The Mimo Governance Token
mimo
Sep 10 · 10 min read
“All political systems need to mediate the relationship between private wealth and public power.Those that fail risk a dysfunctional government captured by wealthy interests.Corruption is one symptom of such failure with private willingness-to-pay trumping public goals.”
— Susan Rose-Ackerman, Yale University.
UNESCO describes governance as “the culture and institutional environment in which citizens and stakeholders interact among themselves and participate in public affairs”.The UN, on the other hand, describes governance as “the exercise of authority or power to manage a country’s economic, political and administrative affairs.”
The UNESCO description of governance has accountability and resource allocation at heart.It is the nirvana of the central governance systems.
That said, most authority systems work as per the UN’s description of governance.Centralization of power rules every traditional governance system.
These s y stems also are record, transaction and contract heavy with lengthy processes and middlemen underpinning every political, economic and legal system to create trust.
Contracts and agreements set boundaries and protect assets.Recordkeeping, on the other hand, chronicles events and verifies identifies.
Contracts and records are governance structures.They should support transparency, equity, accountability, inclusiveness, broad-based participation, stability, empowerment, and law rule.This, however, has not been the case.
The Benefits of Blockchain Technology Long before the modern world adopted centralized governance systems and over reliance on authority, most societies had natural decentralized governance systems.As an illustration, the Alþing, Iceland’s annual parliament, at Þingvellir is the oldest legislature on record.
Formed in 930 AD, 36 representatives meet Þingvellir to make law and dispense justice.Before the 14th century’s state of absolute monarchy, the Althing had a say in all governance matters.However, as modernity swept through the continent, decentralization became a term associated with failed attempts at power distribution.
A case in point is the French Revolution.
Centralized governance systems are not inherently evil.
They, however, create single points of failure.People that obtain power through centralized systems often have a problem relinquishing its control.They will hold on to power even when it is clear that their action is causing catastrophes.
Centralized systems do try to correct themselves during times of crisis.They, however, recentralize once more when stability increases.When they recentralize, the use of power goes beyond vigilance and utility, creating banking crises, genocides or fascist governments, to name but a few failures of central governance.
The 2008 banking crises, for instance, was the launching pad of mass blockchain technology use.Acute centralization of power had gone beyond vigilance and utility, bringing many calamities to the global economic system.
Over time, blockchain technology’s decentralized ledger systems have become the most important invention since the rise of the internet.
Blockchain technology seeks to decentralize power and place it in the hands of stakeholders or citizens.Decentralization is the only way to ensure transparency, equity, accountability, inclusiveness, broad based participation, stability, empowerment and the rule of law.
Blockchain innovations such as the Parallel Protocol by mimo.capital are, for instance, decentralizing power in the world of finance.Through the MIMO governance token, the Parallel Protocol will not only open up the world of finance to all but keep centralization out of it.
How Governance Works in DeFi The first sign of a failing over-centralized governance system is a gridlock.
One party acts as a giant ‘on-off’; switch.If they do not authorize activity from the helm, all action comes at a standstill.When they do, the whole system spurs into action, and no effort is spared at making things work.
This strategy wastes time and escalates problems, increasing corruption, fear and inaction amongst all stakeholders.Therefore, the balance is to avoid the over centralization of power, where authority is shared amongst a few fallible individuals.
Tor Bair of Enigma notes , “Systems designed to allow for this type of over-concentration and abuse of power — or systems that can be modified to allow it — are fundamentally broken.
No arrangement of individual actors within such systems can save them without first deconstructing them.”
An authoritarian system might excel at mass mobilization but will create an environment of fear of reprisals.The leadership will tighten controls, and the minions will become fearful of risks or initiatives.
Lazy governance only increases poverty and the disparity between the rich and the poor.
Blockchain technology seeks to replace fiat money with cryptocurrencies and create a new decentralized monetary system.By leveraging governance tokens and protocols and decentralized applications and smart contracts, the blockchain sector will achieve power distribution.
Governance tokens are cryptocurrency tokens that give their holders voting power.Distributed voting power keeps a DeFi project or protocol decentralized.Decentralization is vital to blockchain technology, and most users strive to participate in governance protocols.
Benefits of Governance Tokens Blockchain governance is so popular that the top 5 crypto governance models have a market cap of over $50 billion .Governance token holding effectively creates “the culture and institutional environment in which citizens and stakeholders interact among themselves and participate in public affairs.”
Governance tokens give people a say in DeFi, ensuring that they benefit from their votes.
All they have to do is to access governance tokens such as MIMO and then vote on proposals on DeFi projects such as the Parallel Protocol.
Holding MIMO, therefore, gives you the chance to influence the direction of a decentralized finance protocol.
As an illustration, on the Parallel Protocol, MIMO tokens align with the best interests of MIMO token holders and the Parallel Protocol users.MIMO holders can act as Guardians, setting system targets, values and taking part in proposal voting.
MIMO token holders are, therefore, both the Parallel Protocol’s shareholders and governors.They get to vote on the direction that the protocol is to make, just like a central bank council would.Governance tokens can also help their holders generate a passive income from DeFi protocols such as yield farming or lending and borrowing protocols.
That said, the governance token’s main use is in decentralizing power and decision making and putting it firmly in the hands of the protocol’s users.The governance token’s main purpose is to eliminate the single point of failure challenge.
Through governance tokens, there is hope for an equitable and transparent financial system .Governance tokens in blockchain technology are held by users whose private data is protected via encryption.
The benefits of token holder privacy cannot be overstated.
As an illustration, China’s anti-corruption campaigns have netted close to 1.5 million bribable officials .Yuen Yuen Ang, author of China’s Gilded Age: The Paradox of Economic Boom & Vast Corruption and an Andrew Carnegie Fellow, however, notes that the fight against corruption has led to a high turnover in leadership and a stressful environment for leaders.
The struggle has also moved the focus away from performance to patronage.
Having the right ties seems more important than doing the right thing.Consequently, officials have adopted Lanzheng or lazy leadership.
They are delaying decisions, deserting duty and underutilizing funds meant for the public good to stay off the radar of anti-corruption watchdogs.For this reason, the war against abuse of power has led to further conformity to party disciplines and encouraged personal loyalty .
Governance token holding creates privacy, eliminating fear driven leadership.In DeFi, there is no pressure for patronage.
You do not need political ties to benefit from the system.
Governance tokens do away with Lanzheng and keep the financial system operating at its best, further decentralizing the whole financial system.
Since we cannot reconstruct or modify systems that allow over-concentration of power, we can use governance tokens to deconstruct these systems.Lastly, governance tokens leave the decision making to those most invested in a DeFi project.
Governance token holders have skin in the game since they purchase these tokens with their hard-earned cash
They are also incentivized for governance and for pushing the platform to new heights.This means MIMO doesn’t consider its users only as customers; they gain MIMO tokens when using the protocol, allowing them to take part in its governance system.
What are the Most Popular Governance Tokens? DeFi combines various blockchain tools such as decentralized applications, smart contracts and governance tokens to meet their true potential.
Most governance tokens are ERC20 tokens because they are built on the Ethereum blockchain, the home of most decentralized applications, also known as dApps.
Some of the most popular governance tokens today are Uniswap (UNI), Aave (AAVE), Synthetix Network Token (SNX), Maker (MKR) and Compound (COMP).
Besides governance tokens, there are other types of digital assets.These include;
NFT tokens on the Ethereum Blockchain, created to foster scarcity and digitally differentiated unique products.Transactional cryptocurrencies such as Bitcoin, which with the help of the lightning network, act as a unit of account.This is also the case of Bitcoin Cash, although this cryptocurrency forked from the bitcoin main protocol doesn’t have much adoption at this time.
Utility tokens such as Maker that support platform functionality alongside their stablecoin DAI.How Does Governance Work in Ethereum vs other Blockchain Platforms? Ethereum’s native cryptocurrency Ether is the second-largest digital currency after Bitcoin.However, Ethereum’s governance model is quite different from other blockchains such as Bitcoin, EOS or Tezos.To partake in Ethereum’s governance proposals voting, you need to run the platform’s node software client.
Some of Ethereum’s node software include Geth, Nethermind, Besu and OpenEthereum.The client software implements Ethereum blockchain rules such as transactions broadcasting, miner block broadcast and block rewards.Users can connect to node software seamlessly via their Ethereum wallets.
All node software proposals and changes decisions are made by the users that hold ETH or miners that secure the network and validate transactions, earning ether as a reward.Ethereum core developers also have a say in node software change implementation.
The network’s user, miner or core developer can submit their Ethereum Improvement Proposal (EIP) on Github and drum up support for it.
When a proposal has tons of support, it will go through a draft, review, the last call, accepted and final phase.
Should an EIP make it through these phases, it can then undergo implementation as a soft fork or update and feature in node software updates.However, in some special cases, hard forks or network upgrades happen, splitting some node software users from the rest of the network, should they choose not to implement certain proposals.The DAO hack hard fork, for instance, led to the Ethereum Classic’s departure from the Ethereum network.
Bitcoin has the Bitcoin Core software client that allows users, nodes, miners and developers to vote on Bitcoin Improvement Proposals (BIPs).Popular BIPs will go through the draft, proposed, and final phase stages before implementing their proposals.
Both Bitcoin and Ethereum exercise off-chain governance where decision making takes place externally and away from the blockchain’s codebase.Miners, users, node operators and developers will coordinate via social media, community forums and the blockchain’s official channels and develop proposals.
Think of it as a political canvassing where the user’s best interests take the day.Blockchains such as Tezos, practice on-chain governance .All change proposals take place via code updates.
The blockchain’s nodes will then vote and accept or reject changes.On-chain governance is a tad centralized amongst developers and miners and could “risk a dysfunctional government captured by wealthy interests”.
As per etherscan data , there are over 5,700 active Ethereum nodes.
In contrast, bitnodes shows that Bitcoin has over 9000 nodes.A high node count means that both networks are decentralized enough to ward off a network or takeover attack.
Should any centralized power seek to rule these blockchains, they would face insurmountable challenges because these nodes or computers are scattered all across the world.Moreover, they will resist centralization because they are looking out for their economic interest by protecting the ownership and value of their cryptocurrencies.
Disadvantages of Governance Tokens and Cryptocurrencies Governance tokens play a huge role in popularizing DeFi protocols.However, they are prone to abuse and, in some cases, only act as a monetary incentive rather than the embodiment of voting power .A DeFi governance protocol should increase its ecosystem and create a highly decentralized protocol.Some of the potential challenges facing DeFi governance tokens include;
Certain governance tokens and cryptocurrencies allow voters to sell or delegate their voting power by creating delegators that only vote for proposals that favour them .
As an illustration, Ethereum nodes require a minimum of 32 ETH to act as validator nodes.For this reason, nodes that hold minimal amounts of ETH cannot participate in governance and have to delegate their voting rights to wealthier nodes.This system is also known as Proof of Stake.On the other hand, Bitcoin uses the Proof of Work system, where there is no delegated voting therefore lessening the opportunities for centralization of power amongst powerful nodes.MAKERDAO has one of the most successful DeFi protocols.DAI is the platform’s USD pegged stablecoin, while Maker (MKR) is the platform’s governance token.
MKR holders can vote on smart contract protocol changes making MakerDAO the leading example of a decentralized financial system.MakerDao users earn MKR when they create DAI.
The MIMO Governance Token Parallel Protocol users can earn MIMO tokens when they create PAR by locking their ETH, USDC or WBTC as collateral in the Parallel Protocol’s vaults.Thus, PAR is the world’s first decentralized EURO algorithmically pegged stablecoin .
The Parallel Protocol is a novel DeFi protocol.It is a legitimate stablecoin issuance protocol, and it has a Quantstamp audit.
The project is decentralized and has voting on upgrades and other protocol changes.
The voting system will eliminate the single point of failure challenge guaranteeing decentralization.Voting will also enhance the Parallel Protocols and MIMO community involvement in the day-to-day governance needs of the platform.
The protocol’s distributor module manages the MIMO token supply.The model has a supply curve that lowers the production of MIMO tokens by a weekly 1.3875%.MIMO has a supply cap of 1 billion tokens.
To ensure decentralization, the MIMO token are being mined through liquidity providing and borrowing against assets through the lending product of the Parallel Protocol.
MIMO token holders will need to lock their MIMO tokens in the Parallel Protocol’s Voting Escrow contract to assume governance rights.When they stake their MIMO in the Voting Escrow contract, they will receive vMIMO.one vMIMO equals 1 MIMO.The vMIMO is non-transferable.
The vMIMO holder’s voting power will decay over time, but the user can extend it if they wish to at any time.
To submit proposals on the Parallel Protocol, you will need 0.02% staked tokens staked at MAXTIME.
According to the Parallel whitepaper, “proposals that gain majority support and meet the ’1% of total staked MIMO tokens at MAXTIME quorum requirement are executed after a 2-day time-lock delay.These governance parameters are set within the GovernorAlpha contract as constants.Therefore, creating a proposal with ‘propose‘ requires a list of contract calls.Contract calls in a proposal can update system parameters and perform upgrades to the protocol.”
To decentralize the Parallel Protocol, there will have multichain support in the future.At the moment, the protocol runs only on the Ethereum blockchain..
