A robust decentralized governance mechanism must balance the principles of decentralization with resistance to attempted protocol changes, both malicious and ignorant, and the ability to quickly adapt to changing information. In practice, Beanstalk must balance ensuring sufficient time for all ecosystem participants to consider a Beanstalk Improvement Proposal (BIP) with the ability to be quickly upgraded in cases of emergency.
Prior to Beanstalk’s April 17 exploit, Beanstalk Improvement Proposals (BIPs) were entirely on-chain and autonomous. However, after the exploit, Beanstalk was Paused and the ability to propose BIPs on-chain halted. Until a robust on-chain governance system is implemented, BIPs will be voted on off-chain via Snapshot and will be executed on-chain by the Beanstalk Community Multisig (BCM). Stalkholders are able to vote on BIPs via Snapshot.
Anyone can become a Stalkholder and participate in Beanstalk governance by Depositing whitelisted assets in the Silo to earn Stalk. A Stalkholder’s voting power is proportional to their Stalk balance relative to the total Stalk supply. Any Stalkholder can vote For or Abstain. In all instances, 1 Stalk equals 1 vote, and voting Abstain is equivalent to voting against the proposal.
Voting for BIPs takes place on Snapshot, using Stalk ownership at the time of proposal on Snapshot. The Voting Period opens when a BIP is submitted to Snapshot and closes after 7 days or when it is committed with a supermajority.
If at the end of the Voting Period:
- Less than or equal to half of the total outstanding Stalk at the time the BIP was submitted to Snapshot that still exists votes in favor of the BIP, it fails, or
- More than half of the total outstanding Stalk at the time the BIP was submitted to Snapshot that still exists votes in favor of the BIP, it passes.
If at any time before the end of the Voting Period more than two-thirds of the total outstanding Stalk at the time the BIP was submitted to Snapshot that still exists votes in favor of the BIP, the BCM can execute the BIP on-chain.
Beanstalk governance is designed to move slow and steady. When trying to become an issuer of money, the potential for rapid monetary policy changes is unattractive. By requiring more than 50% of Stalk to vote in favor of a BIP for it to pass, it is quite difficult for a BIP to pass. Therefore, unless the proposed change is significantly preferred by Stalkholders, it is unlikely to pass.
In case of a particularly dangerous vulnerability to Beanstalk, the BCM can Pause Beanstalk without a Snapshot. You can read more about which actions the BCM can take without a Snapshot proposal here. The Beanstalk DAO can also Pause Beanstalk via BIP.
When Paused, Beanstalk does not accept a
sunrisefunction call. Once Unpaused, the
sunrisefunction can be called at the beginning of the next hour.
The BCM address has the exclusive and unilateral ability to Pause or Unpause Beanstalk, and commit a BIP. In the future, it is expected that a BIP will revoke these abilities from the BCM and reimplement on-chain governance. You can read more about the BCM here.