Proposal Sponsor

In Compound Governance, any COMP token holder can become a sponsor by submitting a proposal. The sponsor must hold at least 65,000 COMP (or have it delegated to them) to meet the proposal threshold. This mechanism ensures sponsors have significant skin in the game and filters out spam. The process involves:

• Drafting the proposal (e.g., changing a collateral factor).
• Queuing it on-chain with the required COMP.
• Awiting a 2-day voting delay before the community vote.

The Uniswap Grants Program is a sponsored governance initiative where a committee (the sponsor) submits bundled funding proposals on behalf of the community. These Treasury Grant proposals request funds from the Uniswap DAO treasury to fund ecosystem projects. The sponsorship committee handles due diligence and administration, abstracting complexity from individual voters. This demonstrates delegated sponsorship for specialized functions like grant allocation.

On Arbitrum, a sponsor must lock a security deposit (in ETH) when submitting a proposal. This deposit is slashed if the proposal is rejected, but returned if it passes. This bonding mechanism aligns the sponsor's incentives with proposal quality and voter sentiment. It prevents spam while allowing any entity to sponsor by putting capital at risk, rather than requiring a large token holding.

MakerDAO utilizes Governance Facilitators as official sponsors from the Protocol Engineering Core Unit. These facilitators are responsible for bundling, formatting, and technically submitting Executive Votes and Polling Votes based on community consensus. They act as a trusted sponsor to ensure proposals are executable and follow proper governance processes, showcasing a role-based sponsorship model.

Aave Governance separates the ideation and sponsorship phases. First, a Temperature Check (off-chain snapshot) gauges sentiment without sponsorship. A successful signal must then find a sponsor with the required Aave Governance Power (proposal power) to submit it on-chain. This creates a two-stage filter where community support is validated before a sponsor commits resources for the formal vote.

Core developers or founding teams act as sponsors to propose protocol upgrades, parameter adjustments, and treasury allocations. They provide the technical specifications and rationale for changes to the network's core logic or economic policy.

• Example: Aave Labs sponsoring a proposal to add a new collateral asset.
• Example: Uniswap Labs proposing a new fee switch mechanism.

Elected delegates or professional governance firms sponsor proposals on behalf of token holders. They often focus on operational governance, grant programs, and ecosystem initiatives.

• Key Activities: Drafting budget proposals, establishing committees, and managing community grant rounds.
• Role: They translate community sentiment and strategic vision into executable on-chain actions.

Third-party projects seeking integration or funding sponsor proposals to access a protocol's treasury or technical resources. This includes grants for building on top of the protocol.

• Common Proposal Types: Request for funding (RFP), integration proposals, and partnership agreements.
• Goal: To leverage the existing community and capital of a DAO to bootstrap their own project or service.

Groups of retail token holders or investment DAOs (like The LAO) pool resources to meet sponsorship requirements. They sponsor proposals advocating for tokenomics changes, revenue distribution, or governance process reforms.

• Mechanism: Use syndication or multi-sig wallets to collectively post the required proposal bond.
• Impact: Enables smaller, aligned groups to directly influence protocol direction.

Sponsoring a proposal is a formal process with specific barriers to prevent spam. Key requirements include:

• Proposal Bond: A staked amount of native tokens (e.g., 0.25% of supply) that is forfeited if the proposal fails.
• Minimum Support: Achieving a threshold of affirmative votes to move from a temperature check to a formal vote.
• Technical Specification: Providing executable code or clear parameters for on-chain execution upon passage.

Entities become sponsors to achieve specific strategic outcomes, which shape the type of proposals they submit.

• Value Capture: Proposing changes to direct protocol fees or revenue to a specific group.
• Ecosystem Growth: Funding initiatives that expand the protocol's user base or utility.
• Risk Mitigation: Adjusting parameters (like loan-to-value ratios) to improve system security.
• Governance Influence: Establishing precedents or processes that shape future decision-making power.

The primary security function of a sponsor is to gatekeep proposal submission through a financial commitment. By requiring a proposal deposit (often in the protocol's native token), the system disincentivizes spam, frivolous, or malicious proposals. This deposit is typically slashed or burned if the proposal fails to reach a quorum or approval threshold, ensuring sponsors are economically aligned with the network's best interests.

Sponsor deposits are governed by specific on-chain rules. Common slashing conditions include:

• Failure to reach quorum: Not enough voting power participates.
• Failure to pass: The proposal is rejected by voters.
• Early termination: The proposal is canceled by governance or found to be malicious. The deposit may be returned in full if the proposal passes, creating a reward mechanism for beneficial governance participation.

A sponsor with significant capital can exert undue influence by:

• Proposal flooding: Submitting multiple proposals to dominate the governance agenda.
• Stifling dissent: The high cost can prevent less-funded community members from sponsoring proposals, leading to governance capture by whales or large entities. Protocols may implement deposit caps or sponsor reputation systems to mitigate this.

In Compound Governance, a proposal sponsor must hold at least 65,000 COMP (or have their proposal delegated that amount) to submit. This acts as the proposal deposit. If the proposal fails to reach a quorum of 400,000 COMP votes, the sponsor's deposit is burned. This creates a high-cost barrier, ensuring only serious, well-supported proposals reach a vote.

A Proposal Factory is a smart contract that can sponsor proposals on behalf of users, often pooling funds or using a shared deposit. While increasing accessibility, it introduces new risks:

• Smart contract risk: Bugs in the factory could lock or lose deposits.
• Opaque sponsorship: It may obscure the true entity behind a proposal.
• Sybil resistance challenges: Requires robust identity checks to prevent abuse of pooled resources.

To balance security and accessibility, protocol designers should consider:

• Dynamic deposit sizing: Adjust based on proposal type or network activity.
• Deposit refunds with interest: Reward successful sponsors to encourage participation.
• Delegate sponsorship: Allow token holders to delegate voting power to a sponsor without transferring funds.
• Timelocks on sponsored proposals: Prevent rapid, malicious proposal sequences even with sufficient deposit.

A formal, on-chain suggestion for a change to a protocol's parameters, code, or treasury. It is the primary mechanism for decentralized decision-making.

• Types: Parameter changes, treasury spends, smart contract upgrades.
• Lifecycle: Draft → Snapshot (temperature check) → On-chain proposal → Voting → Execution.
• Example: A proposal to adjust the Compound protocol's reserve factor or allocate funds from the Uniswap DAO treasury.

A collateral requirement that a sponsor must lock to submit a proposal. It acts as a spam-prevention mechanism and is typically refunded if the proposal passes a preliminary voting threshold.

• Purpose: Deters frivolous proposals that waste community attention and block space.
• Mechanism: In Cosmos SDK chains, a minimum deposit must be met, often through community crowdfunding.
• Forfeiture: The deposit may be burned if the proposal fails to reach a quorum or is rejected by a large margin.

The process by which token holders (governance token owners) assign their voting power to a representative, known as a delegate. This is central to representative DAO models.

• Function: Allows holders who are not actively engaged to participate indirectly.
• Impact on Sponsors: Delegates with large voting power are often sought as co-sponsors to signal early support and improve a proposal's chances of passing.

An off-chain, gas-free signaling mechanism used to gauge community sentiment before an expensive on-chain proposal is sponsored. It is a critical step in the proposal lifecycle.

• Purpose: Tests ideas, builds consensus, and identifies potential sponsors.
• Tool: Uses the Snapshot platform, which verifies voting power via a signed message rather than an on-chain transaction.
• Relationship: A successful Snapshot vote often precedes the formal, on-chain proposal sponsored by a delegate or whale.

A cryptocurrency wallet that requires multiple private keys to authorize a transaction. In DAOs, they are often used as the executive or treasury wallet.

• Role in Proposals: After a governance vote passes, the execution transaction is typically submitted by a designated multisig. The sponsor of the original proposal is not necessarily a signer on this wallet.
• Security: Distributes control, preventing a single point of failure for treasury funds or protocol upgrades.

The minimum amount of voting power (e.g., percentage of total token supply) that must participate in a vote for the result to be valid. It is a fundamental requirement for proposal legitimacy.

• Challenge for Sponsors: A primary risk is a proposal failing due to low quorum, even with majority support. Sponsors must actively campaign to drive voter participation.
• Variation: Quorum requirements differ per DAO; some use dynamic models based on past participation.