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MIP113: The Arbitration Scope Framework

MakerDAO

MIP113: The Arbitration Scope Framework

Preamble

MIP#: 113
Title: The Arbitration Scope Framework
Author(s): @rune
Contributors:
Tags: endgame, scope-framework
Type: General
Status: Accepted
Date Proposed: 2023-02-06
Date Ratified: 2023-03-27
Dependencies:
Replaces:
Forum URL: https://forum.makerdao.com/t/mip113-the-arbitration-scope-framework/19700
Ratification Poll URL: https://vote.makerdao.com/polling/Qmbndmkr#vote-breakdown

Sentence Summary

The Arbitration Scope Framework provides the core principles, rules and regulation regarding Arbitration in the Endgame.

Paragraph Summary

MIP113 establishes the Arbitration Scope Framework. This covers principles and processes related to high level decision making, constitutional interpretation and regulation of constitutional conservers and regulation the core governance processes. The Arbitration Scope plays a critical rule for governance security, and its processes and rules must be defined to enforce that they are carefully followed with care and precision. The Arbitration Scope constrains and supersedes all other Scope Frameworks.

Component Summary

MIP113c1: Preamble
Contains the Preamble to the Arbitration Scope Framework.

MIP113c2: Scope Framework Articles
Contains the Scope Framework Articles for the Arbitration Scope Framework.

MIP113c3: Responsible Facilitators
Contains details on the role and responsibilities of the Responsible Facilitators of each Scope Framework.

MIP113c4: Active Responsible Facilitator Core Unit List Modification Subproposal Process
Contains the process to modify the list of active Responsible Facilitators.

MIP113c5: Scope Framework Articles Modification Subproposal Process
Contains details of how the Arbitration Scope Framework can be amended.

Motivation

The Arbitration Scope Framework is necessary to define the Scope as per the Maker Constitution.

Specification

MI113c1: Preamble

The Arbitration Scope covers principles and processes related to high level decision making, constitutional interpretation and regulation of constitutional conservers and regulation the core governance processes. The Arbitration Scope plays a critical rule for governance security, and its processes and rules must be defined to enforce that they are carefully followed with care and precision. The Arbitration Scope constrains and supersedes all other Scope Frameworks.

MIP113c2: Scope Framework Articles

1: Constitutional Interpretation

1.1: Constitutional Interpretation definition

Constitutional Interpretation is used to disambiguate elements in the constitution with expanded definitions, in connection with specific decisions or disputes relying on language from the Maker Constitution. To make the Maker Constitution as solid and immutable as possible, all constitutional interpretation is recorded to set a precedent about the spirit of the constitution and how future interpretations should be made.

1.2: Principles of using Constitutional Interpretation

Constitutional Interpretation should only be employed when the Maker Constitution itself does not offer enough clarity or contains faults or omissions that can be mitigated by extrapolating the spirit of the Contitution. The resolution of constitutional ambiguity or disputes must be fully congruent with the spirit of the Constitution and prior precedent, while also clearly setting new precedent and help to prevent future ambiguous situations from occuring. Depending on the level of ambiguity, an MKR vote may be needed to establish the precedent.

1.3 Constitutional Intepretation Process

This section contains the processes for proposing and settling Constitutional Interpretations.

  • 1.2.1: Constitutional interpretation precedent approved through MKR vote is contained as subelements of this clause. A majority of Responsible Facilitators of the Arbitration Scope can trigger a vote to add a new subelement if it is necessary resolve a constitutional ambiguity.

  • 1.2.2: Constitutional Interpretation precedent made directly by the Responsible Facilitators of the Arbitration Scope is contained as Active Subelements to the Active Element 1.2.2.1A.

    • 1.2.2.1A:
      ¤¤¤

    List of Constitutional Interpretations:
    * N/A

    ¤¤¤

2: Scope Framework appeals

2.1: Scope Framework appeals definition

Scope Framework appeals are a process that allows any Maker Governance participant to trigger a review of a Scope Framework. This can be in connection with the Scope Framework failing to follow the Constitutional Boundaries, or if it contains biased or otherwise conflicted elements. It can either be a general misalignment of the language of the Scope Framework, or a specific situation where the Scope Framework is being misinterpreted or otherwise violated.

2.2: Scope Framework appeals process

Scope Framework appeal proposals are submitted by CVC Members, and can be accepted or rejected by a majority of the Responsible Facilitators of the Arbitration Scope. If a Scope Framework appeal is accepted, the Responsible Facilitators of the Arbitration Scope must review it. Arbitration Facilitators can also directly choose to review a Scope Framework for adherence with constitutional requirements.

  • 2.2.1: The Responsible Facilitators of the Arbitration Scope can by consensus directly edit a Scope Framework to align its content with the constitutional boundaries and other constitutional requirements such as neutrality.
  • 2.2.2: A majority of the Responsible Facilitators can trigger an MKR governance poll to implement an edit to the appealed Scope Framework that will align it with the constitutional boundaries and other constitutional requirements such as neutrality.

3: Constitutional Conserver management

3.1: Constitutional Conserver management definition

Constitutional Conservers are Ecosystem Actors that perform specific critical tasks in Maker Governance. The Arbitration Scope is tasked with monitoring their adherence to the constitutional rules that apply to them, and take action when necessary.

3.2: Constitutional Conserver recognition

Constitutional Conservers must be recognized by the Responsible Facilitators of the Arbitration Scope. The process of obtaining recognition is specific to each type of Constitutional Conserver. It is not possible for a Constitutional Conserver to gain recognition in more than one type of role at the same time, attempting to become recognized as a different Constitutional Conserver will mean reliquinshing the old Constitutional Conserver recognition.

3.3: Constitutional Conserver adherence requirements

Constitutional Conservers must support the integrity of the Maker Constitution. This includes following specific requirements, as well as indirect requirements extraprolated from the spirit of the constitution.

  • 3.3.1: Constitutional Conservers may not incite actions that contradict the Maker Constitution.
  • 3.3.2: Constitutional Conservers may not incite attempts to modify or overturn the Maker Constitution outside of its self-contained processes.
3.3: Constitutional Conserver derecognition process

The Responsible Facilitators of the Arbitration Scope must derecognize Constitutional Conservers that break the Constitutional Conserver adherence requirements specified in 3.3.

  • 3.3.1: Derecognition of an Ecosystem Actor identity can be done by a Responsible Facilitator of the Arbitration Scope, by directly adding them to the Active Element 3.3.1.1A.

    • 3.3.1.1A:

    ¤¤¤

    List of derecognized Ecosystem Actors:
    * N/A

    ¤¤¤

  • 3.3.2: If a Constitutional Conserver breaks the adherence requirements, but the Responsible Facilitators fail to derecognize them, any MKR holder can lock 10 MKR, by sending it to the Pause Proxy, to trigger a vote of derecognition. This process is to be replaced by the Facilitator penalty mechanism.
    • 3.3.2.1: If the derecognition vote succeeds, the Constitutional Conserver is derecognized, and the 10 MKR is returned to the MKR holder that triggered the vote.
    • 3.3.2.2: If the derecognition vote fails, in case there were legitimate concerns about the constitutional adherence of a Constitutional Conserver, a Responsible Facilitator may bundle an executive vote payload to return the 10 MKR to the MKR holder that triggered the vote.

4: Constitutional Voter Committee management

4.1: Constitutional Voter Committee management definition

Constitutional Voter Committees are organized groups of Ecosystem Actors with publicly verified MKR ownership. Their role is to represent the interests of MKR holders and form opinions on the direction of Maker Governance, primarily through the modification of the Scope Frameworks in quarterly cycles.

4.2: Constitutional Voter Committee Member recognition process

To become recognized as a CVC Member, an Ecosystem Actor must post a recognition submission message on the Maker Governance Forum. Initially, a CVC Member will be unaffiliated with any CVCs, until they join an existing CVC or create a new CVC.
following the template in 4.2.1. The Ethereum address provided must contain MKR. The message must be cryptographically signed by the provided Ethereum address.

  • 4.2.1: The CVC Member recognition submission template is as follows, and must be posted to the Maker Governance Forum.
    • 4.2.1.1:
      ‘’’
      Title: CVC Member Recognition submission
      CVC member recognition submission
      [Ethereum address]
      [Cryptographic signature of message]
      ‘’’

  • 4.2.2: The list of unaffiliated CVC Members is contained in 4.2.2.1A. The Responsible Facilitators of the Arbitration Scope must regularly monitor the Recognition Submissions messages on the Maker Governance forum and add all Ethereum Addresses of valid CVC Members.

    • 4.2.2.1A:

    ¤¤¤

    List of unaffiliated CVC members:
    * N/A

    ¤¤¤

4.3: CVC Member specific adherence requirements

CVC Members must always maintain MKR in their recognized ethereum address.

4.4: CVC Scope Framework and Governance Strategy Position Documents

Every quarter, a CVC produces a Scope Framework Position Document for each of the 12 Scopes, and a Governance Strategy Position Document.

  • 4.4.1: The Scope Framework Position Documents are based on and make edits to the current Scope Framework, or on an Advisory Council Output Document.
  • 4.4.2: The Governance Strategy Position Document provides the general guidelines and values for how CVC Members and CDs that follow the CVCs Governance Strategy should vote in particular situations. The Governance Strategy Position Document also defines the name, short description and full description of the CVC.
4.5: CVC Subcommittee Meetings

Every quarter, a CVC holds a real time Subcommittee meeting for each of the 12 Scopes. Each meeting must occur in a specific week starting with the first full week of each quarter, called the Scope Focus Week. The focus week of a Scope is based on its number out of the Scope Frameworks.

  • 4.5.1: 1: Stability and Liquidity, 2: Decentralized Collateral, 3: Real World Asset Collateral, 4: Ecosystem, 5: Protocol Engineering, 6: Growth, 7: Physical Resilience, 8: Interface, 9: Infrastructure, 10: Finance, 11: Arbitration, 12: Governance Security.
4.6: CVC management

The Arbitration Facilitators must monitor and record the state of all active CVCs.

  • 4.6.1: CVCs must successfully hold a Subcommittee Meeting for each Scope per quarter, and ratify Scope Framework Position Documents for each Scope, as well as a Governance Strategy Position Document each Quarter, or they lose their active status.
  • 4.6.2: Inactive CVCs must follow the requirements of 4.6.1 for a completely quarterly Governance Cycle to gain active status.
  • 4.6.3: During the Pregame, any CVC Member can create a new CVC through a CVC creation message on the Maker Governance Forum based on the template of 4.6.3.1. New CVCs are active from when they are created.
    • 4.6.3.1:
Title: CVC Creation
Content: CVC Creation
[Name of new CVC]

  • 4.6.4: The list of all active and inactive CVCs are contained in 4.6.4.1A. The Arbitration Facilitators must keep the list current based on CVC creation, adherence with requirements, and CVC Decisions. Inactive CVCs are deleted, and removed from the list after 2 consecutive quarters of inactivity.

    • 4.6.4.1A:

    ¤¤¤

    List of active CVCs and their members:
    * N/A

    List of inactive CVCs and their members:
    * N/A

    ¤¤¤

4.5: CVC Decisions

CVC Decisions are formal actions that can be taken by CVCs.

  • 4.5.1: CVC Decisions are proposed through a signed message to the Maker Governance Forum, from a CVC Member.
  • 4.5.2: CVC Decisions are voted on during a one week period. CVC Members vote by posting a signed message refering the proposal and containing either “For” or “Against”. Voting weight is based on the verified MKR of the CVC Member.
  • 4.5.3: The available CVC Decisions are detailed in the subelements of this clause.
    • 4.5.3.1: Adding a CVC Member. A simple majority of existing CVC Members can onboard a new CVC Member.
    • 4.5.3.2: Removing CVC Member. A simple majority of existing CVC Members can remove a CVC Member.
    • 4.5.3.3: Communication infrastructure moderation rights management. A simple majority of CVC Members can add or remove one or more moderators for one or more platforms.
    • 4.5.3.4: Scheduling Subcommittee Meeting. A simple majority of CVC Members can schedule the time of a Subcommittee Meeting.
    • 4.5.3.5: Ratifying Position Paper. A simple majority of CVC Members can ratify a Position Paper that has been publicly posted to the Maker Governance Forum.
    • 4.5.3.6: CD rejection. A simple majority of CVC Members can reject a CD.
    • 4.5.5.7: CVC Split. 25% of the CVC Member Voting power can initiate a CVC Split. A second vote then occurs where all CVC Members can choose to join the split. If the split gains more than 50% of all voting power, it will take over the name and CD followers.
4.6: CVC Member participation rewards

The 14 CVC Members that have the highest amounts of verified MKR, meet minimum participation requirements and have not opted out, are eligible to receive CVC Member participation rewards.

  • 4.6.1: A total of 500 MKR per year is available per year, distributed equally across 14 slots for each Scope per quarter. This gives a reward of 0.725 MKR available per qualifying CVC Member, per scope, per quarter.
  • 4.6.2: The minimum participation requirement for a Scope each quarter, is to participate in a scheduled quarterly Subcommittee Call for the specific Scope, and to have co-authorship of the Scope Framework Position Document for of the specific Scope.
  • 4.6.3: The Arbitration Facilitators must monitor the participation of CVC Members and bundle the MKR payments of the CVC Members that qualify into Executive Votes each quarter.

5: Constitutional Delegates

5.1: Constitutional Delegates definition

Constitutional Delegate is a Constitutional Conserver role that operates Protocol Delegation System smart contracts and implements the Governance Strategies defined by the CVCs.

5.2: Recognition of Constitutional Delegates

To become recognized as a Constitutional Delegate, an Ecosystem Actor must post a CD Recognition Submission message on the Maker Governance Forum. During the early stage of the Pregame, CDs must deploy exactly 2 Protocol Delegation System smart contracts, and specify which CVC Governance Strategy each of them follow. The message must be cryptographically signed by the provided Ethereum address.

  • 5.2.1: The CD Recognition Submission template is as follows, and must be posted to the Maker Governance Forum.
    • 5.2.1.1:
Title: CD Recognition Submission
CD Recognition Submission
[Ecosystem Actor Ethereum address]
[Ethereum address of Delegation Contract 1]:[Followed CVC 1]
[Ethereum address of Delegation Contract 2]:[Followed CVC 2]
[Cryptographic signature of message]
5.3: Constitutional Delegate overview

The current state of CDs is maintained by the Arbitration Facilitators.

  • 5.3.1: The list of all current recognized CDs is maintained in 5.3.1.1A. It is updated in real time by the Arbitration Facilitators as they process and accept CD Recognition Submissions.

    • 5.3.1.1A:

    ¤¤¤

    List of current CDs:

    ETH Address Delegation Contract 1 Followed CVC 1 Delegation Contract 2 Followed CVC 2 Cryptographic Message
    N/A N/A N/A N/A N/A N/A

    ¤¤¤

5.4: Constitutional Delegate specific adherence requirements

In addition to the standard adherence requirements of all Constitutional Conservers, CDs are subject to strict specific adherence requirements because of the significant power entrusted to them through the incentivized voting scheme of Endgame.

  • 5.4.1: CDs may not incite political factionalism or initiate political or strategic movements.
  • 5.4.2: CDs must support the CVCs as much as possible, to make CVC Member participation as easy as possible by focusing on providing access to facts and data, and advice CVC Members on useful decisions that are aligned with the spirit of the CVC.
  • 5.4.3: CDs may not represent Maker externally, or engage directly with counterparties or ecosystem participants, other than the CVCs.
  • 5.4.4: CDs must respect their role as guardians of the security of the Maker Protocol and act accordingly, by not taking actions that could be perceived to put the security of Maker Governance into jeopardy through politicization of the CD role.
  • 5.4.5: CDs may not stand by idly as other CDs push the limits of the slippery slope of misalignment by potentially breaking the adherence requirements.
  • 5.4.6: CDs may not be found to collaborate to influence Maker Governance in groups or structures outside of the CVCs.
5.5: Constitutional Delegates actions

CDs have formal actions that they take through cryptographically signed messages to the Maker Governance Forum.

  • 5.5.1: CDs can choose to follow the Governance Strategy of a different CVC by posting a message that specifies a new delegate contract and a new CVC to follow. The Arbitration Facilitators must then ensure that the new Governce Strategy is displayed in the delegation frontend.
5.6: Constitutional Delegate participation requirements

To maintain CD recognition a CD must have a minimum level of activity, or lose its recognition as CD and removal from 5.3.1.1A, without being Derecognized as a Constitutional Conserver.

  • 5.6.1: A CD must keep a minimum voting activity of 75% participation in all votes on average
  • 5.6.2: A CD must keep a minimum communication activity of having provided comments for 75% of all votes on average.
5.7: Constitutional Delegate income management

The top 14 CDs that have the highest amount of combined MKR delegated to their delegate contracts, and meet minimum requirements, are eligible to receive CD income.

  • 5.7.1: There are two levels of CD income: Prime Constitutional Delegates (PCDs) and Reserve Constitutional Delegates (RCDs).
    • 5.7.1.1: The top 7 qualifying CDs by number of combined MKR delegated to their delegate contracts are the PCDs.
    • 5.7.1.2: The top 8.14 qualifying CDs by number of combined MKR delegated to their delegate contracts are the RCDs.
  • 5.7.2: When eligible for CD income, the PCDs and RCDs still have to meet specific participation requirements in CVCs.
    • 5.7.2.1: PCDs must participate in at least 16 CVC Subcommittee Meetings per month.
    • 5.7.2.2: RCDs must participate in at least 4 CVC Subcommittee Meetings per month.
  • 5.7.3: Actual CD income payouts are also modified by voting activity metrics for the last 12 months, which includes overall voting activity in all of the votes that the CDs are able to vote on. If a CD is active in less than 95% of all votes, they receive a reduced amount of CD income. The reduction in income is proportionally linear until it reaches 0 CD income at 75% voting activity. If a CD falls below 75% voting activity, it loses qualification for CD income and any CD income rank they may be eligible for is passed on to the next highest CD by amount of delegated MKR.
  • 5.7.4: Actual CD income payouts are modified by CD communication metrics for the last 12 months, which requires the CDs to write an explanation for each vote that ties it to the Governance Strategy and their independent strategy, to help the MKR holders that delegated to them to understand the logic they use when executing the chosen Governance Strategies. If the CD actively communicates on less than 95% of all votes, they receive a reduced amount of CD income. The reduction in income is proportionally linear until it reaches 0 CD income at 75% communication activity. If a CD falls below 75% communication activity, it loses qualification for CD income and any CD income rank they may be eligible for is passed on to the next highest CD by amount of delegated MKR.
  • 5.7.5: The 7 PCD slots share a total of 2000 MKR per year amongst them, equivalent to 285.7 MKR per year for each PCD, or 23.8 MKR per month for each PCD.
  • 5.7.6: The 7 RCD slots share a total of 500 MKR per year amongst them, equivalent to 71.4 MKR per year for each RCD, or 5.95 MKR per month for each RCD.
  • 5.7.7: Payout of CD income is done monthly by the Arbitration Facilitators bundling MKR payments into an Executive Vote.

6: Core Units and Facilitators

6.1: Core Units and Facilitator Management

During the pregame the arbitration scope manages and provides the budget for Core Units and Facilitators, while designating their responsible scopes. The role of Responsible Facilitators is further defined in MIP113c3.

  • 6.1.1: The Ecosystem Actor name, Ethereum address and budgets are contained in 6.1.1.1A. The Active Element is changed through the ordinary CVC process.

    • 6.1.1.1A:

    ¤¤¤

    List of Facilitator budgets:

    Facilitator ETH Address DAI per Month MKR per Month One Time Lump Sum (if applicable, only applies to March/April 2023)
    GovAlpha 0x01D26f8c5cC009868A4BF66E268c17B057fF7A73 75,000 28.33 226.64 MKR
    TECH 0x2dC0420A736D1F40893B9481D8968E4D7424bC0B 115,000 36 N/A
    Steakhouse Financial 0xf737C76D2B358619f7ef696cf3F94548fEcec379 185,000 57.5 N/A

    ¤¤¤

  • 6.1.2: The Scopes and their responsible Facilitators, or Responsible Facilitator Core Units, are contained in 6.1.2.1A. The Active Element is changed through the ordinary CVC process.

    • 6.1.2.1A:

    ¤¤¤

    List of Responsible Facilitators:

    Scope Framework Responsible Facilitator ETH Address (if relevant)
    Stability and Liquidity SES
    Decentralized Collateral BA Labs 0xDfe08A40054685E205Ed527014899d1EDe49B892
    Real World Asset Collateral SES
    Ecosystem SES
    Protocol Engineering PE
    Growth GRO
    Physical Resilience SES
    Interface DUX
    Infrastructure TECH 0x2dC0420A736D1F40893B9481D8968E4D7424bC0B
    Finance SF 0xf737C76D2B358619f7ef696cf3F94548fEcec379
    Arbitration GovAlpha 0x01D26f8c5cC009868A4BF66E268c17B057fF7A73
    Governance Security PE

    ¤¤¤

  • 6.1.3: If all Facilitators of a Scope are unresponsive and not taking care of their duties, a majority of the remaining Facilitators can choose amongst themselves an interim Facilitator, that will then temporarily become the Responsible Facilitator for the Scope

7: Pregame bootstrapping

7.1: Pregame bootstrapping votes

Arbitration Facilitators are empowered to use broad judgement when exercising their ability to make direct constitutional interpretations and edits to the Maker Constitution and the Scope Frameworks in 1 and 2, when this relates to unintended consequences or mistakes in the affected documents.

  • 7.1.1: In case of unintended consequences or mistakes in the Maker Constitution and Scope Frameworks causing Maker Governance to function incorrectly, the Arbitration Facilitators can at any time run a Governance Poll to enable MKR holders to make a decision that will alleviate and resolve unintended consequences or mistakes.
  • 7.1.2: The Arbitration Facilitators can at any time propose to edit any content of a Scope Framework through a Governance Poll.

MIP113c3: Responsible Facilitators

The Responsible Facilitators of each Scope Framework are responsible for adhering to the contents of the relevant Scope Framework elements.

The Responsible Facilitators also have the governance privilege to interpret, trigger or use any of the processes described in the Scope Framework elements.

During the Pregame, the Responsible Facilitators are defined as the Core Unit Facilitators of the Core Units that are listed as Responsible Facilitator Core Units.

The Responsible Facilitator Core Units for each Scope are defined in MIP113c2.6.1.2.1A.

MIP113c4: Active Responsible Facilitator Core Unit List Modification Subproposal Process

This component is a subproposal process component that, if approved by Maker Governance, modifies the state of MIP113c2.6.1.2.1A to update the list of Responsible Facilitators.

Subproposals must use the Active Responsible Facilitator Core Unit List Modification Template 3.

This component can be used to add, amend, or remove Responsible Facilitator Core Units from any of the approved Scope Frameworks.

MIP113c4 subproposals have the following parameters:

  • Default Feedback Period: 1 month
  • Frozen Period: 1 week
  • Governance Cycle: Monthly
  • Other Requirements: None.

MIP113c5: Scope Framework Articles modification Sub Proposal process

During the Pregame the Scope Framework articles can be modified through the Monthly Governance Cycle using a MIP102c2 subproposal.

Protocol:MakerDAO
Date:February 6, 2023
Author:rune
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