Proposal Threshold

A proposal threshold is the minimum amount of governance power—typically measured in tokens—a user must hold or delegate to formally submit a governance proposal for a community vote. This mechanism acts as a spam filter and quality control measure, preventing the governance system from being flooded with frivolous or malicious submissions. It ensures that proposal submitters have a meaningful skin in the game, aligning their incentives with the protocol's long-term health. The threshold is usually defined in the protocol's smart contracts and can be adjusted through a governance vote itself.

The specific implementation of a proposal threshold varies by protocol. In systems like Compound and Uniswap, it is expressed as a fixed number of governance tokens (e.g., 65,000 COMP or 10,000,000 UNI). Other DAOs may use a dynamic threshold based on a percentage of the total token supply or delegated voting power. This design choice balances accessibility with efficiency; a threshold set too high can centralize proposal power, while one set too low can lead to governance paralysis due to proposal overload.

To meet a proposal threshold, users who do not hold enough tokens individually can participate in delegate strategies, such as forming a governance pod or rallying support from a decentralized autonomous organization (DAO) sub-group. Alternatively, they can use platforms that aggregate voting power from multiple stakeholders to sponsor proposals. The threshold is distinct from a quorum, which is the minimum voter participation required for a proposal to be valid, and from a passing threshold, which is the majority vote needed for execution.

Adjusting the proposal threshold is a critical governance decision. As a protocol matures and its token distribution changes, the community may vote to increase the threshold to maintain proposal quality or decrease it to encourage broader participation. Historical examples include MakerDAO's iterative adjustments to its governance parameters to optimize for stability and inclusivity. These changes are often debated in governance forums long before a formal vote, highlighting the threshold's role in shaping the political and operational dynamics of a decentralized community.

A proposal threshold is the minimum amount of governance power—typically measured in a protocol's native token—that a user must possess and stake or delegate to create an on-chain governance proposal. This mechanism acts as a spam filter, preventing the proposal queue from being flooded with frivolous or malicious submissions that would waste community attention and network resources. The threshold is usually defined as a specific token quantity (e.g., 100,000 UNI) or a percentage of the total voting supply, and is enforced automatically by the protocol's smart contracts.

Setting the threshold involves a critical trade-off between accessibility and efficiency. A threshold set too low may lead to governance proposal spam, overwhelming voters and making serious debate difficult. Conversely, a threshold set too high can centralize proposal power among a small group of large token holders or whales, stifling broader community participation. Many protocols initially set a high threshold for security and later adjust it via governance votes as the ecosystem matures and token distribution widens.

The threshold is often distinct from a quorum, which is the minimum voter turnout required for a proposal to pass. A user must meet the proposal threshold to submit a proposal, but the entire community must meet the quorum to validate its outcome. In systems like Compound and Uniswap, this threshold is a publicly visible, immutable parameter in the governance contract, though it can be changed through a successful governance vote itself.

In practice, users who do not individually hold enough tokens can collaborate to meet a proposal threshold through delegation or by forming a governance pod. Delegation allows smaller holders to pool their voting power with a trusted delegate who can then submit proposals. Alternatively, specialized platforms enable the creation of sub-DAOs or pods that aggregate tokens solely for the purpose of proposal submission, democratizing access while maintaining the spam-protection benefits of the threshold.

For developers and analysts, monitoring the proposal threshold is key to understanding a protocol's governance health. A threshold that consistently requires more than 1-2% of the circulating supply may indicate excessive centralization. Historical analysis of successful proposals can reveal whether the threshold is effectively filtering noise without excluding meaningful community initiatives, providing critical data for future parameter optimization.

A proposal threshold is a governance parameter that establishes a minimum requirement—typically a quantity of voting tokens—that a user must meet to submit a formal governance proposal. Its primary purpose is to prevent governance spam and maintain the operational efficiency of the decision-making process. By requiring a meaningful stake, it filters out frivolous or malicious proposals that could otherwise overwhelm the community and dilute attention from substantive issues.

The rationale extends beyond simple spam prevention. A well-calibrated threshold ensures that proposal submitters have skin in the game, aligning their incentives with the long-term health of the protocol. This reduces the risk of proposals designed for short-term exploitation or that would be detrimental to the collective. Furthermore, it encourages coalition-building, as smaller stakeholders must collaborate to pool their tokens and reach the submission requirement, fostering broader community discussion before a proposal even reaches a vote.

Setting the threshold value is a critical governance decision itself. A threshold set too high can lead to governance capture by large token holders (whales) or entities, stifling participation and innovation from the broader community. Conversely, a threshold set too low fails its anti-spam function and can make governance practically unusable. Many protocols use a percentage of the total token supply (e.g., 0.25% to 1%) or a dynamic formula based on past participation to find this balance.

In practice, the proposal threshold works in concert with other governance parameters like quorum and voting delay. While the threshold controls entry into the proposal queue, quorum ensures sufficient participation for a valid vote, and a voting delay provides time for review. This creates a multi-layered system for quality control. For example, in Compound Governance, Proposal 62 famously established a threshold of 65,000 COMP, which was later adjusted by the community based on evolving needs and token distribution.