PIP-1 DAO proposal: Governance Framework for Puffer Protocol’s RNO Participation in AVSs
Summary
This proposal aims to establish a governance framework for how Puffer’s Restaking Node Operators (RNOs) join and exit Actively Validated Services (AVSs).
The key points include:
- Acknowledgment of Existing AVSs: Puffer RNOs have already joined 10 AVSs prior to the DAO’s establishment.
- DAO Approval for Future AVSs: From now on, joining new AVSs will require a DAO proposal and approval.
- Reassessment upon Slashing Activation: Once slashing is enabled on EigenLayer, a DAO vote will reassess all AVSs that Puffer has joined.
- DAO-Controlled Exits: Exiting any AVS will also require DAO approval.
Background
One of the most crucial aspects of the restaking process is selecting the right set of AVSs to participate in. This choice maintains the protocol’s risk/reward balance. Until now, Puffer’s AVS strategy has been straightforward—we’ve been joining all AVSs that are technically compatible with Puffer and allow our RNO to join. The main reasoning behind this approach is that there’s currently no working slashing mechanism on EigenLayer (and we’re unsure how long this will remain the case).
However, as rewards begin to be distributed and slashing is expected to be announced, Puffer’s core contributors feel the need to adjust the strategy.
- Firstly, we want to inform the DAO about our current AVS set. All our RNOs join the same set of AVSs, and we don’t see any immediate need to change this.
- Secondly, we aim to delegate the AVS join/exit decision-making power to the DAO members. This move increases transparency while also sharing the responsibility of defining the risk/reward strategy with the DAO. Since our RNOs are controlled by smart contracts, none of them will be able to join or exit an AVS without a DAO decision.
- Lastly, we want to establish when the entire AVS set should be reassessed. This reassessment should naturally occur after EigenLayer announces its working slashing mechanism.
Proposal Details
1. Acknowledgment of Existing AVSs
Status Quo: Recognize that Puffer RNOs have joined 10 AVSs before the DAO’s establishment.
Current Puffer AVS set:
| AVS name | AVS description | Link | Date joined |
|---|---|---|---|
| EigenDA | EigenDA is a data availability solution with 10 MiB/s of write throughput and the lowest cost in its class. The system’s design is inspired by Danksharding, which promises to scale Ethereum’s DA beyond EIP-4844. EigenDA is available today. Learn more at | https://docs.eigenlayer.xyz/eigenda/overview/ | Jul 18, 2024 |
| eoracle | The modular and programmable oracle network secured by Ethereum, built with Eigenlayer. | https://www.eoracle.io/ | May 28, 2024 |
| Lagrange State Committees | Lagrange State Committees are a ZK light client protocol for optimistic rollups that are designed through combining EigenLayer’s restaked security with Lagrange’s ZK Coprocessor. | https://www.lagrange.dev/ | May 30, 2024 |
| Witness Chain | The EigenLayer AVS for DePIN coordination. It is the first physical state consensus protocol which is unifying a siloed DePIN economy. Through WitnessChain, a shared economy of integrated physical assets is unlocked, facilitating the exchange of resources like computing power, energy, storage, and beyond. | https://www.witnesschain.com/ | Sep 04, 2024 |
| Lagrange ZK Prover Network | Decentralized network for reliable generation of different ZK proofs with high liveness guarantees | https://www.lagrange.dev/ | Jun 14, 2024 |
| Hyperlane AVS | Hyperlane is a modular and permissionless interoperability framework currently deployed on more than 35 EVM, Cosmos, and Sealevel chains. | **https://hyperlane.xyz/** | Jun 23, 2024 |
| Cyber MACH | Cyber is the L2 for social. By expanding web3’s focus beyond finance, Cyber enables developers to create dApps that transform how people connect, create, monetize, and share value. | https://cyber.co/ | Jun 08, 2024 |
| Automata Multi-Prover AVS | Automata Network explores the development of TEE Coprocessors in the direction of a Multi-Prover AVS on EigenLayer. Decentralized systems bootstrap a secondary TEE Prover to minimize network-breaking bugs and achieve better security and decentralization. The approach is augmented by the introduction of TEE Committees, with the Multi-Prover AVS dually bounded by machine trust and cryptoeconomic security. | https://ata.network | May 21, 2024 |
| ARPA AVS | The ARPA BLS Threshold Signature Scheme (BLS-TSS) Network is a cutting-edge decentralized cryptographic system designed to perform BLS threshold signature tasks. Leveraging the ARPA Network, Randcast provides secure and reliable random number generation on multiple prevailing blockchains. | Secure Computation Network for Blockchain-adapted Cryptography | ARPA | Aug 15, 2024 |
| Unifi AVS | UniFi AVS - Preconfirmations for the next generation of rollups, made by Puffer | https://unifi.puffer.fi/ | Sep 23, 2024 |
Action: These existing AVS participations are to be maintained until reassessed.
Rationale: Honoring prior commitments ensures protocol stability and respects initial operational decisions.
2. DAO Approval for Joining New AVSs
Requirement: Any new AVS participation must be proposed to and approved by the DAO. Before submitting a proposal, the submitter should assess the technical feasibility of joining and provide a detailed technical explanation.
Proposal Process:
Submission: An RNO or community member submits a detailed proposal to the Governance Forum.
Contents of Proposal:
- AVS name and description
- Benefits to the Puffer Protocol
- Potential risks and mitigation strategies
- Technical and operational requirements
Voting Period: Standard DAO voting period applies.
Rationale: Ensures community oversight and collective decision-making on network expansion.
3. Reassessment Upon Slashing Activation on EigenLayer
Trigger Event: Announcement of activation of slashing mechanisms on EigenLayer.
Action:
- Initiate a comprehensive review of all currently joined AVSs.
- Submit proposals for each AVS to decide whether to continue participation.
Considerations:
- Updated risk assessments
- Historical performance and reliability
- Impact of slashing on network security and staker assets
Rationale: Reevaluate risks in light of new slashing penalties to protect stakers and the protocol.
4. DAO-Controlled Exiting of AVSs
Requirement: Exiting from any AVS requires a DAO proposal and majority approval.
Proposal Process:
Submission: An RNO or community member submits an exit proposal.
Contents of Proposal:
- Reasons for exiting
- Potential impacts on the protocol and stakers
- Proposed timeline and exit strategy
Voting Period: Standard DAO voting period applies.
Rationale: Maintains transparency and allows the community to weigh the pros and cons of exiting an AVS.
Implementation Plan
Effective Date: The governance framework becomes effective immediately upon DAO approval.
Communication: Notify all RNOs and stakeholders about the new governance procedures.
Monitoring: Community-based. As long as it is technically impossible for an RNO to join an AVS without operational multisig consent, we consider community monitoring sufficient.
Benefits
Enhanced Security: Community vetting reduces the risk of participating in insecure or malicious AVSs.
Transparency: Open proposals and discussions foster trust among stakeholders.
Risk Mitigation: Reassessing AVSs upon slashing activation protects against unforeseen losses.
Community Engagement: Empowers token holders to have a say in the protocol’s direction.
Potential Risks
Operational Delays: The proposal process may slow down the ability to join or exit AVSs quickly.
Governance Overhead: Increased administrative efforts may be required to manage proposals and votes.
Proposal Fatigue: Frequent voting could lead to decreased participation over time.
Alternative Considerations
Emergency Powers: Define conditions under which immediate action can be taken without prior DAO approval, subject to post-action review.
Delegated Authority: Allow the DAO to delegate decision-making to trusted committees for efficiency.
Conclusion
Adopting this governance framework ensures that all decisions regarding RNO participation in AVSs are made transparently and democratically, aligning with the best interests of the Puffer Protocol community.
Voting Options
- For: Approve the establishment of the proposed governance framework.
- Against: Reject the proposal and retain the current process.
Please cast your vote within the next [voting period, e.g., 7 days] to determine the adoption of this proposal.
Glossary
- DAO (Decentralized Autonomous Organization): A blockchain-based entity governed by code and community votes rather than a central authority.
- RNO (Restaking Node Operator): Operators who manage nodes that restake assets across multiple AVSs.
- AVS (Actively Validated Services): A group of validators actively participating in consensus for a blockchain or protocol.
- Slashing: A penalty mechanism that confiscates a portion of a validator’s stake for malicious actions or negligence.