New Polygon 2.0 Governance Model to Add More Decentralized Control: Will the SEC Accept This?
Will the new structure help Polygon solve SEC situation? | Credit: Shutterstock
- To achieve more dispersed control, Polygon intends to revamp its governance architecture
- This involves introducing a two-phase community treasury and establishing an “ecosystem council” for smart contract improvements
- The SEC classified Polygon (MATIC) and 67 other cryptocurrencies as securities
To achieve more decentralized control over its ecosystem, the Polygon team has revealed its plans to develop a new governance architecture to help it with the latest confrontations with the SEC. The advancement is in response to the team’s latest roadmap, Polygon 2.0, which calls for the creation of a network of Layer 2 chains driven by zero knowledge.
According to the developers, the new Polygon governance structure would consist of “three governance pillars,” emphasizing the administration of the network’s core protocol, smart contracts, and community treasury management. In a blog post , Polygon stated that it intended to include the ethos and community-building strategies of Ethereum’s governance structures.
The Three Elements of Good Governance
The constitution of a state assigns several suitable decision-making procedures to each governable entity. For instance, the local government may decide to pave a crossroad, but the federal government decides to spend money on the nation’s infrastructure.
Similarly to this, when thinking about the governance of blockchain networks and ecosystems, one needs to concentrate on the many decision-making objects to consider the right decision-makers. The Three Governance Pillars have been developed to define appropriate decision-makers and decision-making processes. They act as a topology of all governable objects in the Polygon ecosystem.
The division of duties and responsibilities will make it possible to create scalable and effective governance frameworks that compartmentalize and streamline the whole governance procedure.
Protocol Governance
The PIP (Polygon Improvement Proposal) framework, modeled after the strong, efficient frameworks used by the IETF, Python, Bitcoin, and Ethereum, offers an open coordination platform for developing Polygon protocols. Internal and external players are using the PIP framework, which is live and fully functioning on the Polygon PoS chain, to suggest updates.
The PIP framework is expected to be expanded in Polygon 2.0 to cover the full Polygon permissionless stack eventually. This will give the community a formal means to conduct research and suggest improvements that could eventually be incorporated into protocols.
To shape its governance, the Polygon team said it is seeking stakeholders, including validators, dApp developers, and users. The researchers emphasized that in order to achieve this, “we are proposing a forward-looking framework for decentralized ownership and decision-making over all Polygon protocols and the ecosystem.”
System Smart Contracts Governance
This pillar will make it easier to update protocol elements that are used in smart contracts. Although the PIP architecture can (and probably should) help with these upgrades, the nature of Ethereum smart contracts necessitates further oversight of the upgrading process.
We suggest the creation of the Ecosystem Council, an organization overseen by the community and tasked with upgrading system smart contracts, to guarantee the continued upgradeability of the aforementioned protocol components.
The Ecosystem Council would be supported by a custom governance structure that would allow for secure, scalable, and clear decision-making for this pillar. On a broad scale, a model protected by elections and community veto, built on sophisticated token holder governance, may offer the finest blend of security and effectiveness.
The transition to the inaugural Ecosystem Council, which has stringent consensus standards and a reliable group of members to represent the ecosystem in this phase, will be offered as a PIP soon. After that, there will be a steady progression to the fully functional, community-controlled governance model that ensures effectiveness and security.
An Ecosystem Council Transparency dashboard, an open-source tool for community monitoring of upgrade transactions and their lifetime, including clear descriptions of proposed upgrades, will shortly be launched to provide for enhanced insight into the operations of the Council.
Finally, it is urged that subject matter experts and ecosystem players work together to develop the governance structure and take part in the governance process. The outcome of one such partnership will soon be available to you in the shape of an impartial report by L2Beat on the system smart contracts governance in the L2 business.
Community Treasury Governance
The Web3 industry as a whole and the Polygon ecosystem are still in the early stages of development and usage. The Polygon ecosystem will require continued support in the upcoming years to maintain its current growth trajectory.
This is the rationale behind the new proposal in the tokenomics whitepaper to create the Community Treasury, a self-sustaining ecosystem fund. In essence, this money should support innovative ecosystem projects, efforts, and public goods.
Polygon also added it is crucial to continue supporting community development, education, and accessibility to boost participation in protocol research and development.
To do this, a PIP platform—a user-friendly PIP knowledge base and empowerment tool—is being investigated, and the governing forum will shortly receive several updates that will enhance the user experience.
Supporting community development, education, and accessibility must continue to boost engagement in protocol research and development. A PIP platform, a user-friendly PIP knowledge base and empowerment tool, is being investigated for this purpose, and the governing forum will shortly be updated with several user experience improvements.
The company stated that every element of Polygon 2.0 is up for debate. According to them, the Polygon network is entirely under the community’s authority, and all of the concepts that have been shared to yet will receive the community’s final approval. Furthermore, once the Polygon 2.0 concept is realized, community participation and governance will be necessary going forward.
Polygon Reacts To the SEC, and Prices Increase
“We are putting out a futuristic architecture for decentralized ownership and decision-making on all Polygon protocols and the ecosystem to make this possible. The framework identifies three governance pillars, or the three primary Polygon ecosystem components that need to be governed, and investigates the best governance solutions for each,” it said.
The company is hoping that this will help end its confrontations with the SEC. Last month, the SEC filed several lawsuits against Binance and Coinbase and classified some tokens, including Polygon’s MATIC, as securities.
This led to a sharp price decline across the entire crypto market. In the midst of all of this commotion, Polygon’s response to the SEC sparked a price surge for MATIC and Tradecurve, two companies that have been making headlines in the DeFi industry.
Regulators, legislators, and the non-American market were thanked by the Polygon team, who also said they were ready to collaborate with them to improve the Polygon ecosystem. The crypto community, meanwhile, has responded favorably and praised Polygon’s stance against the SEC.
This answer from Polygon (MATIC) and its community changed the way people felt about MATIC, which had been steadily losing ground lately. In just 24 hours, MATIC’s price increased by 14%, pushing the token’s price as high as $0.680. It is hoped that the release of Polygon 2.0 would restore investors’ faith in MATIC and allow the token price rise back toward $0.75.
