Concordium’s Governance
The Concordium Foundation is a Swiss-based non-profit with the goal to build the world’s leading open-source, permissionless, and decentralized blockchain with built-in user identity at the protocol level.
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Introduction
Three bodies share the governance on Concordium: the Concordium Foundation, the Governance Committee and CCD holders. At its launch, the Foundation was the sole governing entity. Through the decentralization process, which is seeing a mix of direct and representative democracy being introduced to the chain, governance is slowly shifting to the CCD holders via the Governance Committee.
The purpose of the Concordium Foundation is defined in its Public Deed. The Foundation Board is tasked with ensuring that the Concordium protocol continues to develop and remain relevant to the needs of users within the principles of the Foundation's purpose. The Concordium Foundation is supervised by the Swiss authorities.
The Governance Committee is an advisory committee to the Concordium Foundation Board. It is tasked with taking decisions on certain areas of governance of the blockchain. In particular, it is consulted on technical changes and it is expected to drive tokenomics changes and governance decentralization. The Governance Committee was set up with 5 members chosen by the Foundation. New members are added by the token holders through elections, until it reaches 9 members. Then seats are up for re-election.
The decentralization process will lead to CCD holders being able to nominate and elect GC members, vote on some GC decisions and propose their own changes. A roadmap for this decentralization process is described in the roadmap section. The governance committee members, their tasks and past decisions are found in the GC section. All the details for the 2024 election to the GC committee are found in the election section.
The Governance Committee
Tasks of the Governance Committee
The Governance Committee (GC) is an advisory committee to the Concordium Foundation Board. It is composed of technical experts, entrepreneurs or community members. The GC is responsible for recommending changes to the following areas of the Concordium blockchain:
- Parameter updates
- Protocol updates
- Tokenomics
- Managing CCD holder proposals and votes
- Preparation of the next phase of decentralization
In particular, the GC is consulted on technical changes, and it is expected to drive tokenomics changes and governance decentralization. In doing so, the GC will consider the following goals and priorities:
- Widespread adoption of the blockchain
- Value creation on the blockchain
- Prevent dominance by single parties
- Ensure a decentralized network of validators
- Stability of the protocol
- Inclusion of CCD holders in decision-making
Foundation Board
Renowned entrepreneur with a long-standing career in finance and technology.
Legal expert specializing in civil and commercial law.
Professor of Computer Science at ETH Zurich and a leading expert in cryptography.
Seasoned executive with over 15 years of experience in technology.
Log of changes to the Governance Committee
June 2021: Initial member: Lone Fønss Schrøder.
June 2021: Initial member: Jørgen Hauglund.
June 2021: Initial member: Torben Pryds Pedersen.
June 2021: Initial member: Beni Issembert.
June 2022: Resigned member: Torben Pryds Pedersen.
June 2022: Resigned member: Beni Issembert.
June 2022: New member: Michael Jackson.
June 2022: New member: Kåre Kjelstrøm.
June 2022: New member: Christopher Portmann.
March 2023: Resigned member: Lone Fønss Schrøder.
March 2023: New member: Torben Pryds Pedersen.
October 2023: Resigned member: Kåre Kjelstrøm.
October 2023: New member: Nibras Stiebar-Bang.
June 2024: New member: Andreas Baidas and Michael Bondum.
Past decisions
Change of CCD/EUR exchange rate to reflect Private Placement pricing.
Adds the possibility to add meta text (memo) to transactions transferring CCD.
Adds Digital Trust Solutions as an additional identity provider.
The protocol change adds support for multiple addresses for the same account, also referred to as account aliases. In protocol version 3 each account can have up to 16777216 addresses.
Setting initial parameters for delegation incl. delegation leverage, pool size, and commissions.
Updating parameters for allocation of minting rewards.
Updating parameters for baker and delegation cooldown period.
Protocol change adding support for delegation, new smart contracts that support larger states, synchronous calls, and several cryptographic primitives.
Protocol update change adding support for upgradable smart contracts.
Allowing smart contracts to query additional data from the chain.
The protocol update allows smart contracts to use more resources and introduces a major reorganisation of the account storage allowing for more efficient account retrieval and updates.
Protocol update to increase the max. throughput of the Concordium blockchain.
Changes the consensus protocol from an existing two-layer design to a new ConcordiumBFT consensus.
Adds better support for sponsored transactions.
Other fixes and improvements.
Simplified tokenomics to align with industry standards and enhance staking.
Finalisation rewards removed; minted CCDs added to block rewards.
Max pool size capped at 5% of pool stake.
Pool stake/validator stake ratio limited to 6.
Validator setup stake raised to 500,000 CCDs.
Passive commissions increased to 25%.
Validators set their own pool commissions.
Delegator cool-down aligned with validators (3 weeks).
Mint rate reduced to 8% p.a.
Parameter update to reduce the cost of transactions with the goal of insuring competitive transaction fees for both simple and complex transactions
The cost in EUR of all transactions is reduced by a factor of 100
The cost for simple transactions is planned to increase to the past level of slightly below in connection with a later implementation of a new pricing mechanism that will ensure competitive fees for all transactions.
Roadmap
After the preparatory phase which ends with the elections of two new Governance Committee (GC) members from the community in June 2024, the decentralization of the Concordium governance is divided in two phases. In the first phase, the Concordium foundation board has the responsibility and is liable for ensuring that the Concordium blockchain develops in accordance with its Public Deed. During this phase, certain tasks are assigned to the governance committee, which is an advisory committee composed of people with relevant skills and experiences, including technical expertise on blockchain and Web3, entrepreneurs building on the Concordium chain and representatives of the community of CCD holders. This first phase of decentralization will see a mix of direct and representative democracy be introduced to the Concordium blockchain. CCD holders will elect members of the GC, first adding new members and then (re)electing members in the seats that were initially filled by the Foundation. As part of the decentralization development, CCD holders will also obtain certain rights to vote on GC decisions and make proposals of their own.
In this first phase of decentralization, the Foundation board has a supervisory role. It is responsible, in particular for ensuring that the GC is functional and develops the Concordium blockchain according to guidelines that are inline with the Foundation deed.
When all members of the GC are elected by CCD holders—which will be June 2027 according to the current decentralization roadmap here below—the Concordium blockchain will start the second phase of decentralization, which will see an enhanced role in the decision making process for the GC and CCD holders. The details of this second phase are to be developed by the GC during the first phase. A rough outline is as presented below.
1st phase of decentralization
June 2024-June 2027
CCD-holders appoint two new members to the GC by electronic voting, thereby expanding the committee from five to seven members. At this stage, two of seven members of the governance committee are appointed by the CCD holders.
The GC will start preparing a governance framework to determine what proposals are put to a vote by CCD holders and what quorums are needed for them to be accepted. They will also review the passed elections, and make recommendations on possible changes in the procedures.
CCD holders appoint two further members of the GC by electronic voting, expanding the GC from seven to nine members. At this stage, four of nine members of the GC are appointed by the CCD holders.
Token holders may vote on certain technical proposals from the GC in accordance with the framework prepared by the GC. The GC will start preparing the groundwork for CCD holders to make their own proposals to change parameters or elements of the tokenomics.
The GC’s number of members remains at nine members, with three seats up for (re)election every year. Thus, three of the initial five committee seats appointed by the Board of Concordium Foundation are up for election in 2026. At this stage, seven of nine members of the GC are appointed by the CCD holders. CCD token holders may make their own proposals to change parameters or elements of the tokenomics.
CCD holders appoint two further members of the GC by electronic voting, expanding the GC from seven to nine members. At this stage, four of nine members of the GC are appointed by the CCD holders.
Token holders may vote on certain technical proposals from the GC in accordance with the framework prepared by the GC. The GC will start preparing the groundwork for CCD holders to make their own proposals to change parameters or elements of the tokenomics.
2nd phase of decentralization
From June 2027 onward
All members of the GC will be appointed by the CCD holders. With this starts phase two of decentralization. Certain aspects of the governance framework may be modified by CCD holders. CCD holders may assume an even stronger role in shaping and overseeing the development of Concordium. The precise scope of the GC’s mandate will be determined based on the experience gained during the preceding steps.
Security
The election protocol chosen provides privacy and end-to-end verifiability. This means that votes remain secret at all times—no one can know how individuals voted. And every step of the protocol involves zero-knowledge proofs showing that the step was executed correctly. By checking the ZK-proofs, a third party (e.g., an auditor) can verify the correctness of the election outcome. Technical details on the voting protocol can be found in this article.
Election Rules
The details of the elections rules can be found here, and instructions for voting are available in the documentation. A summary is provided here below.
Weighting Votes
ll accounts may vote, and the vote is weighted by the average amount of CCD on the account between the 1st of March 2024 and the 31st of May 2024 (rounded down to the closest whole CCD). It is thus recommended that a user with multiple accounts votes from all accounts for their vote to have maximal weight. If the same account votes multiple times, only the last vote will count.
Staked CCD, whether it is by validators or delegators, is still held in the user’s wallet, so it counts towards the weight of the vote. But shielded CCD cannot be seen by anyone other than the wallet owner, so it cannot be part of the weight. And CCD locked in smart contracts cannot be used to vote either. Furthermore, tokens that are in a custody wallet, e.g., on a centralized exchange, will not count as part of the weight of the token owner, but as part of the weight of the custodian. It is thus important for all CCD owners who want to vote (or who don’t want custodians to vote in their name), to transfer all CCD to wallets of their own.
The Concordium Foundation will not vote from any of their accounts in the 2024 election.
Approval Voting
The voting system chosen for this election is called approval voting. The voter may choose as many candidates as they like, i.e., they assign either 0 or 1 to every candidate. In standard approval voting, all votes are added up and the candidates with the most votes get the seats. In our weighted case, every candidate that receives a vote receives the corresponding full weight of the account from which the voter was cast—the weights are not split amongst the candidates that receive a vote. For example, suppose that there are four candidates, Peppa Pig, Rebecca Rabbit, Suzy Sheep and Zoe Zebra. And suppose that Alice has 4000 CCD and votes for Peppa, Bob has 2000 CCD and votes for Rebecca and Suzy, and Charlie has 3000 CCD and votes for Suzy and Zoe. Then the final tally is 4000 votes for Peppa, 2000 for Rebecca, 5000 for Suzy and 3000 for Zoe.
Since there are two seats being filled in these elections, the two candidates with the most votes are elected. In case of a tie, which is very unlikely, a fair coin is flipped.
Interested readers may discover more about approval voting on wikipedia.
DApp and Vote Delegation
A dApp has been implemented so that voters can connect to the voting smart contract and cast their vote. The browser wallet, new mobile wallet and CryptoX Concordium wallet all have dApp connectivity, so they can vote this way.
Users of the desktop wallet need to create a new account in one of the wallets mentioned above and delegate their vote from their desktop account(s) to the new account, then vote from the new account. Vote delegation is done by transferring any amount of CCD (1 micro-CCD is enough) to the target account with a memo that says “delegatevote2024”. It is possible to check from the DApp that the delegation worked. The window for delegating votes is the same as voting with the DApp.
Users of the legacy mobile wallets can either delegate votes as described above, or they can import their accounts into the cryptoX wallet and vote from there.
Only the original weight of an account can be delegated, not any weight that is received from delegation. For example, suppose that A delegates to B and B delegates to C, then the weight of A is not transferred to C, but stays with B. So in this scenario, a vote from A would have weight 0. A vote from B has the original weight of A. And a vote from C has the original weights of B+C. Like for voting with the DApp, if an account delegates multiple times, it is the last one that counts.
Detailed instructions on how to vote are provided in the documentation.