Liquid Democracy and the AMPnet Governance Council

The core structure of the AMPnet protocol governance model is driven by continuous liquid democracy. This democratic model allows voting stakeholders to dedicate or vest their voting power in delegates, or retain their voting power for themselves.

5 min readJun 15, 2021

We have given an insight into how decentralized networks handle governance, what are the main issues and how AMPnet’s ecosystem solves them with its governance model in the previous article. In this one, you will find out how stakeholders are given voting power and what changes it brings to increase the democratization of the whole system.

Voting and staking

In practice, network participants can either vote directly on proposals or changes to the AMPnet ecosystem or stake AMPnet AAPX tokens in the name of other network participants. The candidates with the most AAPX tokens staked in their name by token holders are automatically elected to the AMPnet governance council.

This model allows passive token holders who would prefer to abstain from directly interacting with the voting process to participate in the governance structure bypassing their voting power to a delegate they feel best represents their interest.

The AMP governance council consists of members that are elected through a continuous voting mechanism — AAPX token holders are able to either revoke or re-stake their vote to another candidate at any time, which allows the AMPnet community to rapidly elect new council member candidates.

Anti-Pareto Scaling and Weighted Voting

While the AMPnet governance council addresses the issue of voter apathy present within blockchain governance systems, it doesn’t directly overcome the problem of stake accumulation and runaway voting power.

In many blockchain governance systems, the votes of a small minority of token holders outweigh the voting power of the blockchain community at large. To prevent the dominance of council members and eliminate the possibility of indiscriminate control over the AMPnet ecosystem, the AMPnet governance model integrates an “Anti-Pareto Scaling” feature.

This mechanism alters the weight of votes within the AMPnet governance structure when the voting system becomes either too centralized or too distributed, minimizing the imbalance caused by rapid stake accumulation. For a more complex breakdown of the Anti-Pareto Scaling mechanism, see the AMPnet White paper.

Members of the governance council vote as representatives of the token holders who have staked their AAPX tokens. The power wielded by each elected council member is based on the total amount AAPX staked to them and is adjusted by the Anti-Pareto scaling function.

AAPX token holders who choose to vote directly without staking their AAPX to a candidate are able to vote directly but are still subject to the Anti-Pareto scaling function.

What Do Council Members and AAPX Token Holders Vote On?

Now we’ve outlined the way voting and governance works within the AMPnet ecosystem, it’s important to identify what network participants actually vote on.

The AMPnet governance council and AAPX token holders vote on proposals submitted by network participants. Any AAPX token holder can submit a proposal, which can present a wide range of different changes.

Proposals may outline specific actions, such as changes to network fees, liquidation ratios, or mandatory reserve requirements. Other proposals may present changes to the AMPnet protocol itself. It’s also possible for proposals to suggest changes to the AMPnet governance model, such as altering the amount of inequality present in the voting system itself that will trigger the Anti-Pareto Scaling mechanism outlined above.

In addition to voting on protocol or governance changes, the AMPnet council also votes on important elements of the AMPnet protocol dispute resolution process. A tokenizer that fails an audit, for example, will be reviewed by the governance council, who may find the tokenizer malicious or incompetent and remove the tokenizer from the platform, reimbursing token holders with reserve capital.

Similarly, the AMPnet governance council is responsible for reviewing auditors forwarded by the auditor slashing process. The governance council has the final say in reviewing slashed auditors, determining whether an auditor will be removed from the platform in the case of incompetence.

Accepting or denying proposals is straightforward — proposals are accepted with a simple majority vote of 50% + 1 vote or more.

Who Can Submit a Proposal & How Often Are Proposals Voted on?

Proposals are submitted by any AAPX token holder or governance council member. Anybody that holds AAPX tokens is able to submit a proposal by staking a specific amount of AAPX tokens into a proposal contract.

The importance of a proposal is determined by the amount of AAPX staked by the party submitting the proposal. The AMPnet governance model operates on a weekly voting cycle that addresses two proposals each cycle — one public proposal submitted by the public, and one proposal submitted by the AMPnet governance council.

It’s important to note that governance council members don’t need to stake AAPX in order to submit a proposal — council proposals are accepted automatically, and are voted on in chronological order with the earliest submitted council proposals voted on first.

Proposals submitted by the public are addressed based on stake — the proposal with the highest AAPX stake will be selected to be voted on within a voting cycle.

All variables within the voting process, such as the amount of AAPX stake required to submit a proposal or the length of the voting, can be changed through the governance model itself.

Key Takeaways

AMPnet’s governance model addresses and overcomes the key challenges faced by on-chain governance by allowing passive token holders to elect council members to represent them while implementing a community-managed vote weighting system to prevent the centralization of the voting power.

In summary:

  • AAPX token holders vote on proposals directly or elect governance council members to vote on their behalf
  • Any AAPX token holder can submit a proposal by staking AAPX
  • The AMPnet governance model integrates a weighted voting system to prevent runaway voter power
  • The AMPnet governance council votes on both governance issues and conflict resolution within the AMPnet ecosystem
  • Every element of the AMPnet governance system is mutable and can be altered by the AAPX community through the governance model itself

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