By now, you hopefully have read about our overall approach to our work here at the Stacks Foundation in the first post of this series and a bit more about our approach to events, community programs, and security in subsequent posts.

This post will provide an overview of current governance processes on Stacks and highlight opportunities where we can take governance to the next level.

To start, it’s worth defining the scope of governance on Stacks. In web3, people often equate governance to DAOs or on-chain voting but these are merely tools and mechanisms that can help to facilitate governance. Governance in general is a system or set of processes for decision-making that outlines how decisions get made and who gets to make them. Like many web3 ecosystems, Stacks has a formal process for making blockchain-level decisions known as the Stacks Improvement Proposal or “SIP” process. This process is both rigorous and accessible. It involves several stages of editing and review of proposals, but also allows any community member to participate in blockchain decisions by either attending weekly SIP calls (always open to the public) or engaging in SIP discussions on Github.

In theory, having one formal process for blockchain governance should be sufficient. After all, Stacks is a decentralized and permissionless ecosystem where anyone can participate in whatever way they’d like (subject to the limits of the blockchain of course). In reality though, the Stacks ecosystem is more than just its blockchain. It is an expansive community of builders who are constantly making decisions about how to improve Stacks. Working groups, for instance, do not follow a standard decision-making process, and yet they often make decisions that can impact the entire ecosystem. The sBTC working group is a prime example of this; their current work will lay the foundation for the highly anticipated Nakamoto Release, which will eventually require a consensus-breaking change at the blockchain level. All of this is to say that there is a vast system of informal governance on Stacks that is just as influential as the formal SIP process. We believe that developing these informal processes is what will take Stacks governance to the next level.

We at the Stacks Foundation value decentralization and believe that it is the key to both unlocking innovation and distributing power and resources in a way that empowers all. However, we also recognize that it is extremely challenging to decentralize effectively. Time and time again we’ve seen projects across web3 either decentralize too much, too quickly, resulting in critical inefficiencies, or decentralize too little, too late, resulting in questionable power dynamics and unfair distribution of benefits. Needless to say, decentralization is a core tenet of Stacks governance but it is not the end goal. The end goal is an ecosystem that minimizes exploitation while maximizing utility for all. In order to get there, we are actively working to cultivate a system of governance that...

1. Gives all key contributors a seat at the decision-making table
2. Incentivizes the community to adopt a “nobody succeeds unless we all succeed” mentality
3. Enables entities to easily coordinate and reach consensus with one another

These considerations were fundamental to the formation of the SIP process and will continue to influence other emergent areas of governance on Stacks, like working groups and the decentralized grants program. The following table illustrates how governance on Stacks could look if these areas were added to our greater governance system:

**Note that this table is by no means a definitive model of governance on Stacks. It’s just meant to provide a simple mental model for understanding how governance operates.

We think of Stacks governance as operating in layers, with the SIP process governing the fundamental layer that is the Stacks blockchain, working groups organically governing critical work streams like sBTC a layer above, and programs like Stacks Grants governing the community layer. All layers are equally critical when it comes to maintaining a healthy, balanced, and thriving ecosystem. Critical infrastructure creates the opportunity and environment for building by providing a stable blockchain, common goods like sBTC and subnets give builders purpose for building by addressing industry-wide challenges, and public goods like documentation help to increase user adoption of Stacks. Given that the critical infrastructure layer is sufficiently governed by the SIP process, our focus for the next 6–12 months will be on providing more structure and legitimacy to governance at the common goods and public goods layers.

As previously mentioned, the SIP process exists to manage changes to the Stacks blockchain. SIPs themselves are design documents that outline key features, procedures, or standards for the blockchain, while the SIP process is what community members go through to propose, get feedback on, and review their ideas for blockchain improvement. The SIP council is comprised of 6 editors who help community members develop and draft SIP ideas, 18 Consideration Advisory Board or CAB members who review and recommend/reject SIPs for ratification, and 3 steering committee members who have the power to ratify or veto SIPs. Outside of these officially recognized roles, there is also a broader community of SIP contributors who participate in the process via the weekly SIP call and SIP discussions on Github, the Stacks Forum, and Discord.

The SIP process takes place almost entirely off-chain. The only time a SIP might result in on-chain activity is if it requires a consensus-breaking change, i.e. a hard fork. Because hard forks affect the entire network, it is often recommended that the Stacks community vote to implement them. To date, we have held two community-wide votes, with the last vote resulting in the implementation of the Stacks 2.1 upgrade. We anticipate another vote in Q4 to implement the upcoming Nakamoto Release.

Blockchain Governance Highlights
The SIP process has grown and matured immensely, due in large part to the work of Community Governance Resident, Hero Gamer. In the last 12 months, we’ve been able to...

• Fill the majority of SIP roles. Two steering committee members and all CAB members and SIP editors were recruited and onboarded in the last year.
• Ratify 9 SIPs, including SIP-015 & SIP-020 which outlined the Stacks 2.1 upgrade, SIP-018: Signed Structured Data, SIP-019: Notifications for Token Metadata Updates, and more.
• Increase voter turnout from 28 to nearly 500 community members between the last two votes.
• Host over 55 community SIP calls, fostering collaboration between core developers and the broader community on a regular basis.

Overall, the SIP process has been effective at facilitating blockchain governance, though it could be more efficient. Over the next few months, we plan to...

• Have SIP editors work more closely with SIP authors to ensure that their drafts are as high quality as possible before submission. This should cut down the time it takes CABs and the steering committee to review and ratify SIPs.
• Utilize a RICE score-inspired rubric to evaluate SIP ideas before encouraging authors to draft SIPs. This should help filter out the most promising or high priority ideas from the ideas that are not quite ready more quickly.
• Onboard technical mentors to the SIP council who can help community members develop and scope their ideas. This should make the SIP process less intimidating, encouraging community members to engage more often.

As the Stacks ecosystem continues to grow, we’re seeing more and more community members coming together to coordinate on decisions that are neither ready nor suitable for the SIP process. This is a positive development for Stacks governance and precisely the kind of open collaboration one would hope to see in a decentralized ecosystem. It's also an indicator that it is time to expand governance on Stacks, from a system that only manages changes to the blockchain, to a system that gives a legitimate platform to the community members who innovate and drive adoption of the blockchain as well.

Working Groups
Functionally, working groups are like hubs for critical research and development. They’re constantly working to figure out what feature upgrades or tools (i.e. common goods) are needed to ensure that Stacks remains competitive among Bitcoin L2 solutions. So even though most working group decisions don’t need to be vetted by the SIP process, they still carry a lot of weight because of their potential to shift the Stacks paradigm. sBTC and faster L2 are two such working group focus areas expected to completely change the way that builders interact with the Stacks blockchain. For this reason, it would make sense to implement some sort of decision-making process or accountability system for working groups.

Will Corcoran, Ecosystem Project Manager at the Stacks Foundation is currently auditing a few working groups with the intention of driving more efficient coordination between working group members. Working groups are comprised of members from all around the Stacks ecosystem, which is great from a decentralization standpoint, but challenging when it comes to sharing responsibilities and of course, making decisions. Once working groups fall into a steady rhythm of collaboration, our goal is to establish a clear system for decision-making that enables the broader community to weigh in on working group matters, while remaining simple and lightweight. We plan to outline and ratify this system in a SIP by the end of this year.

Decentralized Grants Program
Another emergent area of governance is the decentralized grants (de-grants) initiative, which aims to put decisions around grants directly in the hands of community instead of the Stacks Foundation team. As the primary facilitator of public goods, the decentralized grants program would be making decisions on behalf of thousands of community members to determine what resources should be funded in order for all community members to thrive. This includes critical onboarding resources like documentation and other educational materials that could make or break the adoption of Stacks. As such, it is necessary for this program to establish a decision-making system that thoroughly captures and reflects the needs of the broader community.

Currently led by myself (Director of Community Programs & Governance) and Hero Gamer, Community Governance Resident at the Stacks Foundation, the de-grants initiative is highly focused on putting a clear and accessible decision-making system in place. Inspired by other de-grants programs like Gitcoin as well as discussions with Stacks de-grants participants, this program will likely be led by a group of community-selected representatives who will have the authority to evaluate and approve grant applications on behalf of the community. In this system, community members will have the option to delegate decisions/votes on grants to the program representatives or vote directly on grants themselves. A pilot of the Stacks decentralized grants program is underway and expected to launch by the end of Q3 2023. Note that we are taking a very iterative approach to the development of this program. We don’t expect to get everything perfect upfront; instead, we are optimizing for community feedback and testing with the goal of making key improvements to the program every quarter for the next year, at which point, the program should be ready to be handed off from the Foundation to the community.

All in all, it’s an exciting time for governance on Stacks. Between the growth of SIPs and clearer decision-making processes coming together for working groups and de-grants, we can expect to see a much more holistic governance system take shape on Stacks within the next 12 months. This system aims to empower all contributors with a fair share of authority and influence over important decisions, incentivize all to work in the interest of the community, and enable entities to easily coordinate and reach consensus with one another. In the next 6 months alone, you can look forward to clearer coordination within and between working groups as well as a grants program led almost exclusively by the community.

Whatever your role is in the community, we encourage you to take part in governance, whether it’s through attending SIP calls, joining a working group, or contributing to the design of de-grants. While the unique value proposition of the Stacks blockchain is what brings builders together now, governance––that is, the way the Stacks ecosystem works and makes decisions together––is what will help us achieve our shared mission of activating the Bitcoin economy.

To get involved in any of the initiatives outlined above, please email jenny@stacks.org.