Euler Finance Formalizes Governance Processes
January 30th, 2023

TLDR: Euler’s DAO seeks to provide more clarity and structure to its developing governance systems.

Non-custodial, permissionless lending protocol Euler was originally founded by Euler Labs and has since been following the path of progressive decentralization. Now with an active DAO, Euler follows a fairly typical governance process that relies on Discourse, Discord, and Snapshot to debate ideas, surface prevailing sentiment, and rally the community to vote for (or against) changes to the protocol. Euler’s first proposal was put before the DAO on Snapshot in late June of 2022. But as the DAO has developed, the community has expressed the need to create more clarity and structure around the governance process — including an explicit procedure for fast-track proposals that deal with urgent concerns.

The Proposal: Formalising Governance Processes

This proposal, labeled eIP-45 according to Euler naming conventions, hopes to address a lack of standardization in governance in the Euler DAO. Proposal author Patricia notes that there is “often confusion regarding proposal categories, what information is required to include in the proposal, proposal stages and responsibilities of moving proposals through each stage,” which is “magnified” when new community members arrive and attempt to understand the process. Patricia points to the several stages of the current lifecycle, observing that it takes a minimum of four to five weeks for a successful proposal to be executed:

  1. Ideation

  2. Request for comment (seven days)

  3. Euler Improvement Proposal (seven days)

  4. Snapshot vote (six days)

  5. Execution

This lengthy process might be fine for some proposals, but it is inadequate for dealing with timely matters — not to mention anything urgent. (It appears that Euler hasn’t implemented the on-chain voting process described in their documentation.)

Formalise Governance Processes
Formalise Governance Processes

The suggested new process aims for a default proposal lifecycle of 14 days, as follows:

  1. Ideation. This is best initiated in the Euler Discord;

  2. Request For Comment (six days). RFCs are to be posted in the forum, require specific information as determined by the appropriate template, and should include a poll that serves as a temp-check;

  3. Formal Submission (two days). This is submitted in the same RFC thread, includes changes resulting from community feedback, and requires a formalized title;

  4. Snapshot vote (six days). Submitting a proposal for Snapshot vote requires 500 EUL delegated. The proposal category in the forum is changed to “Live Vote,” and the proposer comments with a link to the Snapshot vote.

  5. Implementation/Voted Proposal. If the proposal is successful, it will be executed by the appropriate team. Whatever the outcome, the proposer must change the proposal category in the forum to “Voted Proposal” and follow up with a comment indicating the outcome.

The new, proposed governance process also includes specific guidelines for the temp-check poll (part of the RFC phase) and designates three proposal categories, each with its own template: Euler Improvement proposal (for such things as changes to the protocol, risk parameters, or collateral factors); Grant Proposal (for funding from the DAO); and General Proposal (for proposals falling outside of the purview of the previous two). Forum categories are to be adjusted to reflect these changes and help give the process a visual structure.

Finally, the post outline includes a new fast-track proposal process, which will skip the ideation and RFC stages and go straight to the forum as a live proposal and simultaneous Snapshot vote — to last 24 hours in total.

“As fast-track proposals usually involve high-priority and important updates to the protocol, the ability to propose fast-track proposals will be limited to Euler Labs contributors and Recognised Delegates. This will be further decentralized with time.”

Voting for this proposal ended on January 29th; it passed with nearly unanimous support.

The Big Picture

Euler is a relatively new, up-and-coming protocol that is among those genuinely attempting to become increasingly decentralized. In the effort to do so, it’s not uncommon for new DAO hopeful’s to adopt the governance structures and processes that have come before. After all, we don’t need to reinvent the wheel every time. But each protocol and each community has its own contours and idiosyncrasies, and governance structures must be adapted (assuming they are adaptable) to suit evolving needs. It signifies a healthy community that can navigate such adaptations with open debate and pragmatic orientation.

Even here, as this proposal appears well on the way to implementation, comments in the forum offer thoughts and suggestions. How do we make sure polls aren’t gamified? Should there be 24-hour notice before a vote goes live? How long must a failed proposal “wait” before re-submission? Further refinements are always possible in a well-functioning DAO.

We’ll be tracking this proposal activity closely at Boardroom. Follow our newsletter to stay up to date. If you’re a voter in a protocol, make sure to check out Boardroom Portal.


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