Referendum SIP

Simple Summary

Introducing the Synthetix Referendum (SR). The SR is an artifact used to describe proposed changes to Synthetix that are to be voted on by SNX token holders, not representative Council members.

Currently, Synthetix operates under a delegated governance model. There is no defined mechanism in the Synthetix constitution for token holders to vote for change outside of the election system.

This limits the power of the ultimate stakeholder of Synthetix, the SNX token holders, to enact significant protocol change if they collectively determine it to be required.

Abstract

The SIP aims to improve the governance structure of the Synthetix protocol by introducing a mechanism (i.e. a token holder Referendum) for token holders to directly vote on a proposal, constitution change or protocol issue. This is in contrast to delegated governance where representatives vote on proposals. A successful Referendum would require 75m SNX tokens to participate, and two-thirds majority to pass.

Motivation

To make Synthetix governance more robust, there must be a mechanism for SNX token holders to vote on proposals (i.e. Referendums). There are two important scenarios where a referendum can be effective and improve the robustness of Synthetix Governance:

1. The Spartan Council can refer proposals of the utmost significance to the ultimate Synthetix stakeholder, the SNX token holder.
2. Proposals that may conflict with or not be aligned with the perspectives or motivations of the Spartan Council can be proposed via a referendum.

Specification

A SNX token holder referendum can be proposed by any community member. For an SR to be merged and included on the SIP website, proof of a soft quorum (i.e. 10m SNX - configurable by SCCP) must be provided to a SIP editor. This prevents spam referendums and ensures community discussion is focused on impactful and supported change.

SR’s will live on the same site as the SIPs official site but follow a slightly different specification.

For a referendum, 1 SNX = 1 vote (i.e. linear voting). Voting will take place on Snapshot. The voting window will be 7 days (configurable by SCCP).

Given the nature of referendums is to enact significant change, for the referendum to pass, it must meet two criteria:

1. A quorum, meaning the minimum number of SNX tokens that are required to partake in a referendum (vote yes, no, or abstain), of 75m SNX tokens is required. The rationale for this number is outlined in Note 1 below. This represents half of the non-Treasury SNX stakers and is over 400% more SNX tokens than those that voted in the recent Spartan Council election.

2. Approval must be over two-thirds majority of the yes/no vote (i.e. 66.67% approval threshold, excluding abstention).

These criteria can be voted on by governance with an SCCP.

These criteria can be voted on by governance with an SCCP. Changes to SR criteria cannot be proposed or approved between the time an SR is posted and the time voting has closed.

Changes to a referendum's criteria are considered metagov changes and require 6/8 Spartan Council members to approve (also configurable by SCCP).

Note 1 - There are ~150m staked SNX, excluding the Synthetix Treasury balance. Stakers are a representation of the more active component of the Synthetix community. 75m SNX tokens, or 50% of these community members, represent an adequate sample size of the community. Additionally, based on the recent election only ~17m SNX tokens partook in the Spartan Council election (<12.5m debt shares, with a debt per voting power of ~0.5, and an average c-ratio of <350% across Synthetix --> <$22m worth of SNX tokens, or <17m SNX tokens priced at $1.30). 75m SNX tokens represents over 400% of the community that recently participated in protocol governance.

Note 2 - Should exchange wallets that hold SNX tokens on behalf of customers be identified as partaking in a Referendum, their votes may be manually excluded from both the quorum and the vote.