What is Federation?
Federation is a protocol for coordinating around governance rights onchain. The protocol is designed to be extended with new functionality through modules. Modules released by Federation are designed to be:
- Trustless. Greatly reduced or no centralization risk.
- Unstoppable. Provide transaction execution guarantees.
- Fair. Designed to benefit all participants.
Nouns governance pools
The first module release by Federation is the Nouns Governance Pool. Noun holders can delegate their Noun(s) to a governance pool. The collective voting power of the pool is then auctioned off to the highest bidder. Those who delegate to a governance pool earn rewards from each auction in proportion to the amount of votes they own / total pool size. This is possible through the use of ZKProofs and as a result no asset staking or registration is required to join a pool.
If a vote could not be cast in time the highest bidder can claim a full refund. If a vote is cast but the proposal is then canceled or vetoed, the highest bidder can claim a partial refund (minus fees + gas refunds + tips):
refund = (bid amount - (protocol fees + gas refunds + tips))
The first governance pool (launched by Goop Troop) has a 10% fee applied whenever a vote for a proposal is cast. This fee is split between Goop Troop and Federation: 7.5% to Goop Troop and 2.5% to Federation.
Gas refunds + tips
To ensure modules run forever, gas refunds and tips are offered to execute time sensitive transactions. In governance pools these are used to reward accounts that submit transactions to cast votes against proposals.
This not only leads to a better UX, but it provides an opportunity for anyone to earn ETH in exchange for keeping the protocol running.
You can configure a wallet to withdraw rewards on your behalf by setting a delegate for the contract through delegate.cash