[Proposal] Transitioning away from the Community Pool

Secret Governance
1

Hello all,

The Problem:

The Community Pool as a resource has been heavily drained over the past two years because of many different problems propagating across the ecosystem. This ranges from:

  • People who have touted a “growth mindset” to just chuck money at everyone (which has resulted in instances of the Community Pool being rugged);
  • The inability of validators to make a decision on contentious matters that often results in large swathes of “abstain” votes; and
  • Funds from the Community Pool being approved to spend by people purely by the amount of SCRT staked as opposed to any experience or expertise in the relevant field.

Unfortunately, Wayback Machine wasn’t too kind so I can’t give a proper data point, but I am confident that the Community Pool has spent over 1,000,000 SCRT over the past two years with little to be proud of.

The Community Pool has a very finite amount of resources and unless we are more efficient with how these funds are deployed, the Community Pool will deplete and be spoken about as one of the many failures within this ecosystem.

I believe the Network currently has positive actors that receive funding from the Community Pool but there is still a need to optimise this further. These conversations don’t happen in the normal governance process because governance usually results in very binary answers with “yes, we fund” and “no, we do not fund” with nothing in between.

The Proposal:

It is my opinion that Secret should transition away from using the Community Pool directly to fund proposals and move towards a Kujira Senate-like implementation where a small number of individuals are nominated to review and adjudicate proposals.

For reference, Kujira can have up to nine senators and the passing of a proposal requires more than half of the senators to support a proposal with a quorum of 75%.

Under such a proposal, the Community Pool would make a transfer of funds to the DAO that represents the Secret Senate. The Community Pool would continue receiving funds from inflation, but it is expected that spend proposals will go through the Senate and the Community Pool will make periodic transfers to the DAO. See the section on accountability for my thoughts on this piece.

This will be presented as a signalling proposal to understand whether the community supports a transition towards a Senate, with later proposals to nominate those initial members to the Senate.

Accountability:

As stated in the above section, I do not believe it is appropriate to yet remove the Community Pool module in its entirety. Before we get there, I envision the interim step as periodic sweeps from the Community Pool to the Secret Senate to support operations. This is because this will be a material change and it is important that the Community continues to support this change long-term.

The Senate will be responsible for communicating spend proposals each quarter to the community to maintain transparency. This should not be an opaque organisation and all funding distributed to each proposal should be clearly communicated to the community, with the exception of those that require NDAs.

Note that I think with the current state of the ecosystem, the vast majority of spend proposals should be entirely directed towards those that are building on the L1 (or the wider constellation subject to economic alignment with Secret).

If the Senate fails to meet its obligations with respect to transparency, or if the community believe that the Senate is failing to be a better allocator of resources, then this can always be wound down and back in the control of the Community Pool entirely.

Items to Resolve:

Upon the passing of this proposal, there will be a number of items to clarify:

  • Agreeing on the number of members in the Senate;
  • A series of governance proposals voting in/out members. These proposals should all occur concurrently. I expect that more people than the capacity of Senate will be voted “yes” to, so there will be another exercise in determining how these are chosen (potentially the highest “yes” voted members); and
  • The creation of the necessary infrastructure, i.e., DAO tooling, something that has evaded the Network for a significantly long period of time.

Feel free to poke and prod on the idea and I shall do my best to communicate my thoughts better so we can shape this into something better than I have conveyed!

OJ

5 Likes
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The proposal has my support, it would also be good to look at Juno for example which is building an extensive DAOs/governance system :point_right:Commonwealth

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The steps of the wind down process need to be well thought out. This could lead to collusion between senate members and projects on the platform.

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Dear OJ,

I appreciate the depth of your post and share the mutual concern for optimizing our communal resources. However, the proposed transition to a ‘Senate’ or DAO structure raises several reservations for me.

Redundancy and Centralization:
The Secret Network Foundation already manages a significant portion of community resources, derived principally from network earnings, operating in a manner reminiscent of your proposed structure. Creating another similar body seems redundant and would result in the total transfer of decision-making power from regular stakeholders. This approach centralizes influence and resources and likely elevates the regulatory risk of the pool, possibly imposing unique liabilities on the DAO senate members—a point I can expand upon if needed.

Loss of Stakeholder Rights:
In practice, this proposition would entirely divest regular stakeholders of their rights over community funds, potentially leading to protracted and ambiguous legal battles for enforcement. While assurances of community ownership have been offered by unreliable entities in the past, asserting such ownership realistically necessitates legal intervention—proving, at times, so impractical that some find misappropriation of funds easier than community legal action. At least the community pool allows stakeholders, both large and small, to retain a voice, and no massive thefts have occurred, unlike more centralized approaches taken.

Imperfect but Essential Community Control:
Despite its flaws, our current community pool system probably should not cede control to a more centralized organization, a situation ripe with risks (lets not call this a proposal for a DAO because what is being proposed here is not more decentralized than the current system and it’s not autonomous). We might find ourselves amid two self-serving and low accountability entities, competing to impose taxes on network participants. The history of such constructs on secret only reaffirms concerns over disproportionate compensations and preferential resource allocations, masked as deserved rewards and doing whats best for the network.

In conclusion, while improvements are warranted, relinquishing communal control and creating redundant structures jeopardizes the power of the people on secret. Solutions must prioritize sustainable and equitable resource use over models known to divert millions from community funds to individuals as personal compensations, keeping community voice paramount and decentralization as our guiding principle.

The Real Issue:
Community pools are entangled with the tragedy of the commons, where self-interested individuals exploit shared resources, causing communal detriment. The community pool system has seen meaningful improvements in its use over time, and the current dilemma is more aligned with the low price of Secret rather than funding non-essential initiatives. Creating another organization, especially one that takes power away from large and small stakeholders, seems ill-advised. The community would likely find itself torn between two tax-imposing entities, competing for our favor.

My closing question to you, OJ, is whether there are current proposals that, in your view, are non-essential or squandering community pool funds? I’d really like to know what proposals these are and your opinion on if the utilization of pool resources on poor uses has improved or worsened over time. I’m interested in your insights on this matter.

xoxo,
Node Papi

2 Likes
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Yes, I agree - inspired by the thoughts that I had around the time of SCRT 2.0, I would like to see something similar to this:

  • The DAO consists of its voting members, they vote on day-to-day proposals
  • SCRT stakers have a force exit ability in the DAO. They should be able to effectively create a proposal to “send” SCRT elsewhere, i.e., back to the Community Pool. Realistically, this should be phased as first a signalling proposal and then a spend proposal (in the DAO) so that members of the DAO can communicate any upcoming committed expenses.
1 Like
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I do not plan to share my opinion on specific proposals that I think should not be funded or that should be optimised as they could be overfunded.

But yes, there is a degree of centralisation to this. Centralisation is not inherently a bad thing, decentralisation is not inherently a good thing. As I mentioned in my response above, as long as there is a way for the Community Pool to “quit” the DAO, that is a reasonable compromise in my opinion that allows the benefits of centralised decision-making while preventing the DAO from holding funds hostage or grossly mispending.

Solutions must prioritize sustainable and equitable resource use over models known to divert millions from community funds to individuals

:slight_smile:

The other remark about imposing taxes is irrelevant because the tax already exists. There is no additional negative impact from a tax perspective on stakers here.

PS - I thank ChatGPT for its highly detailed response. I would recommend using the word “succinct” in the future to make this slightly easier for readers!

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Ok. In regards to funding useless stuff, we don’t do that anymore. In regards to funding essential stuff but accounting for affordability, testnet and api proposal have had to have those discussions with community and are complying. So essentially the opening point of your post is a non issue currently, but it would have hit on point at some point in the past.

My point in highlighting the decentralization vs centralization is much simpler than me implying decentralization = good. My point is that the more centralized approaches on secret have resulted in more abuse in regards to funds being wasted.

Hmmm. I strongly disagree that it’s not relevant. Currently we don’t have “2 entities” or “groups” competing to tax us, if a formal DAO is created that would get tax funds instead of the pool, then there would be an actual group that would likely push for more taxes because it would be a group with formal decision makers.

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Ok. In regards to funding useless stuff, we don’t do that anymore.

Can you confirm that 74 nodes are the necessary number of API nodes necessary to provide a quality service? How do we know that we are not overpaying on the API proposal because there is an overstatement of the number of nodes needed?

Currently we don’t have “2 entities” or “groups” competing to tax us, if a formal DAO is created that would get tax funds instead of the pool, then there would be an actual group that would likely push for more taxes because it would be a group with formal decision makers.

This is not right under my current impression of the ecosystem. Secret Foundation hasn’t funded dApp development and infrastructure-related stuff. If there is overlap in scope, then yes, there is risk of conflict between entities - but this is not a given.

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You can read our response here, and as i said we already agreed to change our scope from ensuring that the API always works to providing the best we can for a budget. The API Proposal IV - #17 by thenodefather

There wouldn’t be an overlap in scope, there would just be 2 different orgs that will compete to tax all stakeholder on the network in your case.

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You can read our response here, and as i said we already agreed to change our scope from ensuring that the API always works to providing the best we can for a budget. The API Proposal IV - #17 by thenodefather

While I would like to read it, I’m not planning to trawl through a considerably long comment to find it. I would appreciate if you can refer me to the relevant place.

There wouldn’t be an overlap in scope, there would just be 2 different orgs that will compete to tax all stakeholder on the network in your case.

Why hasn’t the Community Pool competed with the prior Foundation to date? There was even a considerable amount of overlap…

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Sounds like a plan. I think this could work. At the very least, we should try.

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TLDR : We discussed with network participants to find that cost was the biggest concern, we decided not to put in extra man hours to do technical analysis requested by 3 people, and we agreed to lower the nodes in the cluster as well as lower our scope / SLA essentially. If people want the actual issues resolved, we will need to see the node software / network get additional performance improvements over time.

I’m talking about going forward, i dont see there being much of an overlap. Do you? Also my main point was that 2 organizations / groups funded by the network would be paid by us to lobby us to pay them more. I also strongly disagree with the idea that any taxes should be on by default, instead they should expire after a year unless renewed by default.

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I refer you to my post sir, under the section accountability:

I do not believe it is appropriate to yet remove the Community Pool module in its entirety. Before we get there, I envision the interim step as periodic sweeps from the Community Pool to the Secret Senate to support operations.

There will be no direct stream of inflation, the Community Pool gets funds and sends it over to DAO when requested. There should be a minimum timeframe of operation (say 6 - 12 months) where the Community Pool should send it over before they’re able to say no. That gives the Senate enough time to implement change and assess its benefits/drawbacks.

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I mean this is pretty much exactly why I pointed out that it would be creating a 2nd org that is paid to lobby stakeholders for more money which is notably different than the pool because the pool doesn’t have people paid to lobby its own size to be increased. Also, its exactly why I compared this idea to existing structures. Currently we actually have 2 operating foundations (no realistic ETA on when 1 of them will shut down), this proposal is to fund operations for a 3rd entity.