Overview of Merit Circle DAO's governance

Overview of the governance and $BEAM's role

In addition to its other utilities, $BEAM functions as the governance token of the MC Ecosystem. It plays a key role in the progressive decentralization of the MC Ecosystem.

Governance mainly occurs in two ways:

  1. Governance of the Beam network through validation; the majority of validators can make changes to the network.

  2. $BEAM tokenholder (DAO) voting in connection with governance proposals.

This section focuses on the type of governance referred to in no. 2 above, where the tokenholders primarily govern the community treasury and and certain smart contract systems (such as configurable parameters of BeamSwap).

For the DAO to operate as a fully decentralized and autonomous user-governed ecosystem, it is beneficial to have in place a formalized process of decision making. In a permissionless ecosystem with permissionless smart contract systems, everyone should in principle be able to propose changes and improvements.

There are two main categories of governance proposals:

  1. Binding proposals: Are proposals that may be enforced autonomously on-chain after a vote has successfully passed, or otherwise.

  2. Signaling proposals: Are all other governance proposals made. For example, signaling a preference for certain code or functions to be added to Beam or a business decision to be made by a DAO-adjacent entity, e.g. to enter into a particular agreement. Signaling proposals are voted upon in the same way as binding proposals. However, because these proposals require off-chain implementation actions by extrinsic parties – such as a smart contract developer, or others, the DAO approval is neither necessary nor sufficient to cause these proposals to be implemented. Therefore, these proposals merely signal the DAO's support for or opposition to the proposed outcome.

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