Lesson 13 of 19
In Progress

Overview of AAVE Protocol Governance

The AAVE protocol is a decentralized platform that is governed by its community of users. This means that decisions about the direction and development of the AAVE protocol are made by the community through a transparent and decentralized governance process.

In this lesson, we will provide an overview of the AAVE protocol governance system and how it works. We will cover the key components of the governance system, such as the governance token, the governance forums, and the voting process. We will also discuss the role of the AAVE protocol community in shaping the future of the platform.

What is Governance Token?

The AAVE protocol uses a governance token called “Aave Governance Token” (AAVE) to enable community members to participate in the governance process. AAVE is a standard ERC-20 token on the Ethereum blockchain, and it is used as the primary means of voting on governance proposals.

Holders of AAVE can propose, discuss, and vote on governance proposals through the governance forums. These proposals can range from updates to the AAVE protocol, to the addition of new features or assets, to changes in the protocol’s risk parameters.

AAVE tokens can be obtained through various methods, such as participating in liquidity mining programs, buying AAVE on exchanges, or earning AAVE through the AAVE protocol’s yield farming and staking mechanisms.

Governance Forums

The AAVE protocol has two main governance forums: the AAVE Governance Dashboard and the AAVE Governance Forum.

The AAVE Governance Dashboard is a web-based platform that allows users to view and participate in the governance process. It is the primary platform for proposing, discussing, and voting on governance proposals. The Governance Dashboard is accessible to anyone with an AAVE token, and it is the main channel for the AAVE community to come together and make decisions about the direction of the protocol.

The AAVE Governance Forum is an online forum for discussing governance-related topics. It is a place for community members to ask questions, share ideas, and engage in discussions about governance proposals and other topics related to the AAVE protocol.

Voting Process

The voting process on the AAVE protocol is based on a stake-weighted voting system, where the voting power of a community member is determined by the amount of AAVE they hold. This means that the more AAVE a user holds, the more influence they have in the voting process.

When a governance proposal is submitted to the AAVE Governance Dashboard, it enters a discussion phase, where the community can discuss and provide feedback on the proposal. After the discussion phase, the proposal enters the voting phase, where AAVE token holders can cast their votes.

Votes are counted using a “time-lock” voting system, where votes are locked in for a certain period of time before the final vote count is determined. This allows for a more accurate and transparent voting process, as it reduces the risk of vote manipulation and ensures that all votes are counted equally.

After the voting period has ended, the proposal is either accepted or rejected based on the outcome of the vote. If the proposal is accepted, it is implemented on the AAVE protocol, and if it is rejected, it is discarded.

Conclusion

In conclusion, the AAVE protocol’s governance system is designed to be transparent, decentralized, and community-driven. Through the use of the AAVE governance token, the governance forums, and the stake-weighted voting process, the AAVE community can come together and make decisions about the direction and development of the AAVE protocol.

By participating in the governance process, AAVE token holders have the the ability to shape the future of the AAVE protocol and ensure that it aligns with the needs and interests of the community. Whether you are an experienced developer or a casual user of the AAVE protocol, you can get involved in the governance process and make your voice heard.

Exercises

To review these concepts, we will go through a series of exercises designed to test your understanding and apply what you have learned.

How do you obtain AAVE governance tokens?

AAVE governance tokens can be obtained through participating in liquidity mining programs, buying AAVE on exchanges, or earning AAVE through the AAVE protocol’s yield farming and staking mechanisms.

What are the two main governance forums for the AAVE protocol?

The two main governance forums for the AAVE protocol are the AAVE Governance Dashboard and the AAVE Governance Forum.

How is the voting power of a community member determined in the AAVE protocol’s governance system?

The voting power of a community member in the AAVE protocol’s governance system is determined by the amount of AAVE they hold.

What is the time-lock voting system and how does it work?

The time-lock voting system is a method of counting votes in which votes are locked in for a certain period of time before the final vote count is determined. This reduces the risk of vote manipulation and ensures that all votes are counted equally.

How is the outcome of a governance proposal determined on the AAVE protocol?

The outcome of a governance proposal on the AAVE protocol is determined by the result of the vote. If the proposal receives more “yes” votes than “no” votes, it is accepted and implemented on the AAVE protocol. If it receives more “no” votes, it is rejected and discarded.