EulerDAO on-chain governance will soon launch and will use the Tally governance application.
In this guide, users can learn more about how governance will work with Tally and the DAO launch phases. This article explains the Euler on-chain governance process and how users can participate in order to be more prepared for the launch of EulerDAO.
EulerDAO is based on the OpenZeppelin Governor smart contract for governance. It is a governance protocol which allows delegates to vote on active proposals to make changes to the EulerDAO and Euler protocol. To manage the governance process, Euler will be using the Tally governance dashboard / web application.
Through Tally, users can set up their wallet to become a delegate (i.e., delegate voting power to themselves), create on-chain proposals, vote on active proposals, discover delegates in the community, and delegate voting power to another community member.
As noted in the Call for Delegates article, delegates represent EUL token holders who have delegated their voting power to vote on their behalf.
Delegates are volunteers who actively participate in the EulerDAO governance, such as voting and creating proposals, so the role should be treated as a serious commitment. EulerDAO should aim to fairly and adequately reward its delegates for their significant efforts.
How does a user become a delegate?
To become a delegate, users must delegate voting power to their wallet or be delegated by another community member, thus giving them the right to use their voting power.
To achieve this, token holders need to execute the delegate function of the EUL token to delegate another user or the token holder themselves to enable the governor contract to determine their voting power.
The DAO will be launching soon. When it does, community members will be encouraged to delegate their votes. As part of that process, community members will be presented with a delegates list.
What does delegation mean for users’ tokens?
When a user delegates the voting power of their tokens, they retain 100% ownership of the token itself. There are no changes to the way they use or hold the token.
A healthy governance system is good for Euler and for all EUL token holders. Choosing a good delegate is in each EUL token holder’s best interest.
Using Tally Governance Dashboard to Delegate Voting Power
The first step in the delegation process via the Tally governance application is to visit the EulerDAO page on the Tally governance application and connect a wallet.
The second step is to click on “Delegate vote” in the top-right corner of the screen.
Users can then decide to either delegate to themselves or to another wallet, delegate, or community member. By delegating to themselves, users retain their voting power. Next time there is an active proposal, users can vote in any way they choose.
If a user decides to delegate to an address or delegate, the following screen will be shown instead, where they can enter the address to delegate their voting power to.
This will not transfer any tokens to the delegate, users will only be delegating their voting power, i.e., voting via proxy who will be voting on their behalf or representing them at the polls! Users can always change the delegate later on or delegate to themselves again. This helps to ensure that there is a good degree of participation from the community on on-chain governance proposals voting.
Finally, regardless of whether users are delegating to themselves or delegating to a delegate, they will be required to confirm the transaction in their wallet which will cost gas.
To recap, delegates are token holders that have completed a one-time setup process. Once a user becomes a delegate, they can then vote on active proposals, and create proposals if they have enough voting power. If the user chooses not to directly vote on proposals, they can pass their voting power on to a delegate, as shown above.
Euler is a capital-efficient permissionless lending protocol that helps users to earn interest on their crypto assets or hedge against volatile markets without the need for a trusted third-party. Euler features a number of innovations not seen before in DeFi, including permissionless lending markets, reactive interest rates, protected collateral, MEV-resistant liquidations, multi-collateral stability pools, sub-accounts, risk-adjusted loans, and much more. For more information, visit euler.finance.