Going further #5: Panoramic Governance
Overview of Abstract's native gouvernance system
Last updated
Overview of Abstract's native gouvernance system
Last updated
As you may have understood, Abstract chain is a L2 blockchain. Recently, they introduce a new mecanism called Panoramic Governance (PG), which will be described bellow.
Before diving into the details of PG, it’s essential to first understand two core components of L2 blockchains: Sequencers and Governance.
In L2 blockchains sequencers are responsible for ordering and publishing transactions in batches to a L1 blockchain like Ethereum. They ensure that transactions are processed efficiently and that the blockchain runs smoothly.
Furthermore, sequencer fees are the gas fees users pay for faster transaction ordering. These fees cover the cost of submitting transaction data to the L1 blockchain (calldata) and processing the transaction on Layer 2. In traditional L2 systems, sequencer fees are typically kept by the sequencers or operators.
In decentralized networks, governance refers to the decision-making process by which holders of the "governance token" vote on proposals that shape the future of the blockchain or protocol. The primary purpose of governance tokens is to decentralize decision-making and to give holders a say in how the project is run.
Governance participants play a crucial role by voting on key issues such as protocol upgrades, token emissions, or treasury management.
As it core, Panoramic Governance (PG), is a novel mechanism designed by Abstract to incentivize both governance participation and protocol growth within Layer 2 blockchains.
The goal of PG is to create a value-aligned ecosystem, ensuring that all blockchain actors (users, protocols, and chain operators) are correctly incentivized.
Through different modules, PG aligns the interests of token holders, onchain protocols, and chain operators and users, fostering sustainable and robust ecosystem development.
PG consists of two interdependent systems:
The Active Driven Loop: distributes sequencer fees to governance voters that actively participate in the network
Emission Driven Loop: allows governance voters to direct token emissions to protocols built on the given blockchain.
The Activity-Driven Loop (ADL) ties network participation directly to sequencer fee rewards.
The more activity generated by on-chain applications, the more gas is consumed, leading to higher sequencer fees. Instead of sequencer fees being kept by operators, these fees are redirected to governance token holders who have escrowed their tokens and meet the activity requirements, creating a positive feedback loop.
Governance participants are then encouraged to push for more protocol and dApp development on the blockchain, which increases network activity and further boosts the rewards they receive.
The Active Participation Threshold (APT) ensures that only active participants who are contributing to the network receive rewards. APT can be determined by various metrics, such as transaction count, gas spent, or time active on the network.
PG uses transaction count as the primary metric to define activity, but it can also use a weighted transaction count based on the transaction's value to prevent gaming of the system.
By requiring users to meet the APT, Panoramic Governance encourages genuine network activity and deters passive behavior.
https://pg.abs.xyz/ https://pg.abs.xyz/assets/documents/pg-whitepaper.pdf https://x.com/AbstractChain/status/1847344743317180628 https://x.com/0xCygaar/status/1847354267436535874 https://x.com/0xCygaar/status/1847643502924222677 https://x.com/jarrodWattsDev/status/1848736109980725638 https://blog.jarrodwatts.com/the-ultimate-guide-to-sequencers-in-l2-blockchains https://www.coinbase.com/en-fr/learn/crypto-basics/what-is-a-governance-token
