Title: Governance Framework
Authors: André Geest, Christoph Simmchen
Created: 2023-07-06
Please refer to the full proposal text on the SafeDAO forum. Some parts needed to be removed to fit within the character limit on Snapshot: https://forum.safe.global/t/sep-7-governance-framework/3711
Abstract:
The purpose of the governance framework is to define and outline the key stakeholders involved in the governance of SafeDAO, to establish a dynamic governance approach and to describe the governance process.
Proposal details:
A. Hierarchy of governance sources
![14c715e316420ccd26c815f7a77fb9a992ff2f59_2_700x500.png]()
SafeDAO governance is built on a hierarchy of norms. In this hierarchy, each level must comply with the level above. On top stands the SafeDAO constitution, which sets the blueprint for SafeDAO, a decentralized collective, stewarding the thriving ecosystem around the Safe Smart Accounts on Ethereum and other blockchains. The governance framework must align with the constitution, and in turn, seasons and proposals must adhere to the governance framework. This structure ensures each element supports and enforces the broader goals outlined in the constitution.
B. Stakeholder overview
SafeDAO is made up of various stakeholder groups, with a participant potentially being part of several groups. An overview of each stakeholder is provided below:
![cbf57e4c0bf746b84cff6cdbd1b3e48d2de74550_2_1250x1000.jpeg]()
I. Token holders
1. Rights
Safe token holders (Token holders) can vote within the scope of governance of SafeDAO (see C. Scope of governance). They can vote with their vested and unvested tokens and delegate their voting power.
2. Responsibilities
Token holders are encouraged
- to actively participate in decision-making processes, lending their voice to proposals, discussions, and voting.
- to delegate their voting rights to trusted individuals or entities, if unable to actively participate
- to fully understand the implications of their votes by doing their own research to ensure informed decisions. If they cannot commit to this due diligence, delegation to delegates is encouraged.
II. Delegates
1. Delegation process
The delegation process is offchain. Token holders can delegate their votes to any address of their choice. The current delegation system requires full delegation of the voting power. Partial delegation may be implemented. Token holders can redelegate or undelegate at any time.
2. Rights
Delegates can vote on behalf of token holders who delegated their voting rights to them. Delegates may not delegate their delegated voting right to someone else.
3. Responsibilities
Delegates should be actively involved and responsible for representing the interests of the token holders, participating in decision-making processes, and facilitating transparent and effective governance. As such, delegates should provide a short reasoning on each of their votes on Snapshot through its commentary function.
III. Guardians
1. Guardians selection
Safe Guardians are active members of the Safe community, who have verifiably proven their commitment to SafeDAO’s vision. They steward the Safe ecosystem and protocol, while driving the adoption of Smart Accounts. They are mission-aligned and likely to be actively participating in governance.
The first cohort of Guardians (Guardians v1) was chosen by the Foundation and has already received a retrospective token allocation and enjoys certain benefits. Given that Guardians play an essential role in SafeDAO governance by virtue of their responsibilities, there will be further cohorts. Those cohorts will be administered by SafeDAO. Details will be laid out in Guardians v2.
2. Rights
Guardians can vote with their tokens granted as part of Guardians v1.
3. Responsibilities
As outlined here, Safe Guardians are expected to
-
Keep up with announcements and discussions
-
Give feedback on Safe Ecosystem Proposals (SEPs) which will also serve as a signal to other community members.
-
Move proposals which are mature enough for a voting from Phase 1 to Phase 2.
-
Vote on SEPs via the Safe Snapshot space
-
Provide a reasoning on each of their votes on the SafeDAO forum and on Snapshot through its commentary function
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Push new ideas that could transition to proposals
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Advocate for voting delegations - boost responsibility by campaigning for other token holders to delegate
Guardians are encouraged to be actively involved in discussions on the forum.
Details of the responsibilities may be specified in a code of conduct, should one be established.
IV. Non-token holders
Non-token holders have various ways to contribute to SafeDAO. They can submit proposals, engage in discussions on the collaboration platforms and become delegates. As such their rights and responsibilities correspond to their corresponding role.
V. Safe Ecosystem Foundation (SEF)
The Safe Ecosystem Foundation (“Foundation” or “SEF”) is a foundation governed by the laws of Switzerland and established in Zug (Switzerland). A Swiss foundation is an independent special-purpose fund endowed with legal personality, whose assets may only be used to achieve the purpose of the Foundation. It is a special form of legal entity, as it has no shareholders and no beneficial owners and thereby aims to avoid the value extraction by governance bodies which are not in compliance with the purpose of the foundation.
SafeDAO is stewarded by the Foundation, consistent with the SafeDAO Constitution and the Foundation Deed. The Foundation acts as a legal wrapper of the SafeDAO treasury, facilitates and administers the governance procedures and implements passed governance proposals if necessary.
1. Purpose and mission
The Foundation Deed, the regulations, directives and policies of the Foundation in alignment with the Swiss foundation norms, delineate its purpose, mission, and governance structure. It states that the Foundation is dedicated to the development and promotion of technologies within the Safe Ecosystem, public education about the ecosystem, and the management of related assets. As a legal document, it lays down the operational blueprint, guiding the Foundation's dealings, including liaising with various entities, managing intellectual property rights, and supporting research and development. This promotes transparency and accountability in the Foundation's efforts towards achieving its objectives in the Safe Ecosystem, thereby ensuring its alignment with the overarching goals of SafeDAO.
The full text of the purpose of the Foundation in its legally binding, German version can be found here. An unofficial translated version (German / English) can be found here.
In principle, the Foundation does not have a profit-making-purpose and does not seek any profits. The Foundation may generate profits to the extent required for the realization of its purpose.
2. Foundation’s governance
a. Council
The Foundation council (“Council”) is the highest governing body of the Foundation, with the core duty to implement the Foundation purpose. There is a minimum number of three Council members required in accordance with the Foundation Deed. The current Council members are elected for a term of office of 4 years. With an exit of a Council member, the remaining Council members would appoint a new member. The Council can remove a Council member with a majority vote. The current composition of the Council can be found in the Governance Hub.
b. Responsibilities of Council
In order to achieve the Foundation purpose, the Council is tasked, among other things, with:
- specifying the organizational structure and strategy using Foundation regulations and guidelines,
- personnel planning at Council and executive management level,
- appointing and dismissing members of executive management, and people entrusted with representing the Foundation,
- supervising members of executive management and people entrusted with representing the Foundation with respect to objectives,
- approval of the annual report / annual financial statements,
- supervising compliance,
- communication with the Swiss Federal Supervisory Authority for Foundations (also known as the Eidgenössische Stiftungsaufsicht / ESA).
c. DAO committees
DAOs face a variety of unresolved legal issues. The most prominent ones are the lack of legal personality, the limitation of DAO participants' liability, and the tax treatment of community assets (please refer to the explanations of the dydx foundation and the chosen approach of a Guernsey purpose trust). The Foundation’s goal is to provide an innovative Swiss solution to the legal challenges by leveraging SEF’s legal personality in engagements with contracting parties and acting as a legal wrapper of the treasury for tax purposes.
SEF has prepared its Foundation Deed for the possibility of setting up so-called DAO committees. The unique characteristic of these foundation native bodies is that they can be staffed with DAO participants only and the composition is chosen by SafeDAO. Furthermore, there would be the advantage that the members of the DAO committee could be supported by the legal and financial department of SEF. Administrative support would allow members of a DAO committee to focus on their substantive activities. The Council as well as SafeDAO can assign certain activities, as well as rights and responsibilities which are in their scope of governance to the DAO committees. Currently, SEF is clarifying the organizational requirements for the establishment of DAO committees with the relevant authorities. Once these requirements have been clarified, it is intended that SEF and SafeDAO will jointly coordinate the establishment of DAO committees.
d. Supervision of Foundation
To ensure that the Foundation duly promotes the Foundation's purpose and does not undertake any non-compliant value extraction, Swiss foundations are subject to supervision of the Swiss Federal Department of Home Affairs, enforcing through the Swiss Federal Supervisory Authority for Foundations.
3. Rights and responsibilities in SafeDAO
a. Economic holder of SafeDAO assets
SEF maintains stewardship over the assets of SafeDAO, e.g. Safe token allocation assigned to SafeDAO. The Foundation acts as a legal wrapper of the SafeDAO treasury. SEF does not engage on behalf of SafeDAO or allocate funds from the SafeDAO treasury without previously being signaled so by SafeDAO.
b. Governance administration
SEF assists with the administrative elements of SafeDAO's governance processes. This includes:
- Moderation and facilitation of governance proposal processes.
- Removal of proposals that are fraudulent, spam-oriented, defamatory, hateful, or otherwise inappropriate or inconsistent with the SafeDAO Constitution, SEF Foundation Deed or any Foundation regulation (if applicable).
- Exercising oversight and control over collaboration and communication platforms such as Discourse, Discord, Telegram, Twitter, and Snapshot to ensure and facilitate effective engagement and interaction.
- Monitoring of the voting process including the accurate reflection of voting power, voting periods, quorums and approval thresholds.
- Other necessary services aligned with the SafeDAO Constitution to ensure orderly operations.
SEF provides administrative support to governance processes in order to offer a minimum level of structure. It is open to support community initiatives that carry out governance administration independently or in addition.
VI. GnosisDAO
SafeDAO is a spin-off from GnosisDAO (see “History” in the Governance Hub), which was decided in GIP-29. This states that GnosisDAO has two functions:
- Token holder: GnosisDAO is a significant backer and token holder (see “Safe Token” in the Governance Hub).
- Joint treasury: A joint treasury between SafeDAO and GnosisDAO was established which is collectively governed by both DAOs.
C. Scope of governance
I. Domains of governance
The following domains are under governance of SafeDAO:
- Constitution
- Governance framework: This encompasses the scope of governance, dynamic governance, decision-making process and principles of proposal implementation
- Resource allocation framework, once ratified
- Assets of SafeDAO (see “Treasury” in the Governance Hub)
- SafeDAO Treasury and joint SafeDAO/GnosisDAO Treasury
- IP rights: ENS domain, NFTs etc.
- Safe Grants Program with funding and administrative support provided by SEF
- SEF governance signaling: Suggestion regarding the establishment and composition of DAO committees, once established by the Foundation
- Unpausing of Safe token transferability
- Safe{Core} Protocol: Parameters and other governance-related aspects, once they have been transferred to the governance of SafeDAO
The Foundation’s fiat funds and its Safe token allocation are not under scope of governance of SafeDAO, unless these have been allocated specifically and solely for the purpose of SafeDAO by the Foundation.
The below table shall help visualize the responsibilities and scope of governance of SEF and SafeDAO.
![61a7aa4faa7c0d06d8c661363623aa160194230e.png]()
II. Proposal types
SafeDAO votes through Safe Ecosystem Proposals (SEPs). These are separated into proposal types, according to the domains of governance. Proposal types can be executed either on- or offchain.
| Proposal types |
Description |
Execution |
| SEP: Constitutional Proposals |
Changes to the constitution |
offchain |
| SEP: Governance Proposals |
Changes to the governance framework and the resource allocation framework |
offchain |
| Other SEPs |
All other domains of governance not explicitly stated in the other proposal types |
off-/onchain |
| Grants Council Nominations for SGP |
Voting on the grants council nominations for SGP |
offchain |
As steward of the SafeDAO governance the Foundation is administering which proposal type a specific proposal belongs to.
D. Dynamic governance
I. Objective
The core objective of dynamic governance cycles is to continuously evolve and optimize the democratic processes within SafeDAO. By committing to an iterative and data-driven approach, it is the aim to identify, implement, and refine the best possible governance model over time that truly reflects the collective interests of Safe’s community and promotes their active engagement.
II. Governance cycles
SafeDAO will change its decision-making process over a specified time frame and run several governance experiments (seasons). Seasons will consist of the following 4 sprints.
![b8d9ae3657d1df584a98e76111c5479aa11ec0d8.png]()
- Sprints 1-3
The proposals of the first 3 sprints shall address all proposal types except constitutional and governance proposals (s. C.II. Proposal types). This design shall allow a focus on fostering the Safe ecosystem while avoiding distractions from governance proposals.
- Sprint 4: Review and governance amendment sprint
As a counterpart to the restriction of governance proposals during the first 3 sprints, the 4th sprint is dedicated to governance review and governance proposals. During this time, no other proposals shall be submitted.
Notwithstanding the aforementioned, SEPs related to the implementation and execution of the milestones of SEP #3 are allowed to be voted on in any sprint until their completion.
- Guiding principles for timeline
The guiding principles of the timing are (1.) to make the sprint processes predictable, (2.) to provide sufficient time for preparation and review tasks of relevant events and (3.) to strike a balance between Sprints 1-3 and Sprint 4 (review and governance amendment sprint).
III. Changes to governance
Changes to the dynamic governance include the processes laid out in this governance framework which include, but are not limited to modifying the governance cycles, the proposal types and the voting mechanisms. The governance framework can be changed itself by an SEP.
E. Decision-making process
I. Governance toolkit
SafeDAO governance utilizes several tools:
- Snapshot: An offchain voting platform
- Discourse: A community forum dedicated to discussions around governance proposals and related topics.
- Discord: The governance channel is used for governance announcements and less formal governance discussions.
Other tools that are being used can be found in the “Toolkit” section of the Governance Hub.
