With so much innovation and experimentation surrounding governance structures, we’d like to share our initial governance plans for the Balanced DAO.
We’ve introduced the concept of “worker tokens”, a simple and clearly defined governance process, and a fund of Balance Tokens owned and operated by token holders.
We’ve added these plans to the Balance Token economics section of the Balanced white paper.
Balanced worker tokens
Balanced worker tokens (BALW) are entitled to a share of Balance Token inflation. At launch, and unless Balance Token holders vote otherwise, Balanced worker tokens will be entitled to 20% of the Balance Token inflation.
Balanced worker tokens can be transferred by the BALW holders or through a vote by BALN holders. There will only be 100 BALW, with the initial allocation split evenly between the initial workers: ICX Station, iBriz-ICONosphere, PARROT9, Mousebelt, and ICON DAO.
The responsibilities and governance power of Balance Token holders include, but are not limited to:
- Adjusting fees
- Adjusting interest rates
- Adjusting inflation rates
- Adjusting inflation allocations
- Adjusting the unstaking period of Balance Tokens
- Adjusting Loan to Value (collateral ratio) requirements
- Adjusting the governance process itself
- Transferring Balanced worker tokens (BALW)
- Spending the Balance Tokens held in the DAO fund
- Adding new pegged assets to the protocol
The Balanced governance process will start off simple, but is subject to change by token holders:
- More than 66% of participating Balance Tokens must vote in favor
- At least 20% of staked Balance Tokens must participate in a vote
- All votes will last for at least 5 days
At launch, and unless Balance Token holders vote otherwise, the DAO fund will be entitled to 10% of the Balance Token inflation. The Balance Tokens held in the DAO fund will be spendable at the discretion of BALN holders and subject to the same governance process as any other decision. We expect the DAO fund to be spent on specific initiatives, such as promotions and smart contract audits.
While Balanced offers a lot of benefits, it’s important that you understand the risks:
- Smart contract risk: We will have audited contracts, but there’s always the possibility of a bug or vulnerability in a smart contract that compromises user funds. It would not be possible to recover them.
- Liquidation risk: If your collateralization ratio drops below 150%, you will lose all of your collateral, but you will get to keep any borrowed assets.
- Rebalancing risk: When you deposit ICX into Balanced, it’s used to keep the value of Balanced pegged assets stable (i.e. keeping bnUSD pegged to $1). Some of your collateral will be sold over time, but it will also lower your debt by an equal amount.
If you’re confused about any of these risks, talk to us on Telegram.