[RFC] Governance Procedure for Extraordinary Situations

Author(s): Raslambek
Submission Date: 15.11.2022
RFC: Governance Procedure for Extraordinary Situations

Governance Procedure for Extraordinary Situations

Simple Summary

This proposal offers to introduce a special fast-track governance procedure for the DAO to be able to react to emergency situations.


Comprehensive, profound and inclusive discussion lies at the core of the Euler DAO values. That is why, there has always been a silent consensus in place that any proposal created on the Forum should take as much time as it is necessary to let all the interested members of the DAO to express their views and concerns. Such an approach guaranteed the mission-oriented approach and contributed to the strategic vision of the EulerDAO.

However, since the launch of the DAO accompanied by the relatively neutral market conditions, the crypto world has dramatically changed. The prolonged down-trend exposed the vulnerability of the system with some, previously considered too big to fail players, collapsed. New reality requires the EulerDAO to constantly adapt to the changing environment.

The most conspicuous example is the ongoing bankruptcy of one of the largest and trusted exchanges FTX that led to the users loss of about $8 billions and extreme depreciation of the FTX native token FTT.

The DAO reacted resolutely and fast by introducing a proposal to Blacklist FTT from EUL gauges to preventively maintain security of the protocol from the technical, financial and legal point of views. Despite the proposal being published relatively quickly, the current governance system did not allow the DAO to take necessary urgent measures.

Another example of an extraordinary situation is the Ethereum Merge. Without any doubts having a completely different nature in comparison to the FTX situation, nevertheless the pre-Merge and the very Merge resulted in a series of serious challenges from the risk assessment perspective.

All the mentioned above got the community thinking that a special procedure for extraordinary situations is required.


The general flow of the governance process is as follows:

  1. Discuss the idea/draft proposal in the Euler Discord #governance channel
  2. Draft & create a RFC (Request For Comment) Proposal on Governance forum for further feedbacks
  3. Contact a forum moderator to create a eIP (Euler Improvement Proposal) on the Governance forum
  4. eIP created on Snapshot (off-chain voting)​

This requires 7-14 days for the so-called temperature check on the Forum, 6 days voting via Snapshot resulting in 13-20 days for a proposal to pass. Plus the implementation time, which in case of the eIP 25 - reduction of UNI and LINK collateral factors could take up to 30 days.

In this respect the following Governance Procedure for Extraordinary Situations is proposed:

  1. Accept the discussion initiated in Discord as a part of the governance process.
  2. Set a formal RFC discussion time for 24 hours.
  3. The Proposal is put on a vote automatically 24h after the RFC is posted.
  4. The Snapshot voting time should decreased to 48 hours.
  5. Instruct the EulerLabs team, as the execution agent of the DAO’s decision for the DAO Phase 1, to start necessary preparation for the proposal execution once the RFC is published.
  6. Given the short time, the aggressive announcement campaign for a proposal subject to the fast-track procedure should be implemented by notifying the EulerDAO community via Discord, Twitter and Telegram channels [and, probably, on the app].
  7. The extraordinary procedure should be launched by a tentative vote, for example via for and against emojis, initiated by the CEO of the EulerLabs team. The decision should be taken by a simple majority with at least 25 people participating in the voting.


“Yes” - Introduce the Governance Procedure for Extraordinary Situations

“No” - Do nothing


I agree that there should be a process for this. That said, and maybe I missed this in your post, how do we delineate between an extraordinary situation and one where someone might just be trying to push something through governance faster than the normal process allows? It seems like there needs to be some check, threshold, etc., that qualifies it for the fast track. Maybe that’s an initial temp check on the forums to qualify it, maybe something else (just thinking out loud).

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Hey! That is a very good question. On the one hand, this procedure should be applied to some obvious situations, like ETH Merge and FTX collapse, so that nobody could answer the need for a fast track procedure. On the other hand, the will certainly be attempts to abuse the scheme. My initial idea is no pass a preliminary temperature check in Discord, which is a better place to post ideas and give quick reaction. That is why the first step I suggested is to 1. Accept the discussion initiated in Discord as a part of the governance process.
Among other ideas, maybe we could require an expert opinion of the EulerLabs team since they know the protocol better then anybody else.
If you have any suggestions on how to make the process more solid and reliable I would be glad to hear them!

Thank you Raslambek, this is a great place to start. As for trigger mechanisms, I think what could be a good gatekeeper to this would be the elevated delegate status we discussed a little. I’m almost ready to submit the proposal (probably early next week).

Generally, I fear that the 25 people in discord thing is a step towards a solution, but I don’t support it fully due to the threat of sybil attacks. This is something I think a lot as I consider governance.

Over the course of Q4/Q1 I’d like to have solidified with the DAO a vision of the lifecycle of a proposal, and this is an important part of that. There will be emergencies, and we need established plans. Thanks for bringing it up Raslambek.

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Hey! Thanks for your input! I was thinking about engaging elevated delegates, but could not come up with something concrete before your proposal. Potentially, there could be a voting for a group comprised of elevated delegates and EulerLabs team members (for the profound risk assessment). That will help to avoid sybil attack, imo

I think risks here are twofold.

  1. Incentives

    • Are we paying people for holding coins which will run out of liquidity
  2. Unrepaid debt

    • How do we handle loans to folks which cease having market liquidity

A good example of an approach imo is Curve Emergency DAO, which minimizes what expidited impact can be performed, and ensures users can still exit.

Curve Emergency DAO can act when there’s a danger of loss of funds and call the kill_me function of Curve Pool contracts which disables all functionality except for withdrawals. Curve pools can be reenabled back by either Emergency DAO or Curve DAO

The Emergency DAO is controlled by Curve DAO which can add or remove Emergency members

I believe it could be worthwhile to have such an Emergency DAO with powers to quickly revoke an epochs rewards, and if abused, members kicked by the main DAO. This seems relatively clean impact for incentives.

As for unrepaid debt, this is a natural risk of permissionless lending. It may be worth adding a liquidity rating more generally than the oracle raiting. I don’t think we really want to add quicker ways to alter interest curves, or pause borrowing, as that could cause higher order problems withing the system perhaps even triggering liquidations in unsuspecting users.

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There is alignment between this idea and the idea of leaning on elevated delegates to mitigate Sybil risk / abuse of the fast-track procedure. I might suggest this idea be temporarily tabled until the elevated delegates proposal is discussed and (pending a vote of the DAO) potentially approved, and then picked up again soon after. We can certainly discuss the structure further in the meantime.