The spirit and inspiration of Jet's Governance model

Continuing the discussion from Launch Collateral for Jet Protocol:

Given we’re at the very beginning of what will be a long and interesting journey of bringing not only Jet Protocol as a product to market but also decentralizing it fully. We wanted to have a robust (and many) discussion about some of the early stage thoughts we’ve discussed internally about how the community could shape up and get feedback from the very community we’re forming what what could work best.

Of course, this is all a work in progress and will feel like a large, unwieldily experiment until processes are in place to create an inclusive and well oiled DAO that controls Jet Protocol.
We make no secret of admiring much of what MakerDAO governance has been able to accomplish. Given one of Jet’s founders is a former employee of MakerDAO and saw the governance evolve and react to DeFi summer as well as the March drawdown last year, it’s clear we have much to learn from them in terms of resiliency and flexibility.

Some of the big product design decisions associated with Jet Protocol at first are going to be related to the types of crypto assets that flow through the protocol. Given that we are building on Solana, selecting SOL as the primary collateral type to launch with just makes sense from a philosophical perspective but also from it being generally regarded as a blue chip crypto asset. The same goes for using either USDC or USDT as they are simply the most widely used stables in the entire industry.

We’ll add more collateral types (and stables) as time goes on, that is for sure. But what this comes down to is not WHAT we enable on Jet Protocol, but the WHY and the HOW. Given this base consideration, we want to open up our discussion on the general collateral onboarding process here and first reference the MakerDAO collateral onboarding process as a source of inspiration.

https://collateral.makerdao.com/
https://forum.makerdao.com/t/about-the-collateral-onboarding-app-subcategory/1982

Application - clear criteria and questions to be answered for a collateral type to be considered
Discussion (2 weeks) - ensuring the community has adequate time to discuss and ask questions
Approval eligible - passes to be eligible for a community greenlight pole
Greenlight approval - greenlight poll is taken and collateral is approved or disapproved

Given this current high level framework we’d love feedback on what you think about MakerDAO’s process or other well-run governance driven processes we should consider.

Thanks in advance for your comments and feedback!

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Wow i didn’t realize Maker was so far ahead in terms of their governance models. But this is amazing i think this model is a great foundation to start with and build upon. I love the feedback loops where by being transparent in every decision we as the community get more educated and able to give better feedback, its a great way to incorporate the community in a way that is not just as a mascot. It also gives us more responsibility to grow in our understanding and if we are looking for a decentralized future it is important that we grow together with you guys. Also in regards to the latest Uniswap blunder this is a great way to prevent that. <3

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Maker DAO has incredible experience and strategies in running the governance, jet protocol can maximize on this and leverage on adding more values through the community. I have no objection if we can replicate maker DAO process of governance in this forum. It has proven to be the best strategies to achieve full potential of the protocol.

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I’ve read through much of MakerDAOs Collateral Onboarding documentation, now. Thank you for the context.

It’s clearly very thorough and responsive.

When thinking of borrow/lending on solana for the time being, the amount of collateral candidates seems low. Unless there will be a reliable wormhole bridge connection to leverage for liquidity.

I wonder if it makes sense to have collateral onboarding quarterly. Rather than ad-hoc. At least initially.

Just thinking out loud. It might make it easier for the community to be focused on the considerations if it’s scheduled.

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Interesting idea! Do you feel quarterly review leaves room for enough flexibility for one-off’s that are timely? Could definitely be great to have a known roadmap in terms of decision making and lead time!

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I feel like my intuition around preferred attributes for collateral is either lacking or maybe too conservative. I was working under the assumption that you would only want a collateral asset that has proven itself over some time frame.

Could you give me an arbitrary example of when you might consider a one-off?

Another downside to regular scheduling is that you may have more collateral candidates approval than you have technical resources to implement.

Either way I’d only see regular schedules like quarterly as an early stage scheme. Once the community, stakeholders and resources have grown I’m sure a more fluid model would make sense.

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I don’t think you’re off per-se. Some assets could be listed and/or have a major shift in liquidity due to institutional interest which would warrant a shorter-term decision, but that also could have its own down side to react to these things.

One example is institution-A wants to come in and be a market marker of some sort for a collateral or stable not listed.

Even in this example, ample time and analysis would probably need to be done by governance in order to make sure it’s a deal everyone wants.

Agree that too many collaterals being onboarded at once could get hefty - maybe there’s a limit per term and that gets put to a vote?

Good thought provoking questions!

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Yeah I think there are a lot of options. But if you’re optimizing for governance participation, scheduling may be a lever. Or it could be completely ineffectual. It would be worth checking in on the histories of AAVE and MakerDAO for reference.

So I think it’s worth listing the factors that would make a successful Governance process.

  • High Participation Rate (how many holders vote / how many holders exist)
  • Incentivizes decisions that are to the benefit the protocol, it’s users and token holders
  • Disincentivize decisions that are primarily beneficial to a minority subset of holders, users or other parties
  • Rigorous community consideration and debate to expose as many externalities as reasonably possible.

I’m sure there’s others but that is what comes to mind. I’d love to hear more. I’m sure there are a lot of potential factors to optimize for.

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This is an interesting thread, thanks all! A few comments…

Remember that collateral assets are only a subset of loanable assets. We can make markets in all kinds of wacky assets, while only accepting usdc, sol, btc and eth as collateral.

Transparency will be important, so we should have quality analytics. The devs will naturally lead this at first, I expect. The community should hold the devs to high standards for data and dashboards about the state of the protocol. These will be good for participation, and a source of new ideas.

Maybe the first round or two of future collateral onboarding will be discrete events in practice. I can imagine us taking a decision on some set of collateral tokens as part of an upgrade process.

At other times it will make sense to move quickly. Ideally the community would be able to gather its attention and act decisively if an interesting opportunity comes along.

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Ah yeah! I totally forgot this. :sweat_smile:

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I think before adding other strange collaterals, we need to carefully evaluate its risks to avoid the risk of manipulative liquidation that happened before xvs.

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Yes - agreed. Setting risk params that everyone agrees on is a critical next step. Coming soon from our team unless someone here wants to take a first crack at it :slight_smile:

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Engaging the community is something that we should consider having, so as to keep us updated on what is currently being worked on, and for us to provide feedback on that.

I think regular community calls (once every 2 weeks?) would go a long way for that!

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I like that idea as well.

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This can be done. Fortnightly might be intense for us in the short term, given the current workload. @jrmoreau, @adamdelsol what do you guys think? I’d happily join for community chat / Q&A.

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Yeah this is a great idea! Maybe we start off monthly? I’m personally a fan of starting with less meeting frequency and only increasing when it becomes obvious we need to meet more regularly.

We could get a high level update from the Engineering team and some time for Q&A. I’m happy to coordinate with @eyevzz on this but if anyone else has interest in being involved, please let me know!

We could also use someone to take notes and collect community questions. @Rion since you expressed interest in the Governance Scribe program, this would definitely be a step in that direction.

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Sounds perfect. I’m down.

That sounds awesome!

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This is a feasible and relatively mature idea.

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Community Q&A has gotta happen. We’ll make a point of it a day or two after mainnet launches (soon).

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