Hats.finance is steered by the power vested in the $HAT token. As of writing this, governance powers are held by the members of Hats multisig.
Looking ahead, we plan to shift to a decentralized autonomous organization (DAO) governance structure, enabling all $HAT token holders to have a say in the protocol's future. This transition is slated to occur once a substantial number of tokens are community-owned, approximately 90 days following the initiation of liquidity mining. At this juncture, we plan to implement on-chain or off-chain voting mechanisms, such as Snapshot or Tally. We are still exploring the best approach and would greatly value community input.
This initial grace period is designed to give our burgeoning Hats community ample time to grasp the intricacies of the governance system, to initiate dialogues around potential proposals, and to conceptualize how to utilize the community-managed treasury. With endless possibilities at our disposal, we're excited to see a wide array of experimentation, from ecosystem grants to public goods funding, all of which could further bolster Hats ecosystem growth.
A further key aspect of governance within the Hats protocol is that it is devised to operate on dual levels. We have Hats-wide governance that invites participation from all token holders. In addition, we have vault-specific governance that exclusively involves depositors, enabling them to influence decisions directly linked to their invested vaults.
A unique aspect of our reward mechanism is the inclusion of an additional $HAT token reward for successfully disclosed vulnerabilities. This reward, secured via the approve function, allows Hats governance to receive a share of each disclosed vulnerability across all projects, further incentivizing hackers and auditors to contribute to our ecosystem's security.
Anticipated General Governance Proposal Process
At Hats Finance, we see our governance system as a living organism that will be ever-evolving and always improving. The following elucidates our anticipated governance proposal process. To gain more insight into our vision for Hats Finance, do explore our blog posts and interact with our vibrant community on Discord or our support forums.
1. Proposal Origination: Any community member can take the initiative to draft proposals. These can range from fund allocation, changes to the governance structure, or decisions impacting the operational facet of the organization.
2. Proposal Elaboration: Once a proposal is live, it's time for community discourse. Members are encouraged to discuss, critique, and offer feedback on the proposal via our forum.
3. Voting: After the initial round of feedback is evaluated and incorporated, a forum poll can be launched to gauge the community's sentiment towards the proposal. This serves as a preliminary temperature check before the proposal ascends to the snapshot phase. At this stage, a formal $HAT weighted vote is conducted. Please note: The proposal may progress to this phase without full community endorsement, but the likelihood of success is diminished if the initial temperature check was either unsuccessful or bypassed. A snapshot vote is considered successful if a majority votes YES and the minimum quorum of YES votes is met.
4. Proposal Implementation: If the proposal garners sufficient votes in favor, the linked DAO transactions can be autonomously triggered by any participant and will be executed.
5. Progress Reports: The teams propelling the proposal are obliged to keep the community informed about the progress and effect of the implemented proposal. This is achieved through regular updates posted on our platforms.
Our Hats Finance governance process is a carefully crafted system, designed with transparency at its core and an ever-open door for new contributors. Decentralization isn't just a feature for us, it's our guiding philosophy.
An Evolving Governance Vision
This proposition lays the foundation for an innovative and adaptable form of decentralized governance, addressing two pivotal needs: 1) ensuring clear control for $HAT holders and 2) empowering the Hats Finance team to operate with the rapid response time it is committed to upholding.
We hold the belief that Decentralized Autonomous Organizations (DAOs) are in their early stages, and there remains a vast landscape of knowledge to be explored. While the prospect of entirely on-chain, trustless governance is compelling, we are aware that it's not yet fully realized. Inherent to each DAO execution is a team of dependable contributors. Our governance model strives to accentuate these trusted relationships, granting $HAT holders the capacity to directly shape them while also allowing for the autonomy of the core team and for committees hosted within the Hats ecosystem.