Today marks the launch of the Pyth Network’s permissionless mainnet, ushering in a new era of token-led governance for the protocol.
Ecosystem participants can actively engage in Pyth Governance by locking their PYTH Tokens in the Pyth staking program to cast votes on community governance proposals. You can participate by staking your PYTH Tokens.
On-chain governance involves major protocol matters, including the reward mechanisms for data providers, the size and denomination of the oracle's fees, and the selection of price feeds listed on the network.
This blog post will explain the purpose of Pyth Governance and how users can participate in governance discussions and on-chain voting.
Note: This post is currently in public preview and may change substantially as feedback is captured from readers like you. Join the Pyth Discord to share your feedback.
From Permissioned to Permissionless Mainnet
The Pyth Network’s contributors have embarked on a mission to bring the world's financial data onto the blockchain. To accomplish this goal, the network invites major financial institutions and decentralized players to contribute their proprietary data to the protocol. The Pyth oracle aggregates their data to securely and reliably publish prices on-chain for decentralized applications to use.
The Pyth Network launched its permissioned mainnet on August 2021. This early bootstrapping phase prioritized strategic growth and optimization of the protocol. In just two years, the network expanded to cover more than 40 blockchains, serving over 230 dApps and sourcing data from over 90 data providers.
Today marks the Pyth Network’s transition to its permissionless mainnet phase. On-chain governance will serve as the backbone of the protocol’s evolution and allow token holders to propose, discuss, and vote on key protocol matters. On-chain governance will facilitate collective decision-making within the Pyth Network ecosystem, encompassing a diverse range of participants such as decentralized applications, financial institutions, infrastructure providers, and individual DeFi users.
How Pyth Governance Works
Pyth Network’s governance system allows anyone with PYTH Tokens to participate. Token holders must stake their tokens in the Pyth staking program to vote on community governance proposals. Governance uses a 1:1 coin-voting system, where each staked token confers one vote. Some network participants also have locked tokens that are released according to an unlock schedule; locked tokens can also be staked and thereby used to participate in governance.
Pyth Governance runs in epochs of 1 week. Tokens that are staked today become available to vote at the beginning of the next epoch. Unstaking tokens requires a cooldown period of 1 epoch before the tokens can be withdrawn. The epoch mechanism ensures that there is a fixed distribution of voting weights for the entire epoch that is known at the start. Proposals also run for 1 week, and use the voting weights for the epoch when they were proposed.
Pyth Governance runs on the Solana mainnet-beta blockchain, but applies to the Pyth Network across all of the various chains where it operates. The governance system uses Wormhole messaging to communicate with Pyth contracts on other blockchains.
Proposals pass when a majority approves them, provided that a quorum of participants have voted. Proposals are binding on-chain: each proposal has one or more associated instructions that are executed when the proposal passes. Community governance proposals proposals can relate to all of the following:
- Determine the size of update fees.
- Determine the reward distribution mechanism for publishers.
- Approve other software updates to on-chain programs across blockchains.
- Determine the price feeds are listed on Pyth and their reference data (e.g., number of decimal places in the price, reference exchanges).
- Choose the publishers that are permissioned to provide data for each price feed
The Pyth DAO LLC
Ecosystem participants that are staking tokens to participate in Pyth Governance will become members of Pyth DAO LLC (“Pyth DAO”), provided that they satisfy the conditions of membership at the time of Pyth DAO’s formation. Pyth DAO will be one of the first DAO LLCs of its kind.
The Pyth DAO is to be formed as an algorithmically-managed non-profit limited liability company. Pyth DAO will be incorporated in the Republic of Marshall Islands. Current drafts of the governance documents for the to-be-formed Pyth DAO can be found here.
Please note that when participating in Pyth Governance, you are responsible for verifying that any Pyth Network websites and channels are listed in the official community hub and you assume any risks arising from participating in Pyth Governance.
PYTH Token holders can access Pyth governance through the convenient staking and governance frontend hosted by the Pyth Data Association.
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