Introducing: Moonwell Apollo Governance

Published in

lunartechfdn

11 min readOct 25, 2022

On August 22, 2022, Moonwell Governance was made the administrator of the Moonwell Artemis protocol. Since that time, the Moonwell community has rallied together to spark lively discussions on the Governance Forum, expressed sentiment through snapshot signal voting, and successfully executed multiple on-chain governance proposals!

Today, we’re proud to announce that Moonwell Apollo has followed in the footsteps of its sister protocol and decentralized through governance! This latest development not only fortifies Moonwell Apollo by removing single points of failure but also empowers the community to propose and ratify changes they believe are in the best interest of the protocol.

MFAM, The Moonwell Apollo Governance Token

Governance rights over the Moonwell Apollo protocol are derived from the MFAM governance token, a standard ERC-20 on the Moonriver network. One must delegate their tokens in order to activate MFAM’s inherent governance rights and voting power. In Moonwell Governance, 1 delegated MFAM token is equal to 1 vote.

Delegate MFAM to vote on and propose changes to Moonwell Apollo

MFAM token holders can delegate their voting rights to the address of their choice, either to themselves or to other wallets within the community. This opens a number of interesting possibilities — such as smaller coalitions of voters banding together to get a proposal enacted, or groups of MFAM holders delegating their votes to a trusted representative that will advocate for their interests. To delegate your MFAM, simply visit the Moonwell Apollo dApp. If you are holding un-delegated MFAM, you will be automatically prompted to delegate.

MFAM token holders can also choose to help secure the Moonwell protocol by staking MFAM in the Safety Module. Staked MFAM tokens, or stkMFAM, carry the same governance rights as native MFAM, and 1 stkMFAM held in a voting wallet imbues the same voting power as 1 MFAM token. These tokens are automatically self-delegated and can not be delegated to an alternate wallet address.

Moonwell Improvement Proposals

Through the proposal process, the Moonwell community is able to recommend, discuss, vote upon and implement changes to the protocol without requiring the assistance of any sole individual or contributing team. The vehicle used to implement these changes to the Moonwell protocol is known as a Moonwell Improvement Proposal, or MIP. In Moonwell Apollo Governance, these proposals are created and voted upon by those with delegated MFAM and contain code that is executed on-chain following their successful passage.

Moonwell Governance Forum

In general, proposals should start with a post on the Moonwell Governance Forum. Anyone can register for an account on the forum, and all discussions are publicly available. The community welcomes thoughtful proposals and discourse about those proposals from everyone, whether or not they are a MFAM token holder.

The Governance Forum is also where members of the community can nominate themselves as a delegate and make their case to the community as to why they should represent others in Moonwell Governance. Delegates play a vital role in Moonwell Governance, as many community members may not be able to dedicate sufficient time and energy to stay informed of all the latest proposals, forum discussions, and protocol developments. Delegating their voting power enables these members to still have a say in governance, without being intimately involved in the day-to-day workings of the DAO. To nominate yourself as a delegate or find another individual or entity to delegate to, please visit the Delegation Pitch category of the Governance Forum.

Snapshot Voting

For proposals that will result in substantial changes to the Moonwell protocol, it is recommended that the proposal author first gauges community interest by capturing a “signaling vote.” Signaling votes are non-binding since they don’t have the ability to directly change the protocol; however, they are a valuable means of measuring sentiment on substantive issues as well as garnering feedback to iterate and refine original proposal ideas. This process also enables the community to capture interest in proposals that might not require changes to the Moonwell protocol directly, for example, proposals that require humans to take some action in the real world, like engaging or providing a grant to an expert contractor to perform work that benefits the Moonwell community.

A snapshot voting portal is now live, where signaling proposals can be created by any MFAM holder or delegate that meets the threshold of 250,000 votes (i.e., 250,000 MFAM tokens). Signaling proposals will be considered to have passed if they receive a majority of Yay votes and reach a minimum quorum of 5,000,000 votes (i.e., 5,000,000 MFAM tokens). These thresholds can be modified in the future by means of a community vote.

On Chain Voting

A Moonwell Improvement Proposal possesses both a description and code that will be executed on the Moonriver network following its passage. The Moonwell Governance Portal aims to make it easy to browse and vote upon MIPs that are currently undergoing active voting. The full proposal process is illustrated in the diagram below. Note that this is different from snapshot voting mentioned above, and has a higher proposal creation threshold, as the vote is binding on chain.

Proposal Creation

A Moonwell Improvement Proposal can be created by any wallet that has enough voting power to meet the creation threshold, which is currently set at 500,000 votes (i.e., 500,000 MFAM tokens). The proposal author must submit the description and code, which consists of a set of up to 100 operations that will be executed if the proposal passes. Once the proposal has been created, the active voting period begins after a short delay of 60 seconds.

Voting Period

The initial voting period is 3 days, during which any wallet with voting privileges (i.e., any wallet with MFAM tokens or stkMFAM) can register a vote of Yay, Nay, or Abstain. At the end of the voting period, a proposal will be considered to have succeeded if it meets the following criteria: it has received a majority of Yay votes (i.e., the number of Yay votes is greater than the number of Nay votes), and a quorum of at least 20,000,000 total votes* (i.e., 20,000,000 MFAM tokens). The quorum threshold includes all Yay, Nay, and Abstain votes, but Abstain votes will not be counted when determining whether the proposal has passed. Therefore it is possible for Abstain votes to assist a proposal in reaching quorum and passing successfully, even if the total proportion of Yay votes does not make up the majority of all votes cast.

*Please note that Moonwell Apollo Governance differs from Moonwell Artemis Governance in the fact that it utilizes a dynamic “floating quorum”. This feature is discussed in further detail in the Governance Parameters section below.

If a proposal does not reach both the quorum and Yay votes greater than Nay votes requirements during the 3-day voting period, it will be considered defeated and will not be executed.

Timelock

After a proposal succeeds, it will be queued in the Timelock, which introduces a mandatory 24-hour delay before the proposal will be executed. This is intended to give the community time to react to a proposal before it is executed.

Execution

Once the Timelock delay has elapsed the proposal can now be executed by any account on the Moonbeam network, at which point all of the operations included in the proposal will be performed.

Governance Parameters

It is important to note that the governance parameters outlined below can be modified by the community through the voting process. The entire governance system can even be replaced with a new smart contract through governance itself, so the Moonwell community can ultimately decide whether this system works, or whether another form of governance is optimal. In fact, these governance parameters are merely a baseline for the Moonwell community to test, iterate and refine over time.

The initial governance parameters are set as follows:

Snapshot/Signal voting
Proposal threshold (how many votes are required to create a proposal):
▹250,000 votes
Voting period (how long the proposal can be voted on):
▹3 days
Quorum (how many votes are required for the proposal to pass):
▹5,000,000 votes

Governance Proposals
Voting delay (how soon the voting period begins after a proposal is created):
▹1 minute
Proposal threshold (how many votes are required to create a proposal):
▹500,000 votes
Voting period (how long the proposal can be voted on):
▹3 days
Quorum (how many votes are required for the proposal to pass):
▹Floating, initially set at 20,000,000 votes

Floating Quorum

Moonwell Apollo Governance distinguishes itself from Moonwell Artemis Governance in the fact that it utilizes a dynamic “floating quorum”. Recall that quorum represents the number of tokens that must vote for a proposal for it to pass, which is useful to enforce that a minimum set of voters have viewed a proposal before its execution.

In Artemis governance, quorum is a static number that is adjustable via a governance proposal. However, additional WELL tokens enter circulation every day as they are emitted from the Safety Module and core protocol. This means that a relatively high quorum today may be quite easy to reach in the future. Furthermore, while voters may adjust quorum, there is a risk that if the value is set too high, it can never be achieved, and thus further governance proposals cannot pass.

Apollo governance aims to fix this by providing a dynamic quorum. When a proposal closes, the quorum for future proposals is adjusted with a weighted average, such that quorum will increase or decrease. If quorum ever becomes too high, governance proposals will start failing and quorum will readjust to a more reasonable level. If there are more voters than the quorum requirement, the value will adjust upwards to account for the number of participants.

Specifically, floating quorum is defined with the following equation:

newQuorum = (0.8 * oldQuorum) + (0.2 * lastProposalVotes)

As an illustrated example, imagine that quorum is set at 100,000 MFAM. A proposal passes, and 200,000 MFAM of votes are cast on it. Quorum will then adjust to be 120,000 MFAM for the next proposal, calculated as:

newQuorum = (0.8 * oldQuorum) + (0.2 * lastProposalVotes)
newQuorum = (0.8 * 100,000) + (0.2 * 200,000)
newQuorum = (80,000) + (40,000) = 120,000

To keep quorum inside of some bounds (to provide minimum and maximum thresholds), “quorum caps” have been implemented. These are absolute values that quorum may not float above or below. These caps are able to be modified via a governance proposal.

Initial values for Apollo Governance are set as follows:

Initial Quorum: 20M MFAM (2% of Supply)
Upper Quorum Cap: 900M MFAM (90% of Supply)
Lower Quorum Cap: 10M MFAM (1% of Supply)

Governance Guardians

In the early days of governance there may come a time where, through some unpredictable and unknown bug or event outside the control of the Moonwell community, the governance system fails and the Moonwell Apollo protocol becomes “ungovernable”. To mitigate this risk, the Moonwell community has selected interim “Governance Guardians” through signal voting. These guardians have been selected for their expertise in DeFi and governance, and they have special powers that are designed to only be activated during an emergency that results in a failure of the Moonwell governance system: they can invoke a “break glass in case of an emergency” function that returns the administration of the Moonwell Apollo protocol back to the previous administrator.

The Governance Guardians have agreed to only invoke their powers in case of a serious bug or deadlock in the governance system — the type of scenarios that would be catastrophic to the proper functioning of the Moonwell protocol, such as being unable to pass or execute any governance proposals, and they can never veto or cancel a proposal they disagree with. If this were to ever occur, the administrator would deploy a new Governor contract and return control of the protocol to the MFAM token holders as soon as the threat has passed. The only actions performed during this hopefully never-occurring circumstance will be in the strict interest of restarting governance and restoring its proper function in line with the community’s intentions. It is the hope that the Moonwell community will work as a decentralized collective to monitor and stay vigilant with respect to Moonwell governance such that the Governance Guardians never have to invoke such powers.

Initial Guardians

x0s0l, a contributor to the Moonwell protocol, created a snapshot vote that passed and enabled the community to ratify the proposed set of initial guardians below:

Niko Grzesiak is a co-founder of the decentralized trading platform Firefly and a quantum physicist by trade.
0xMaki is a semi-anonymous contributor mainly known for co-founding Sushiswap. OxMaki is currently working towards an omnichain ecosystem via LayerZero and helping LPs maximize their yield at Aura finance. He is Daoist and while he isn’t angel investing, advising numerous projects, or signing transactions on the 10s of multisigs keeping him up at night (Aave, Stargate, Balancer, 88mph, etc.), he loves getting involved with NFT art with implication in the Moonbirds & Nouns communities.
x0s0l — SolarApe is an anonymous co-founder of decentralized exchanges Solarbeam and Solarflare. He’s also a contributor to the Moonwell Apollo and Artemis protocols.

The emergency powers are currently held in this multi-sig, which requires 2 of 3 owners to execute any of the emergency powers.

Sunset Provision

These emergency powers are temporary, and they are designed to be sunset after a 6 month time period has elapsed from the start of governance. Once 6 months have passed, it is the hope that the Moonwell community will have high confidence in the governance system, at which point a proposal can be passed through governance to permanently remove the Governance Guardians, and the emergency powers held by this multi-sig.

How To Get Involved

If you’d like to get involved in Moonwell governance, there are a number of immediate steps you can take to do so. The community is in need of active voters and delegates, and every contribution is welcome. Here’s how you can make a difference and have your voice heard:

Activate Your Voting Power

You can activate your voting power through the Moonwell Apollo application itself, by delegating to yourself or to others. This is an important first step before you are eligible to vote on proposals. It’s important to note that simply holding MFAM tokens in your wallet won’t give you voting rights/power until you delegate those somewhere, even to yourself.

Register at the Governance Forum

When you register at the Moonwell Governance Forum, you’ll be able to discuss proposals with other members of the community, register your interest in becoming a delegate, or find a delegate that aligns with your interests.

Register for Snapshot Voting

You can also register for snapshot voting, such that you can signal your support for Moonwell Improvement Proposals, and help shape nascent ideas that you’d like to see become full-fledged proposals. This is an important way to gauge community interest and help form new ideas into proposals that can later be executed.

Head to the Polls!

Once your votes are activated by delegating to yourself or others, visit the Moonwell Governance Portal to browse and vote on proposals. We can’t wait to see the amazing Moonwell Improvement Proposals that the Moonwell community creates!

About Moonwell Apollo

Moonwell Apollo is an open lending and borrowing DeFi protocol built on Moonriver, and is supported by the Lunar Technology Foundation, which is responsible for fostering the development of the Moonwell protocol and its ecosystem.