Proposal Threshold

A proposal threshold is a governance parameter that sets the minimum amount of a protocol's governance token (e.g., voting power, delegated tokens, or a simple token count) a user must hold or have delegated to them to submit an on-chain governance proposal. This mechanism acts as a spam-prevention filter, preventing the governance system from being flooded with frivolous or malicious proposals that would waste community attention and require costly on-chain execution. The threshold is typically defined in the protocol's smart contracts and can be adjusted through the governance process itself.

The specific implementation of a proposal threshold varies by protocol. In systems like Compound or Uniswap, it is often a fixed number of tokens. In others, like MakerDAO, it can be a dynamic value based on a percentage of the total delegated voting power. This design ensures that only stakeholders with a meaningful skin in the game can initiate formal changes, which range from simple parameter adjustments and treasury allocations to critical upgrades of the core protocol logic.

Setting the appropriate threshold is a critical governance challenge. A threshold set too high can lead to governance capture by large holders and stifle community participation, creating a plutocratic system. Conversely, a threshold set too low can make the system vulnerable to spam and governance attacks, where an attacker submits numerous proposals to create chaos or exploit procedural delays. Many DAOs actively debate and vote on threshold levels to balance accessibility with security and efficiency.

The proposal threshold is distinct from, but works in concert with, other governance parameters like the quorum (minimum votes needed for a proposal to pass) and voting delay/period (the timeframes for voting). A proposal that meets the submission threshold must still attract sufficient voter participation to meet quorum and achieve a majority for vote to be executed. This multi-stage process is fundamental to the checks and balances of decentralized autonomous organizations (DAOs).

In practice, users who do not meet the threshold individually can collaborate through delegate aggregation or use proposal portals that bundle support from multiple community members. Some protocols also feature temperature checks or off-chain signaling (e.g., Snapshot votes) that have no financial barrier, allowing broader community sentiment to be gauged before a formal, threshold-bound on-chain proposal is drafted and submitted.

The proposal threshold is a quantifiable barrier, typically expressed as a number of governance tokens (e.g., 100,000 UNI or 50,000 MKR), that a user or entity must possess or delegate to create an on-chain proposal. This mechanism acts as a spam filter, preventing the governance system from being flooded with frivolous, malicious, or low-effort submissions that would waste community attention and consume valuable block space. By setting this minimum stake, the system ensures that proposers have a meaningful skin in the game, aligning their incentives with the protocol's long-term health.

The specific threshold value is not arbitrary; it is usually set through the protocol's own governance process and can be adjusted via a proposal itself. For example, a DAO might initially set a low threshold to encourage broad participation but later vote to increase it as the treasury grows and the stakes of proposals become higher. This parameter directly influences the accessibility and quality of governance. A very high threshold can lead to centralization, where only large token holders (whales) or well-funded entities can propose, while a very low threshold may render governance inefficient.

In practice, a user who wishes to submit a proposal must have their voting power—either through direct token ownership or via delegation—meet or exceed the threshold at a specific block number, often the time of submission. This is checked on-chain. If the threshold is not met, the transaction will fail. It's important to distinguish this from a quorum, which is the minimum voting participation required for a proposal to pass, not to be submitted. The threshold gatekeeps entry; quorum validates the outcome.

Many protocols implement mechanisms to work with or around thresholds to maintain inclusivity. Proposal delegation allows users to pool their voting power to meet the threshold. Temperature Check or pre-proposal discussion forums (like Commonwealth or Discord) enable ideas to be vetted by the community before any on-chain submission is attempted, ensuring only serious proposals with preliminary support consume formal governance resources. This creates a two-tiered system: informal signaling followed by formal, on-chain execution.

For developers and analysts, monitoring the proposal threshold is key to understanding a protocol's governance health. A sudden, successful proposal to drastically increase the threshold could signal a shift towards more conservative or centralized control. Conversely, a lowering of the barrier might indicate a desire for more radical decentralization and experimentation. The threshold is therefore a dynamic lever that reflects and shapes the political economy of the decentralized organization it governs.

The proposal threshold acts as the primary gatekeeping mechanism in a governance system, preventing proposal spam and ensuring that only initiatives with a baseline level of community support reach the formal voting stage. This threshold is typically denominated in the network's native governance token, such as requiring a proposer to hold or have delegated a specific number of tokens (e.g., 100,000 UNI or 0.25% of the total supply). By setting this barrier, the parameter balances accessibility with efficiency, filtering out frivolous proposals that could otherwise congest the governance process and dilute voter attention.

Adjusting this parameter is a core governance function itself, often requiring a successful vote. A high threshold creates a more exclusive and stable governance environment, favoring large token holders and established delegates, but risks centralizing proposal power. Conversely, a low threshold promotes broader participation and grassroots initiatives but increases the risk of governance attacks and spam. For example, a protocol might lower its threshold to encourage more community submissions after a period of low participation, or raise it following an incident of proposal flooding.

The threshold interacts directly with other key governance parameters. It works in tandem with the quorum requirement, which determines the minimum total voting power needed for a proposal to be valid, and the voting delay and voting period, which set the proposal's timeline. In sophisticated systems like Compound's Governor Bravo, the proposal threshold can be expressed as a function of the total token supply, allowing it to scale dynamically. Proper calibration of this suite of parameters is essential for creating a resilient, responsive, and legitimate decentralized governance process.