How governance on Stride works

Stride utilizes a modified version of Cosmos’ dual tokenholder / delegated governance mechanism. Instead of staking with the chain’s validators, STRD tokenholders may stake with Stride’s “governors” in order to earn staking rewards. Governors can vote with tokens that are delegated to them, and their voting power is equal to their aggregated stake-weight percentage from all delegations. Individual token holders may override their governor’s vote by voting on a governance proposal themselves.

Governors may set a commission rate that defines the percentage of a delegator’s staking rewards that will be diverted to their governor. While there is no accepted minimum or maximum commission rate, note that setting a commission rate that is too high (greater than 5-10%) often results in fewer delegations.

The governance process is divided into three distinct phases:

• Forum Discussion

• Deposit Period

• Voting Period

Forum Discussion

It is strongly recommended to first gain consensus for a proposal idea by posting the proposal text on the Stride governance forum. The forums are a place to get feedback from members of the Stride community and gauge whether a proposal has broad enough support to bring to an on-chain vote.

Deposit Period

After seeking feedback from the Stride DAO on the governance forum, the proposal is ready to be put on the Stride chain for voting. 

Prior to the proposal entering the voting period, a total of 2000 STRD tokens must be deposited to a governance proposal. Anyone may contribute to a deposit by adding their own STRD tokens, however, the first 1000 STRD tokens must be deposited by the proposer at the time the proposal is submitted to the chain. This is a spam deterrence measure.

Deposits will be returned to the wallet(s) that deposited them when the vote ends regardless of whether the vote passes or is rejected by governance. Deposits are, however, at risk of being burned when proposals:

1. Expire - deposits will be burned if the deposit period ends before reaching the minimum deposit (2000 STRD)

2. Fail to reach quorum - deposits will be burned for proposals that do not reach quorum ie. 33.4% of all staked STRD must vote

3. Are vetoed - deposits for proposals with 33.4% of voting power backing the 'no-with-veto' option are also burned. This discourages malicious or spam proposals

Voting Period

Once the requisite deposit has been added, the proposal enters the voting period. The voting period lasts for 3 days. During the voting period, participants may select a vote of either 'yes', 'no', 'abstain', or 'no-with-veto'. Voters may change their vote at any time before the voting period ends.

A proposal in the voting period will pass if all of the following occur:

1. A minimum of 33.4% of the network’s voting power (quorum) must participate in the vote

2. A simple majority (greater than 50%) of the participating voting power (excluding abstentions) must vote `Yes.`

3. Less than 33.4% of participating voting power votes `no-with-veto`

Otherwise, the proposal is rejected.