Dear Panthers,

In an impressive milestone, the Panther community has begun working on setting an independently-designed framework for self-governance.

As several Panther community members have articulated, the current framework, detailed below, has served us well. It released Panther’s v0.5, LaunchDAO, and paved the way for many protocol-level changes that are integral in our road toward v1.

However, this framework was bootstrapped through conversations between Panther founding contributors and community members rather than formally established by the DAO. To take a new decentralization leap, the existing process needs to be redesigned, formalized, and voted upon by the community, ensuring that it aligns with the values and principles of the Panther DAO. This will give way to a new era for the Panther DAO, where the community can collectively shape and direct the future of the platform.

Noticing this, and in the spirit of collaboration with the community to aid its independent discussions, we have put together this article to discuss some best practices on governance frameworks. We will delve into Panther’s existing governance structure, try to provide guidance about the process of progressive decentralization, and review the ethos of both Panther and Decentralized Autonomous Organizations.

Whether you're a current member of the Panther community or just curious about how DAOs operate, this article is a must-read for understanding the intricacies of decentralized governance on Panther Protocol. Please take this article as what it’s meant: guidance to explore the limitless possibilities of decentralized governance.

Why is the Panther DAO so important for the project?

DAOs in a moving and complex crypto ecosystem

Decentralized autonomous organizations, or DAOs, are a relatively new (or at least newly popularized) concept. At their core, DAOs are a form of decentralized governance where decision-making power is distributed among a community of stakeholders rather than being centralized in a single entity. This structure is re-thinking how organizations can operate and enabling the launch of truly decentralized, permissionless platforms that resonate with crypto’s original ethos.

One of the key principles behind DAOs is the "wisdom of the masses" — the idea that a diverse group of individuals working together can make better decisions than a single leader or small group. This is particularly important for Panther, as the project is focused on creating a fully decentralized ecosystem that is open and accessible to all. By giving community members a say in how the protocol is run, Panther can tap into the collective knowledge and experience of its stakeholders, which leads to more innovative and effective solutions.

Panther aims to be censorship-resistant while operating in what's likely the most censorable space in crypto. In light of recent censorship attacks on the DeFi ecosystem, it is crucial for Panther to clarify that although it always has compliance in mind, the DAO serves to protect the project from attempts and from actions that would hinder the community’s autonomy. This is a tricky but achievable goal, as Panther's decentralized architecture enables everything, from the front- to the back-end to be hosted in a decentralized way.

However, it's important to note that decentralized governance is not a set-it-and-forget-it solution. In order to be successful, DAOs like Panther Protocol must adhere to certain values and principles. For example, it is critical that the governance structure is transparent, accountable, sticks to the project’s principles, and fair, and is almost always an ongoing process.

Before discussing how the Panther community could set such a framework for itself, let’s take a look at how Panther achieved its current degree of decentralization.

Panther’s road to decentralization (and the importance of progressive decentralization)

Progressive decentralization (we already devoted a whole article to this!) is a core principle at Panther and a key aspect of its development process.

This is particularly important during the initial stages of project development, where the main focus lies in delivering the roadmap and developing the protocol. New projects need to be somewhat centralized in order to effectively launch their initial protocol. However, as the project grows and matures, and to preserve the qualities outlined above, it is important to build the organization’s censorship resistance. By opening up decision-making power to the community, Panther can ensure that the community is truly in control of the organization and that Panther’s values of privacy, security, innovation, and transparency are accurately represented.

Panther has been implementing this approach by first focusing on building a strong foundation through its community and governance structure. Another way in which we implemented progressive decentralization was through the Panther LaunchDAO. Members of the Panther community directly participated in the launch and were rewarded for doing so. In addition to receiving a $PreZKP non-transferable token, which serves as a badge of honor, the members also received $ZKP tokens after the token launch.

After this, and building up to the launch of v0.5, Panther achieved a significantly higher level of decentralization through Panther Improvement Proposals (PIP) 6, 7, 8, 9, and 10. These proposals covered everything –from democratic procedures related to who is allowed to vote on DAO proposals under certain circumstances to the release of code so that it could be deployed by anyone in the Panther community. PIP-9 and PIP-10 also formalized the terms for the staking program, giving the community a direct key to decide how a significant amount of funds would be distributed among stakers.

As outlined in our whitepaper, Panther is on a continuous path toward decentralization. This approach is by design, as the protocol focuses on building a strong foundation to support further development and evolution.

Panther’s current governance framework and its evolution

As we mentioned before, Panther’s governance framework developed with a very clear goal of making the project as decentralized as possible. This, along with community discussion and experimentation, helped bootstrap a framework rather than following a pre-developed plan.

For its framework, while Panther never attempted to re-invent the wheel (lots of projects have stake-to-vote frameworks, use Snapshot, proposals, etc.), its specifics have been largely shaped by what the community deems fair and effective in practice. This approach has led to a governance system that is still able to adapt and evolve as the needs of the community change.  

The current governance process for Panther starts with a basis on a pre-agreed consensus: Panther’s principles, ideas, and roadmap were established by its initial whitepaper and materials released along with it. By deciding to fund Panther’s development, community members agreed to the directions outlined by these materials. The steps leading to their application and execution, particularly in a moving context, however, are often brainstormed between members of Panther Ventures Limited –the leading Panther developer– and the Panther community using tools like Panther’s Discord, Telegram, and official discussion forum.

This common agreement is essential to preserving transparency and democracy within the platform. Let us now discuss some of the key roles and community tools that partake in it.

Proposals, staking, and Snapshot

The system detailed above was formalized before Panther’s launch with the establishment of Panther’s LaunchDAO, Snapshot page and initial staking solution.

Panther utilizes Snapshot as a way for community members to vote on proposals, such as those put forth through Panther Improvement Proposals (PIPs). PIPs cover a wide range of topics, from democratic procedures to code releases. They are an important tool for community members to voice their opinions and drive the direction of the protocol.

Once a proposal is published on Snapshot, it can be voted upon by the community. If the vote does not pass, no action is taken, preserving the community's power to make decisions about the platform's direction.

Snapshot is a powerful tool for DAOs. It allows projects to create proposals for users to vote on using cryptocurrency without incurring fees. This allows for a cost-efficient and accessible way for DAOs to engage with their audience and make decisions based on their collective input. Snapshot takes a picture (or “snapshot”) of the blockchain at the time of the vote to determine the number of tokens each address has and executes the outcome decided by the vote. This is beneficial as it eliminates the need to deploy tokens and pay transaction fees. It also prevents vote inflation by ensuring that tokens cannot be moved around and used to vote multiple times. Additionally, proposals can also have code attached to them, and if "yes" wins, the code gets automatically executed.

For a user to be able to vote on a Panther proposal within Snapshot, they must first ensure they have a wallet account that meets voting criteria (see below). Once they do, they can use these tokens to vote on any open proposals. As Snapshot utilizes off-chain vote signaling, votes are feeless and do not require users to directly interact with their tokens to vote.

Moderators, Authors, and Admins

The ongoing process of using Discord and Telegram to brainstorm with the community before issuing proposals changed with the release of Panther’s Discourse forum (prominently featuring community members who are unrelated to PVL as moderators) and PIP-8.

PIP-8 set the stage for advancing Panther’s decentralization by putting more responsibilities in the hands of the Panther community. Thanks to it, forum moderators can review a proposal and, if approved, move it to be put into Snapshot by a Snapshot Author, a new role introduced alongisde Admins. Authors are community members with the ability to post PIPs to this platform, while Admins are responsible for maintaining the integrity of the platform's governance structure by enforcing DAO governance rules and values.

Another achievement of PIP-8 was defining a process of electing future Authors and Admins. PIP-8 sought to enhance decentralization by augmenting the number of Snapshot Authors and Admins within the Panther Protocol ecosystem. The proposal successfully onboarded two Panther contributors and six community members as Snapshot Authors, empowered with the ability to propose changes on Snapshot.org. Furthermore, two new community-elected Admin accounts were added as signatories on the Gnosis Safe multisig wallet, which serves as the sole admin account for Panther's Snapshot.org space. The multisig wallet operates under a "2-out-of-3" signing policy, ensuring that changes to the Snapshot.org space's settings are approved by at least two of the three whitelisted Admins.

PIP-8 was a concerted effort to increase community participation in the protocol's governance and eliminate potential points of failure. The introduction of new Authors and Admins, as well as the implementation of a multisig for Admin actions, served to bolster the protocol's resilience and decision-making process. Community members can nominate themselves or others for the role. These newly appointed permissions will remain valid for six months, after which the community will propose and vote on a fresh set of nominees to continue in the role. This ensures that the platform's leadership is continually meeting the needs and expectations of the community.

Voting Logic

Now that we’ve covered how the Panther DAO’s democratic process works, it’s time to look at how votes accrue in favor or against proposals.

PIP-7, also known as the Improved Voting Logic proposal, brought significant changes and improvements to the governance process’ robustness. This proposal introduced a fallback voting logic at times when tokens staked are not sufficient for the community to be thoroughly represented.

The Panther DAO originally used only a "stake-to-vote" mechanism, where token holders could stake their tokens to gain voting rights. However, this system struggled at times when the staking contract didn’t issue rewards. As such, a "hold-to-vote" mechanism was implemented as a fallback. This allowed token holders to vote just by holding a certain amount of tokens, regardless of whether they had staked them, whenever the contract wasn’t issuing rewards.

After the launch of v0.5, the "stake-to-vote" mechanism was once again the primary method of voting, but with a more robust system, thanks to the improvements made by PIP-7. However, the fallback mechanism will continue in place, as it allows for a wider community representation in the voting process.

In Summary

The Panther DAO, in its relatively short existence, has navigated its way through a trial-and-error process to establish its democratic procedures. Panther is more decentralized now than ever as a consequence.

Despite initial challenges, along with Panther contributors, the DAO has successfully created a system that allows for equitable participation and decision-making among its members. As the Panther DAO continues to grow and evolve, it’s now time for it to review its practices and procedures to ensure its longevity and stability. This is a testament to the resilience and adaptability of DAOs as a whole and serves as a model for other organizations seeking to establish democratic processes in a decentralized environment.

In an upcoming article, we’ll write about the process of creating governance frameworks that are self-enforceable.

Stay tuned!

About Panther

Panther is a decentralized protocol that enables interoperable privacy in DeFi using zero-knowledge proofs.

Users can mint fully-collateralized, composable tokens called zAssets, which can be used to execute private, trusted DeFi transactions across multiple blockchains.

Panther helps investors protect their personal financial data and trading strategies, and provides financial institutions with a clear path to compliantly participate in DeFi.

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