Understanding Governor Bravo: A Key Tool for On-Chain Enforceability
31 JUL 2023 | RESEARCH | AUTHORED BY CALLEN
- Governor Bravo is a smart contract used by decentralized autonomous organizations (DAOs) to manage their operations and decision-making processes with security, transparency, and enforceability.
- The key function of Governor Bravo is to create and execute proposals within a DAO, which can be voted on by members of the organization using their tokens.
- Governor Bravo is the successor of Governor Alpha and offers improved features such as upgradability, increased voting options, and the ability to leave a reason for your vote.
- Governor Bravo has been widely adopted by many new and well-known decentralized finance protocols such as Compound Finance and Uniswap.
What is Governor Bravo?
Governor Bravo is a smart contract that enables decentralized autonomous organizations (DAOs) to manage their operations and decision-making processes with a high degree of security, transparency, efficiency, and enforceability.
The key function of Governor Bravo is to facilitate the creation and execution of proposals within a DAO. Proposals can be created by any member of the DAO (assuming they have sufficient proposal power) and can be voted on by other members. The proposal can be anything from changing the rules of the DAO to approving a new project or investment. Proposals are voted on by the members of the DAO using their tokens, which represent their voting power within the organization.
One example of a DAO that uses Governor Bravo is Compound Finance. Compound Finance is a DeFi platform that allows users to lend and borrow cryptocurrencies. The governance of Compound Finance is managed by the Compound Governance Token (COMP), which is used to vote on proposals using Governor Bravo. This allows members of the platform to have a say in the direction of the organization, as well as ensure that decisions are made transparently and democratically.
Why is it important/needed?
Governor Bravo is an upgrade from its predecessor Governor Alpha, offering new features such as upgradability, increased voting options, and the option to leave a reason for your vote. Governor Bravo wasn’t necessarily a brand-new mechanism that DAOs adopted, it simply offered improvements for DAOs that were already ‘truly decentralized’, or DAOs who were looking to become ‘truly decentralized’.
A common phenomenon nowadays is for a protocol to have the facade of a DAO – public forums, Snapshot votes, token holders, etc. Yet, they are not truly decentralized from an on-chain enforceability perspective. For example, a DAO may have a vote on transferring assets from the DAO’s treasury. However, the execution of this transaction is performed by the protocol’s team through a multi-sig instead of automatically executing on-chain after the vote has succeeded.
This forces token holders to take on large trust assumptions hoping that their vote is honoured and enforced by the team. In contrast, a DAO utilizing Governor Bravo (or a similar mechanism) can remove these trust assumptions and know that their voting power has direct control over the whole protocol (or some parts of it) thanks to automatic on-chain execution.
How does it work?
Governor Bravo has three key functions: proposal creation, proposal voting, and proposal execution.
1. Proposal Creation: Any member with sufficient proposal power can create a proposal ranging from changing the protocol’s parameters to transferring treasury assets. The proposal typically includes the proposal’s type, proposal ID, description, and necessary arguments or data.
2. Proposal Voting: Once a proposal is created, token holders can vote on its outcome. Governor Bravo supports voting options: For, Against, Abstain. DAOs can also configure the voting mechanism to use simple majority, supermajority, and quadratic voting weights.
3. Proposal Execution: If a proposal is approved by token holders, the proposal enters into a waiting period (Timelock) so that users against the change can exit the system if they choose, or in the adverse case, there is time for the proposal to be vetoed or cancelled. Once the waiting period is over, the proposal can be executed by any Ethereum address by calling the execute function within the Governor Bravo Smart Contract.
When a protocol adopts Governor Bravo as its governance system, they have to initialise a set of governance parameters including:
- Voting Period – the number of days token holders can vote on the proposal to reach a consensus.
- Voting Delay (Review period) – the number of days before voting goes live.
- Proposal Threshold – the required minimum number of votes needed to create a proposal.
- Voting Quorum – the required minimum number of votes in support of a proposal for it to succeed.
Unlike Governor Alpha, Governor Bravo allows for these parameters to be updated through a governance vote without having to deploy a new smart contract. This allows DAOs to easily adapt their governance systems to suit the evolution of their DAO’s governance activity.
(See here if you’re interested in a high-level technical overview of Governor Bravo)
On-chain Tradeoffs: Time vs Safety
One downside to on-chain enforceability is the speed at which the protocol can react to certain scenarios. As highlighted in the Compound Finance example above, a typical proposal enforcing a change to the protocol can take up to 7 days. But what happens when an unforeseen event occurs that could have significant adverse consequences for the protocol? A 7-day proposal window could be catastrophic for a protocol suffering an exploit.
Luckily, many protocols have safeguards in place like Compound Finance’s ‘Pause Guardian’ – an address that is a community-elected multi-sig and is solely used during unforeseen vulnerabilities. Its only ability is to disable a select set of functions: Mint, Borrow, Transfer, and Liquidate. The Pause Guardian bypasses the Governor Bravo contracts, eliminating the need for a governance vote and therefore allowing the protocol to react quickly to adverse events. However, for Compound Finance to reverse the changes enforced by the Pause Guardian an on-chain vote is needed.
For example, during the events surrounding Silicon Valley Bank and the subsequent de-pegging of USDC. Compound Finance’s Pause Guardian disabled users from supplying USDC on Compound V2 due to USDC being hardcoded to $1, making the protocol susceptible to accruing bad debt.
USDC supply functionality was later restored through a governance vote, allowing the protocol to return to normal.
The combination of Governor Bravo and Pause Guardians ensures on-chain enforceability while still allowing the protocol to remain reactive to time-sensitive situations.
Who uses it?
Governor Bravo has become a popular choice for many well-known decentralized finance protocols and DAOs due to its flexibility and customization. For example, Uniswap and Compound Finance are very different in nature with the former being a decentralized exchange and the latter being a decentralized money market. However, Governor Bravo is able to cater to both protocols despite how different their governance votes might be; whether that be adding a new collateral asset on Compound or launching a new fee tier on Uniswap.
Given the evergrowing multichain DeFi ecosystem, we continue to see DeFi protocols deploying across an increasing number of chains in pursuit of capturing new users and catering to gas-sensitive audiences. This introduces new challenges to governance, like ensuring token holders still have control over cross-chain deployments in a non-fragmented and familiar manner.
Multichain protocols like Uniswap, Compound, and Aave, all employ a similar architecture that utilises bridging protocols to pass governance votes from Governor Bravo (or something similar) on Ethereum Mainnet to their respective multichain deployment.
In the case of Compound Finance, each Compound III deployment outside of Ethereum Mainnet needs a Bridge Receiver and a Local Timelock contract on its chain. For instance, on Polygon, Compound III has a local Bridge Receiver that will listen for messages passed from the Polygon Bridge that were sent from a successful governance vote on Ethereum Mainnet. The Polygon Bridge Receiver contract then relays the message to Polygon’s deployed Timelock Contract, which then executes the changes after a delay period.
Similarly for Uniswap and Aave, utilising bridges for governance introduces security concerns such as trusting bridge validators to relay transactions from Ethereum Mainnet to alternative chains in a censorship-resistant manner; there is also the risk that a bridge experiences downtime and the cross-chain proposal cannot be executed.
Governor Bravo has become an important tool for decentralized organisations, enabling them to make decisions democratically and transparently. By providing a secure and efficient platform for proposal creation, voting, and execution, Governor Bravo has been adopted by several leading protocols in the DeFi space. Its flexibility and customization options make it a valuable tool for any organization looking to implement decentralized governance.
Governor Bravo also provides a solution for the trust assumptions that often arise in pseudo-decentralized protocols, allowing token holders to have direct control over the protocol’s operations through on-chain enforcement. With its innovative features and benefits, Governor Bravo has revolutionised the way that organizations make decisions, and ushered in a new era of decentralized governance.