There has been a consistent rise and adoption of blockchain technology and cryptocurrency over the past decade and across various industries and applications. This brought about the increase in the number of decentralized platforms and networks, powered by blockchain, which is governed and controlled majorly by the community members and less than the founders of the platform. A decentralized system of governance eliminates the mundane centralized system that grants authority to platform owners and selected people in a network, who control operations and enact policies and regulations. Businesses and organizations are adapting to this special opportunity offered by the integration of blockchain technology and its applications into their operations and processes. Certain experts in the industry have performed a comprehensive analysis between centralized and decentralized systems, and they concluded that the latter has higher performance in providing an efficient governance structure.
This detailed analysis of both systems provided empirical proof of an inverted U-relationship between the decentralized system of the blockchain industry with the growth, development, and success of projects. It also displayed how well the industry performed in terms of market capitalization and attracting investors. There are salient factors that influence and facilitate the decentralization of digital payment and financial platforms. However, extensive research indicated that several areas of projects require more decentralization, such as infrastructure and application. This article will provide comprehensive information on the nature and structure of governance on the Smarts Finance DeFi platform.
For Our Network
Operating a decentralized system of governance is one of the primary reasons why businesses and organizations integrate their system and network on blockchain technology, and this affords them a verifiable and transparent platform. Smarts Finance recognizes that blockchain is the technology and network that enables payment platforms, businesses, projects, industries, and others to limit the existence of a centralized system. Smarts Finance understands how vulnerable the system will likely be when governed in a monopolistic manner, which may lead to the benefits and proceeds of the network being streamlined to individuals. As a financial platform that coordinates several transactions every second and the transfer of huge digital assets and fiat currencies, Smarts Finance understands that its governing protocol requires a decentralized framework. With the reliable expertise of its development team, Smarts Finance will deliver an open governance system, which promotes transparency and inclusivity, to its subscribers.
Smarts Finance Governance Plan
The management team is laying down a robust plan to adopt for its governing structure. The first step by Smarts Finance, at the development stage of the project, will be to assign the implementation of the primary features of the system to the founding members and the owners. Before the establishment of the community, the owners of the platform will govern the decentralized system. When joining the members of the community to the governing council of the network, the founding members will collaborate with top and popular influencers who do not have any initial association with the project. These community members (the influencers) will serve as the primary team of advisors for the platform. Smarts Finance will integrate a multi-signature wallet, which will operate as authentication for the deployment of contracts on the network. The majority of these contracts are related to the tokenomics, services rendered, and products offered by the platform.
Voting Exercise in Smarts Finance
This is another significant activity requiring the decentralized system of blockchain technology. Running a DeFi platform should operate on the decision of the members of the network’s community. With the use of the platform’s digital asset, holders and subscribers can engage in all available voting exercise on the network, which allows them to participate, interact, and contribute to various activities. The governing plan for Smarts Finance also allows users to propose a change in the operation of the system, thereby giving all members the right to influence decisions. For the voting process, users can tender their proposals for such but under certain requirements, which they must meet.
This refers to the minimum amount of tokens a user owns in an account. For members to participate in any voting process or proposal submission, they must possess a certain minimum value of tokens. The voting strength is in terms of SMAT token and represented as sSMAT (strength of SMAT). It is determined by locking up tokens over a period, about 6 months. It takes a minimum of 5,000 SMAT to generate a voting strength of 1,000 sSMAT in a year, which is 500 sSMAT in six months. This implies that users can get 2,000 sSMAT when they lock-up at least 5,000 SMAT tokens for two years.
The indication of the voting right of each member depends on the weight of the account and the trust score. The weight is calculated to be equivalent to be a direct proportion of the volume of governance tokens locked up by an account, and it is usually within the range of 1 – 5000 tokens. However, there is a slight reduction in the weight for higher amounts. For decreasing whale activeness on the platform, there will also be a gradual reduction in the voting gauge for proposals, with a relation with time and the activeness of the proposal until its completion to 100% votes.
This mark indicates the engagement of every member and user on the platform. For subscribers to be eligible for voting and proposal submission, they must attain a minimum reputation score. Two distinct factors determine the score of all members, the time factor and previous activeness and participation in the community.
Smarts Finance rewards members who get their proposal accepted on the network. The reward from the platform is obtained from the incentives gotten from the staking fees of tokens, and are shared between the proposing member, voters of the proposal, and for burning. For users that have approved proposals, they receive 20% of the staking fees, 50% will be shared between voters, and 30% will be irretrievably burnt. However, there is a consequence for proposals that are rejected. The owner of such a proposal will lose some voting weight and a reduction in reputation score. Depending on the result of the voting process, a proposal may be successful or a failure and it is subject to modifications based on the community consensus and suggestions.
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