Fantom, a Directed Acyclic Graph (DAG) smart contract platform that offers DeFi services to users, announced yesterday that a new governance proposal is available for its community to vote on and decide whether or not it will be implemented. According to the project’s Twitter announcement, the new proposal aims to create something called an Ecosystem Support Vault.
📢 A new governance proposal has been created: Ecosystem Support Vault
As part of Fantom’s continuous evolution toward decentralization, this proposal empowers the community of validators & stakers through an on-chain Ecosystem Support Vault.
Vote open👇 https://t.co/u0ZBeBiAkO
— Fantom Foundation (@FantomFDN) July 5, 2022
What is the new proposal about?
The announcement continues to say that Fantom is continuously evolving towards decentralization, and the new proposal will allow it to take another step towards reaching that goal. It will bring a new product called Ecosystem Support Vault, which is going to empower the community of validators and stakers.
The project continued to explain how the new product is going to be funded, noting that one-third of the existing 30% burn rate from transaction fees will be diverted to the new product. The diverted funds will be entirely controlled by the project’s stakers and validators, using the on-chain governance and more proposals that FTM token holders will be able to vote on.
The amount that will go into the Vault will, therefore, represent around 10% of the total transaction fee value. Also, according to the proposal itself, the Vault will provide an alternative avenue using community-driven decisions for the funding of projects, ideas, as well as various creations on the Opera network.
All proposals regarding the use of the funds within the ecosystem should be submitted using the governance portal, so these funds would not be any different. It will then be on validators and stakers to approve or deny any idea that gets submitted regarding how the money should be spent using the existing voting mechanism. That way, validators and stakers will get even more included in the project’s decision-making, which will boost the true decentralization of the Fantom Network.
What are the risks?
In order to pass, proposals will require a 55% turnout + a 55% agreement rate. However, the proposal also recognized that there are certain risks involved. The biggest risk is that a malicious submission or submission might get passed, which would involve making a proposal without the intention to uphold the proper use of funds.
Another risk revolves around Funding estimation error, meaning that a project might over-promise only to end up incapable of delivering on that promise, despite the fact that it received the requested funds. Finally, there is the issue of network control, which revolves around a single group or entity controlling 50% of the voting power or more, which would allow them to fund themselves and promote projects that they control.
In the end, the proposal made a list of pros and cons, with the biggest con being the fact that fewer fees will be burned, as the total amount burned would be reduced by the 10% that would not be directed to the vault to be used for proposal funding. As for the pros, there are many, including increased decentralization, self-governance of the Vault, total transparency, a new avenue for project funding, and more.
To learn more visit our Investing in Fantom guide.
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