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Why is Cosmos governance more rigorous and healthy? Participant Quick Start Manual
introduce
The Cosmos ecosystem is known for its "dramas per second" (DPS), which at first glance might not seem like a good thing. But if you dig a little deeper, you'll find the source of this drama - many people with different backgrounds and different goals trying to steer the universe in their preferred direction. So how do so many different players lead together? Who is in control?
In reality, no one is in control. Let's take a deeper look.
Governance
The Cosmos blockchain comes pre-packaged with a governance system - a decentralized decision-making process. At the protocol level, these decisions need to be expressed as proposals, which can be created without permission, voted on by validators and delegators, and submitted to the blockchain where they can be executed by validators.
Proposals can currently take two forms: code-based or text-based. Which type of proposal a user should choose depends on what they want to achieve with the proposal.
1. Code-based proposal
For example, suppose the Cosmos Hub community wants to increase the number of active validators from 175 to 200. Since this value is an on-chain parameter, changing it requires a simple code-based proposal. If successfully passed, the code in the proposal will be automatically adopted and changed by all validators of the next block. In fact, you can use Mintscan¹ or another browser to see all the parameters that can be adjusted through governance.
Blockchains enabled with CosmWasm, the Cosmos chain’s smart contract platform, can achieve more through code-based governance.
Notably, chains like Osmosis, Juno, and Stargaze can automate more complex software upgrades by using CosmWasm.
2. Text-Based Proposals
Users can also submit text-based proposals outlining in plain language what should happen. This has many uses, including:
It is worth noting that among crypto assets, Cosmos is one of the few ecosystems with an on-chain voting system. Currently, its functionality is generally considered somewhat limited, but efforts are underway to expand it.
An interesting example is when Osmosis wanted to start listing Ethereum assets on its decentralized exchange, it needed to choose a bridge (since Ethereum does not have IBC enabled) to allow two-way transfer of assets between the two blockchains transfer.
The Osmosis team created a series of text-based proposals that allow users to indicate which bridge they prefer. Proposals for the Axelar, Gravity, Nomad, and Wormhole bridges all went through the governance process, and since the Axelar bridge received the most support, it was chosen as the default bridge from Ethereum to Osmosis.
Proposal Lifecycle
New proposals must successfully advance through four "gates", meeting four different criteria, before they can pass and be executed by a set of validators. You can view the details of these standards in the official SDK documentation². Each Cosmos blockchain can customize its governance process, and there are many adjustable on-chain parameters, but in this article, I will use the Cosmos Hub process and parameters at the time of writing. You can check the governance parameters of your favorite Cosmos blockchains on Mintscan.
1. Creation and Deposit
Every proposal must be funded through a deposit, a spam prevention measure that requires a certain amount of tokens to be held in escrow. Currently, the minimum deposit requirement for the Cosmos Hub is 250 ATOMs. Any proposal must meet this minimum deposit within 14 days (another on-chain parameter, called the maximum deposit period) before it can enter the voting stage.
If I want to create a proposal on the Cosmos Hub, I have two options:
However, 250 ATOM is not a small amount and for many users, affording it up front could be a challenge. Fortunately, Cosmos allows many different users to contribute to deposits for any given proposal. If I can't afford 250 ATOM alone, I can seek support from the community.
Be careful though - if a proposal doesn't meet the minimum deposit within 14 days, the entire deposit will be burned and thus removed entirely. This is the main incentive to stop fraudsters and other bad actors from creating malicious proposals.
Let's say my proposal successfully meets the minimum deposit. It has passed the first threshold and now enters the voting period.
2. Voting period
During voting, validators and delegators can vote on proposals. The length of the voting period is also an on-chain parameter, currently 14 days on the Cosmos Hub. When governance participants vote, they have four options:
The "pro" and "contra" options are relatively easy to understand:
"Yes" usually indicates that you wish to implement the content of the proposal
"Against" means you disagree.
"Veto" is perhaps one of the more controversial options in Cosmos governance, and it means that you strongly disagree with the proposal and believe that the proposal creator intended to cause harm to the community. In the next section, we will discuss the details of this option in detail.
Finally, "abstain" can be used to indicate no strong preference for a proposal, but wishes to participate in the voting process.
During voting, proposals must pass the last three thresholds before they can be executed by the validator team. Let's look at each threshold.
3.Legal number
The second threshold that my proposal must pass is that at least 40% of all staked ATOMs must vote on the proposal. When this requirement is met, it is called a quorum. This percentage is also an adjustable on-chain parameter, so it may change in the future.
If a quorum is not reached (i.e. less than 40% of all staked ATOMs vote on it), the deposit will be automatically returned to the deposit address and the proposal will not proceed.
4. Veto
Once it is determined that a proposal has reached a quorum, all votes must be counted within a two-week period.
If at the end of the voting period, the proportion of options that are "rejected" exceeds 33.4% (rejection threshold, another on-chain parameter), the proposal will not pass and the deposit will be burned.
This mechanism allows the community to punish actors they deem malicious or intent on harming the health of the blockchain. No matter what I want to achieve with my proposal, I need to make sure the community doesn't see it as inappropriate, lest I lose my deposit.
Assuming I get enough support, voters won't reject my proposal.
5. Pass the threshold
Finally, the last big hurdle to my proposal is, do people want it to pass? This is determined by the threshold parameter, which is currently 50% on the Cosmos Hub. To determine this, we use the following formula:
In other words, if the percentage of "Yes" votes reaches 50% or higher (excluding "Abstention" votes), the proposal will pass.
If the proposal does not meet this threshold, the proposal will not pass and the deposit will be automatically returned to the deposit address. The following is the entire flow of the Cosmos Hub at the time of writing:
participate
Now that you understand how a proposal is created on-chain, let's go back to your role as a normal user: you are staking some ATOMs, and then create a proposal. Ideally, you will:
If you choose not to vote, the votes of your staked ATMs will be determined by the validators you delegate, but you can always override their votes with your own votes. Even if you agree with your validators, it is beneficial to vote yourself.
It's worth noting that this voting isn't based on "people" (because the software doesn't know which addresses are controlled by the same person or people). Instead, votes are weighted proportional to the amount of stake held.
For example, if 100 ATOMs voted on a proposal, and Notional has 10 ATOMs staked, our vote will count for 10%. Users with only 1 stake will only have 1% voting power.
in conclusion
Cosmos is more political than most chains due to delegation and governance mechanisms. This can be daunting, but motivated users will help keep the cross-chain alive and healthy, allowing it to thrive for decades to come.
references
[1] : Mintscan Blockchain Explorer,
[2] : Cosmos SDK Documentation, Governance Module: