be decided through the governance structure include the following three areas, and proposals that require additional decision making may be introduced in a regular meeting or temporary meeting for review. The Klaytn Governance Council must make decisions that are best for the growth of Klaytn.
Technology: Matters related to the technical update of the platform. Here the issues on the blockchain’s basic structure (e.g., Account Structure), new features (e.g., L2 solution), or software update schedule are included.
Economy: The additional issuance of KLAY and its distribution structure, change in transaction fees, changes in Proof-of-Contribution service evaluation methods, Klaytn Improvement Reserve spending approval, and more issues are included in this category.
Governing Rule: The governance subjects and processes, as well as the rules for the responsibilities and rights of governing bodies, are included in this category.
The Goal of Klaytn Governance Process Klaytn collectively defines its decision-making process, from introducing agenda to voting, as Klaytn Governance Process. Klaytn Governance Process may differ in detail depending on the agenda category. Klaytn Governance Process aims to be executed on-chain, where the voting process itself and the results are transparently disclosed to all Klaytn ecosystem participants. However, initially, Klaytn Governance Process may be operated in an off-chain environment, followed by a transparent disclosure of discussion and decision results.
Klaytn principally aims for the governance process to occur within the protocol (on-chain). Through this process, the votes will be recorded on the blockchain, and the results will be carried out following the vote. As the platform grows, more matters will be handled through on-chain governance.
The governance process is operated per the follow order: proposal introduction, statement of opinion submitted by advisors, voting by council members, and various follow-up procedures depending on the result of the vote.
Those who have the right to introduce proposals can make sure each proposal is voted on by introducing it. Once the proposal is introduced, the advisors must conduct expert analysis on the proposal and submit a statement of opinion with their results.
The Klaytn Governance Council members have the right to vote on the introduced proposal and will reference the advisors’ statement of opinion to vote on what they believe to be the best option. If the number of votes passes the threshold, the proposal will pass; if not, the proposal will be dismissed. The follow-up measures for an approved proposal will be led by the chairman, and the chairman has the responsibility to carry out all proposals that have been passed by the council within his or her term. Specific proposal votes and follow-up measures follow the procedures outlined below.
Core Update: These are proposals that suggest updates to Klaytn’s core code. The vote takes place online. However, even if the code update is passed, software update must take place on a set date for this code to be implemented. As such, the software update will also be proposed, and if it is passed, the core update will take place on the set schedule of software update.
Parameter Change: This concerns the proposals that will be applied on the blockchain without any code updates. Currently, matters such as gas price, block reward amount, block reward distribution ratio, voting period, number of committee members, and more can be decided without code updates. The proposer may initiate the voting process, and the vote will take place on-chain during a predetermined voting period. Each voter’s choice will be saved in the block header, and the vote will automatically be closed once the voting period is over. Once the same length of time as the voting period passes after the vote, the decision will be automatically implemented to the platform. Therefore, no specific follow-up procedure is necessary.
Standard Proposal: This concerns proposals that request the approval of new standards for Klaytn, and the vote takes place online. As there is nothing to be changed in the platform, an approved proposal will only see an official announcement that Klaytn has officially approved a standard change.
Unlike usual governance processes, the KIR governance process takes a series of steps composed of introduction of a proposal, spending approval, and follow-up procedures to implement an approved proposal.
KIR’s proposal introduction methods are the following two.
The financial commission, which votes on Klaytn’s financial issues and is composed of the finance commission members, can introduce a new proposal.
A proposal passed by the House of Representatives, a system that evaluates different proposals through the votes of all users, is automatically introduced as a new proposal.
The KIR’s final spending proposal will be determined through the votes of the Klaytn Financial Commission members. The goal is to automatically implement approved proposals on-chain as soon as it is passed, but in the early days following Klaytn’s launch, this process may be handled manually.
Klaytn Governance Council is required to actively participate in Klaytn Governance Process and vote for the long-term growth of Klaytn.
Each of the Klaytn Governance Council members can cast one vote. This was decided as it is important to make sure one body cannot hold monopolistic power over Klaytn. However, the number of votes each council member has may increase later on depending on their level of contribution to the platform and governance structure as well as on their amount of staked KLAY. Each governance council member will have their number of votes determined using the following formula. The maximum value that can be given by the following formula is capped at two, and thus each governance council member’s number of votes will be a real number between one and two.
1+α×f(governance contribution)+(1-α)×g(staking contribution), where 0<a<1
governance contribution may be calculated using the number of new proposals introduced and whether the proposals were passed, voting participation rate for all proposals, etc.
The bodies participating in governance must act in consideration of Klaytn’s long-term benefits rather than just for their personal interests, and they must actively participate in the voting process. Additionally, all participants that contribute to the network as Klaytn Governance Council members must secure computing resources that are greater than the platform requirements and stake a set amount KLAY of their own or from third parties. For the smooth operations in development and stabilization of the platform, Klaytn. Pte. Ltd. will take many roles in governance related matters in the initial development phase. In the future, however, other bodies will gradually take greater roles in the decision-making process, and they will have the right to participate independently.
Development Phase: The initial development phase after the mainnet launch must quickly see parameter adjustments, new feature developments, etc. For this to be possible, many issues will be decided through gathering the opinions of the Klaytn Governance Council members, service providers, and community members. To secure initial stabilization, Klaytn. Pte. Ltd. may assist in the decision-making process. Additionally, all decided matters will be transparently shared with the public.
Stabilization Phase: The Klaytn Governance Council has voting rights on most proposals. For special matters such as those concerning platform development, the opinion of Klaytn. Pte. Ltd. may be taken into consideration. For specific topics with the possibility of conflict of interest (rewards for CCOs, etc.), separate entities such as foundations will advise the council.
Decentralization Phase: Following the stabilization period, to gather additional opinions, more service providers and other bodies may additionally be brought into the decision-making process.