The governance system, ready for a long time, was finally inaugurated with the proposal to simplify the Money On Chain model through the elimination of BTCX leveraged positions.
This was the first proposal to be voted through the governance system making the decentralization of Money On Chain a reality.
In this article, we are going to explain what the proposal was, why, and how the removal of BTCX affects the Money On Chain model.
The governance capacity of the protocol, that is, the possibility for MoC Holders to submit projects to modify the protocol, such as a change in some functionality or an update, has been in force since December 2021, from which time the smart contracts of the stablecoin protocol are governed by the Voting Machine.
Money On Chain was developed with security and robustness at the core of the design. This is why there is no need for constant changes as the protocol has been running smoothly since October 2019.
However, at the beginning of 2023, a proposal was presented in the forum to simplify the Money On Chain model by eliminating the BTCX leveraged positions.
After the evaluation of this modification initiative and the voting process, which can be seen in the article "Tutorial: how to vote in Money On Chain governance", it was voted positively so that the change became effective, becoming the first proposal to pass the voting process fully.
Removing one of the three “actors” from the original Money On Chain model is not trivial. However, looking at the proposal it emerges as something positive, an evolution towards a greater understanding of tokens and the consequent adoption.
Initially, the protocol was designed with leveraged positions (BTCX) but this limited the model to having to redeem the DOC tokens in the settlement (approximately every 30 days), which on average meant a delay of 15 days.
Despite having created a Decentralized Token Exchange - TEX so that users can resort to exchanging DOCs for rBTC at any time, the Money On Chain community required the removal of this DOC redemption queue in order to redeem their DOCs safely and immediately. This caused an asymmetry in the model that was to its detriment.
In addition, the model was quite complex both to explain and to understand, by adding financial characteristics to a protocol whose main objective is the creation of a stablecoin such as the DOC.
The modification of the protocol makes the model simpler to understand and explain.
In practice, this means that:
In short, DOC cedes volatility to BPRO to maintain 1:1 parity with the USD. All other features of the model remain intact.
In this blog article, there is a detailed explanation of how Money On Chain works with the corresponding update.
The first participation of MoC Holders in the governance of Money On Chain has been a success and it is expected that the removal of BTCX from the model will result in a greater understanding and adoption of the stablecoin protocol.