Kava 5 Upgrade Vote – Proposal #40
Decentralized finance is for the people to take back control of their financial well-beings; however, the people will actually have to participate in governance to ensure its place in society moving forward. Take for example, the governance vote on the Kava DeFi platform that concluded on 3/31/21. This vote was unable to reach quorum as the minimum amount of votes cast did not reach the required threshold. The failure to garner enough votes is preventing the upgrade of the Kava Mainnet to its fifth version. Now, why is this an important consideration for blockchains moving forward? If communities do not participate in governance, then what was the point of creating DeFi in the first place?
DeFi governance is a double-edged sword. It relies on the developers, firms, and foundations to make governance voting readily available to its user base. And it also requires the users (or citizens if you will) to pay attention and give a damn about the financial ecosystem they are participating in. I don’t know who to put the blame on for the failed quorum in the Kava 5 vote, but I poked around the Kava website, Medium blog, and Youtube channel, which resulted in me finding zero mentions of the Kava 5 vote. I did find mentions of the voting period on the Kava twitter, but only one tweet really pushed users to go vote. This seems like a communication breakdown from the Kava team mixed with poor participation from users. But where does this leave us in regards to governance with the Flare Network?
Prop #40 to upgrade to Kava 5 did not pass as voter quorum was not reached. As a result, Kava didn't upgrade today.
Kava is a truly decentralized DeFi platform, today is a testament to that. $KAVA holders must vote for the software to upgrade
Next upgrade prop will be out today pic.twitter.com/2jXMhv0Kkc
— Kava Labs (@kava_labs) March 31, 2021
Flare Network Governance
Spark token holders will make up the entire governance of the Flare Network, Spark token, and Flare Time Series Oracle. To avoid the same pitfalls Kava just faced, Flare needs the citizens of the network to care about its future and see it more than just a short-term scheme to make money. Flare Network offers a solution for citizens of the world to take back control of their finances in a secure, scalable, and trustless manner. At Flare’s outset, this will require Spark holders to understand their voting power and decide how to best deploy it.
The Flare Network utilizes a novel voting mechanism termed a liquid democracy in order to reach consensus on network proposals. Liquid democracy on Flare may offer one of the truest and most flexible democratic voting schemes blockchain has seen. Citizens of a liquid democracy are able to either vote directly on proposals or delegate their votes to another trusted party on a vote by vote basis. Just imagine for a moment if you could choose your representatives for every bill voted on by your government. This system is extremely powerful in bringing meaning back to the individual vote. Additionally, each Spark token provides the holder with one detachable governance vote. This introduces an economic incentive to voting as the larger stake in Spark tokens an user has, the greater impact they will possess in governance voting.
You may be worrying that whales will have their way with the Flare Network governance skewing the profits away from the common user, but you needn’t worry as the distribution of Spark tokens has been done in a manner to enable an even enough spread across the network. One safeguard was to airdrop Spark to an already decentralized blockchain, the XRP Ledger, which Flare Network is a utility fork off of. On top of this, there is a 1B whale cap for any individuals owning more than 1B XRP to cap the amount of Spark one party can receive. Also, all Ripple XRP holdings have been disqualified from the airdrop too. In addition to the method behind the initial Spark distribution, the Spark token is inflationary, which sees newly minted Spark being delivered through the FTSO in the form of rewards to participants. The FTSO inflation rewards allow for an even distribution of new Spark being delivered to actual participants in the network, who are then more likely to participate in governance voting moving forward.
The Flare Whitepaper details all of the parameters that may be voted on by Spark holders, which require varying majorities to reach a quorum depending on the potential impact the changes could make. While this setup is all fine and dandy, what needs to happen for the Flare Network to be able to adapt to the increasingly complex technologies and ideas of the future? A true community needs to form made up of retail and institutional investors, developers, and the Flare Foundation. Fortunately, the Flare Foundation is being front-loaded with 20B Spark in order to fund it operations, which will result in the foundation being more of a steward of the network rather than a true participant. This derives from the fact that the foundation cannot use their Spark in any other way than basically as cash to fund operations and develop the Flare Network. Therefore, the Flare Foundation will be a crucial member of the network as they will be responsible for education and communication.
Flare is creating a truly global and decentralized network for all. We need to act as citizens for its future success. This includes voter participation either directly or indirectly via delegation. Additionally, it will require users to be informed on which DeFi products allow them to still vote while in use. And then finally, we are going to have to communicate with each other through mediums like twitter, telegram, youtube, etc. to determine the most prudent decisions for all stakeholders in the network. And to wrap it up, I will leave you all with the below.
Do your part! Become a Flare citizen today!