DebtCoin: Governance Framework

November 22, 2024 ☼ Crypto ☼ Payments

This article explores the governance architecture for DebtCoin, balancing centralized oversight with decentralized community input. Governance is divided into three categories: immutable components, upgradeable parameters, and hybrid processes. The goal is to ensure flexibility and stability while maintaining transparency as DebtCoin tracks the U.S. national debt.

Key Features of DebtCoin

• Pricing Mechanism: Value tied to U.S. national debt for inflation protection and transparency.
• Minting and Burning: Collateral changes as tokens are minted or burned.
• Reserve Management: Hybrid management of reserves in both DeFi (e.g., crypto) and TradFi (e.g., Treasury bonds).
• Debt Fluctuations: Mechanisms for rapid debt changes.
• Diversified Reserves: Adjusted composition to maintain stability and reduce risks.
• Dynamic Pricing: Recalibrated pricing via oracles.

Governance Components

1. Immutable Components

Core features hardcoded into the protocol:

• Price Calculation: Debt/10T formula.
• Minting/Burning Mechanics: Collateral-token relationship.
• Security Framework: Essential safeguards.
• Oracle Integration: Base for price feeds.

2. Upgradeable Protocol Parameters

Adjustable features via smart contracts, modified through on-chain voting:

• Reserve Ratios: Initial 100% USD backing, adjustable as needed.
• Transaction Limits: Caps on minting and burning.
• Fees: Dynamic fees (e.g., 1%) to fund operations.
• Oracle Settings: Data weighting and validation thresholds.
• Emergency Protocols: Circuit breakers (such as a 24-hour minting/burning pause) for extreme market shifts.

3. Hybrid Governance

Combines off-chain discussion and on-chain implementation. Examples:

• Reserve Composition: Community proposals for new assets like gold or crypto, executed through smart contracts.
• Liquidation Procedures: Debate off-chain, finalize on-chain.

4. Emergency Powers

Reserved for critical situations:

• Emergency Pause: Suspend operations during crises.
• Multisig Control: Consensus-driven operational decisions by the founding team.
• Strategic Oversight: Ensure alignment with the protocol’s long-term vision.

Decision-Making

Governance will involve both the community and founding team. Voting structures (direct, delegated, specialized tokens), and proposal rules and thresholds will ensure transparency and inclusivity.

Conclusion

This framework establishes a balanced governance model for DebtCoin, blending immutable rules, flexible parameters, and hybrid decision-making. Future articles will detail voting systems and community-driven proposals.

This is the third article in a 3-part series on DebtCoin:
DebtCoin: A Stablecoin Pegged to the United States National Debt
DebtCoin: Reserve Management
DebtCoin: Governance Framework (current)