What is xGNS

Governance in Gnoswap is powered by xGNS, a non-transferable governance token exclusively issued to users who stake their $GNS-$GNOT positions into the $GNS-$GNOT staking pool. This staking pool functions as voting-power-escrow contracts for Gnoswap. The amount of xGNS a user is eligible to activate is determined by the underlying quantity of $GNS in their $GNS-$GNOT position at the time of staking. Activating xGNS tokens from a position will apply a 14-day lock that is triggered when the position is unstaked. The unstaking mechanism exists to ensure that the positions from which voting power originates are exposed to the effect of the proposal to add a layer of "skin in the game".

How to Earn xGNS

  1. Provide liquidity to a $GNS-$GNOT liquidity pool to obtain a liquidity position.

  2. Stake the position in the $GNS-$GNOT staking pool.

  3. You will be eligible to activate xGNS based on the underlying quantity of $GNS in your $GNS-$GNOT position. (For example, if your position includes 100 $GNS, you will be eligible to activate 100 xGNS tokens)

  4. Once you unstake your $GNS-$GNOT positions, the xGNS tokens will become inactive and burned immediately and your position will be returned after 14 days.

The staking mechanism in Gnoswap, inspired by Balancer, is designed to incentivize liquidity providers with the greatest commitment to the platform's long-term success by granting them governance power. This enables active participation in voting on proposals and influencing the direction of the Gnoswap platform. Additionally, the use of the $GNS-$GNOT liquidity staking pool for issuing xGNS ensures that the core pool of $GNS-$GNOT remains sufficiently liquid, promoting the stability and usability of the platform.

Voting Process

The decision-making process of Gnoswap Governance relies on a simple majority vote from xGNS holders, where 1 active xGNS equals 1 vote. A deposit is required from the proposer as a spam prevention method. The deposit is returned to the voter once the voting is concluded.

  1. The proposer creates and submits a proposal via the Gnoswap Governance Dashboard.

  2. The proposal is put into a deposit period.

  3. The proposal enters the voting period once the minimum deposit is reached.

  4. At the end of the voting period, all votes are tallied to decide on the outcome of the proposal, provided that the percentage of votes reached the quorum.

Scope of Proposals

Proposals come in various types. The proposer may gauge the sentiment from the community on critical topics or ideas with a Text proposal, request funding from the Gnoswap Community Pool with a CommunityPoolSpend proposal, or propose a parameter change that is automatically applied once passed with a ParameterChange proposal. Below is a list of parameters that can be changed with a proposal:

  • Protocol Fee: The percentage of the Protocol Fee taken from swaps.

  • Inflation Rate: The inflation rate of $GNS tokens.

  • Staking Rewards: The staking rewards paid out in $GNS tokens.

  • Deposit Period: The period in which the proposer must submit the required deposit.

  • Deposit Minimum: The minimum deposit required to put the proposal in the voting period.

  • Voting Period: The duration of the voting period.

  • Vote Quorum: The threshold of the percentage of total voting power required to cause the proposal to become valid.

Proposal Examples

  1. Directing $GNS Emission Incentives to a New Pool: A new pool may want to join the list of internally incentivized pools to reward its LPs with $GNS emissions. However, this requires thorough discussions as it will dilute the rewards from currently incentivized pools. The Gnoswap Governance will be attracted to voting towards pools with the potential to bring greater benefits to the protocol by driving organic volume and users.

  2. Adjusting the Protocol Fee: The Protocol Fee of 0.15%, directed to the Ecosystem Growth Reserve, exists to drive the sustainability of Gnoswap. This rate can be modified by the Gnoswap Governance if an adjustment is required.

  3. Deploying Gnoswap on Other GnoVM-based Chains: Gnoswap consists of a set of realms that are entirely written in Gnolang, meaning that it can be deployed on any other chains that are powered by the GnoVM. Having Gnoswap deployed in another chain removes the complexity of bridging for users and allows the protocol to capture fees from the broader ecosystem.

  4. Selecting a Canonical Bridge: Bridged assets from non-IBC-supported blockchains may result in multiple representations of a single token (e.g. ETH bridged via Axelar vs Gravity). To remove confusion for end-users, Gnoswap Governance may choose a certain provider as the canonical token bridge.

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