AI DTF (vlRSR) Governance Flows

Ideas & suggestions
1

Problem Statement

The governance flow for the AI DTF product suite is currently operating below the standard I expect for Reserve DTFs.

While these products are novel, I expected greater consideration to have been given to their governance process before launch, particularly as they introduce a new governance model to the Reserve Protocol, optimistic governance.

To date, eight proposals have been submitted for the product suite. Every proposal has bypassed the RFC stage and moved directly to an IP. In many cases, there has been no accompanying explanation from the proposer and the IP itself contains little or no description of the proposal’s objective or rationale.

As a delegate, I find it difficult to support proposals under this process. Without an RFC, there is no opportunity to ask questions, understand the reasoning behind changes, or identify issues before they reach the execution stage. This concern is amplified when duplicate proposals are submitted without an accompanying rationale, unnecessarily increasing operational risk.

While the AI DTF product suite is still in its early stages, it has already surpassed $5 million in TVL and is expected to become an important avenue for Reserve’s future growth. Governance standards should therefore be established now, before the protocol reaches a much larger scale.

Proposal

I propose a number of improvements to the governance process to improve the safety and quality of the governance process of this new product suite.

  1. The creation and adherence to a mandated governance flow for both standard governance and optimistic processes which includes an RFC stage now the product suite is live. The Yield Protocol has been adhering to a standardised flow for a number of years and has worked very well.

  2. In the interest of safety, I encourage the core team to purchase ENS domains for all company wallets which propose and vote on proposals and encourage other team members and delegates to do the same. This would make it much more difficult for malicious proposals to succeed and encourage community participation as it would be easier identify large holders of voting power and DM them directly to vote on or discuss voting rationale directly.

Next Steps

In lieu of an alternative flow I propose we use the current one as default. To quote @nevin.freeman previous comments:

In order for governors to come to use this flow, they need to know that proposals which are made without posting in these two steps will be rejected by default by most voters. Hence, if you agree with using this flow, you must actively vote against proposals that are made without taking these steps first, even if you think you’d probably vote in favor if they did take these steps. This will force proposals made improperly to be re-made properly, and train proposers to post prior to executing the proposal onchain.

I will be voting against the upcoming AI DTF IPs and encourage the team to consider strengthening the DTFs governance processes and reposting at a later date.

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2

Hi Ham,

As governance facilitator we wholeheartedly support this notion.
IndexDTFs have mostly bypassed the regular governance flow. We had talked to ABC Labs about this in the past, and the rationale had been that this adds speed.
I fully understand that argument, and in the end it’s up to DTF issuers how they want to handle this.

But given a choice, I would appreciate decisions to be announced in one central place, and this can only be this Forum here.

There’s also an economic argument to be made. If I am an investor that is new to Reserve I would ask the following questions regarding DTFs:

  • Who is responsible for basket changes?
  • Where are they announced, and who gets to decide if they happen?
  • Where can I find information about ownership, escalation procedures and track records of team members?

In my opinion this should be the Forum.

Basket changes are decided optimistically, but still I would want to be aware of them well in advance, so I can veto them if they contain bad, or even malicious changes (god forbid!)

So yes, full support on my end.

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