ERC-7787: Soulbound Degradable Governance

Abstract

This proposal introduces the Soulbound Degradable Governance (SDG) standard, where governance power should be granted as non-transferable tokens that decay over time unless renewed through participation. SDG enables young DAOs to implement merit-based governance by detaching governance power from economic power while on early stages of development.

Motivation

Traditional DAO governance models rely heavily on economic tokens, where voting power is proportional to token holdings. While effective for some use cases, this model risks concentrating power among wealthy members, leading to plutocracy and discouraging participation from smaller stakeholders. Furthermore, it fosters a treasury-centric culture that attracts contributors primarily focused on financial gain, rather than long-term governance or community well-being.

Young DAOs, in particular, need governance models that incentivize active contributions without relying on economic power. This proposal addresses these issues by detaching governance power from economic power and ensuring political power decays if not maintained through ongoing participation. This approach creates a merit-based structure that reflects continuous involvement and reduces the risk of early-stage centralization or dependent on heavy inflationary policies.

Specification

The key words "MUST", "MUST NOT", "REQUIRED", "SHALL", "SHALL NOT", "SHOULD", "SHOULD NOT", "RECOMMENDED", "NOT RECOMMENDED", "MAY", and "OPTIONAL" in this document are to be interpreted as described in RFC 2119 and RFC 8174.

This system MUST operate with two distinct tokens types, one representing political power and another representing economic power:

1. The political power token SHOULD be non-transferable with over-time decayment.

2. The economic power token supports liquidity and trade, providing the financial utility needed for the DAO’s operations and is RECOMMENDED to be a standard ERC-20 token.

The implementer of this standard MUST:

1. Override the transfer(...) function for the governance token to block transfers between addresses.

2. Create a decay mechanism by overriding the getVotes(...) function on parent contract, reducing the token’s voting power over time. This is RECOMMENDED to be a linear or exponential decay formula.

3. Create the respective Event emissions that track the voting power of addresses.

Contract Interface:

Rationale

The SDG standard ensures flexibility by not being tied to any specific token type, allowing DAOs to implement it with ERC-20, ERC-721, ERC-1155, or other future token standards. This decision maximizes the compatibility and adaptability of the framework across different governance models.

The choice to decouple governance power from economic power aims to provide a practical governance model for young DAOs seeking to prevent early centralization while fostering active participation. Non-transferable governance tokens ensure that only engaged members retain influence, as political power decays over time if not renewed through contributions.

We deliberately avoided incorporating mechanisms like "Game Master mode" for early stages or fixed decayment strategy within the standard to keep the specification minimal and modular. These governance structures should be implemented by individual DAOs if needed, without burdening the core SDG standard with additional complexity. The goal is to provide DAOs with the essential tools to build sustainable, merit-based governance, while leaving room for experimentation and customization at the implementation level.

The inclusion of grace periods and decay periods balances fairness with fluidity, incentivizing active participation while preventing governance stagnation. These mechanics ensure that governance power reflects recent contributions, phasing out inactive members naturally, and maintaining a dynamic, merit-based structure.

Backwards Compatibility

No backward compatibility issues found.

Reference Implementation

Security Considerations

No security concerns were found.

Copyright

Copyright and related rights waived via CC0.