PIP-77: Governance Evolution & Operational Alignment

Governance Proposals
1

Summary

This proposal evolves Velora’s governance framework to better reflect how the protocol operates today while preserving oversight of the VLR token by its token holders.

At this stage of the project, simplifying governance structures helps ensure that development efforts and resources remain focused on strengthening the protocol and its ecosystem.

Over time, several governance mechanisms introduced during earlier phases of the project have become inactive or are no longer used in practice. This proposal simplifies those mechanisms while preserving governance oversight of the VLR token.

The proposed changes include:

  • Updating the governance framework to focus on structural decisions affecting the VLR token, including potential future adjustments to the protocol’s economic design.

  • Settling infrastructure services that have supported the protocol as part of closing the DAO treasury accounts

  • Simplifying revenue handling by discontinuing DAO-level 20% fee routing

  • Retiring the staking program due to inactivity

  • Updating multisig configurations to reflect the updated governance scope

These changes do not modify token supply, vesting schedules, token allocations, or the transferability of VLR.

Going forward, governance will focus on structural decisions affecting the VLR token, while protocol operations and infrastructure will continue to be supported by the project’s development team.

Governance will continue to oversee structural decisions affecting the VLR token, ensuring tokenholder oversight remains in place.

Background

Velora protocol development and infrastructure services have been supported by Laita Labs Ltd., the Foundation’s operating company, since the early development of the protocol.

Snapshot governance historically played an active role in protocol decisions. In recent periods, however, participation has become limited and governance has primarily functioned as an off-chain signaling layer while operational execution has continued through the protocol’s development team.

Under previous configurations, portions of protocol-generated fees were routed to staking participants and to a DAO treasury. Over the past months, staking rewards have effectively become inactive and participation in staking governance has declined.

As with many early-stage governance systems, several initiatives were introduced to experiment with alternative governance mechanisms. One such initiative was the futarchy pilot approved under PIP-72, which allocated $50,000 in DAO liquidity for a six-month trial period beginning October 7, 2025.

In practice, usage of this mechanism remained limited and it is no longer aligned with the narrower governance scope introduced in this proposal. The pilot will therefore conclude at the end of its trial period on April 7, 2026. In accordance with PIP-72, the associated liquidity will return to the DAO treasury and is reflected in the treasury accounting used in this proposal.

As of March 26, 2026, assets associated with the Snapshot governance framework total approximately $415,000 USD equivalent, including:

  • Liquid assets (ETH, USDC..)
  • Approximately ~$19k currently deployed in the Uniswap liquidity position created under PIP-72 (original allocation: $50,000)
  • VLR holdings

Values reflect current market conditions.

A full breakdown of these assets is available at:

DeBank | Your go-to portfolio tracker for Ethereum and EVM (Octav here: less up to date but it has some historical insights)

Simplifying governance at this stage allows the project to focus on continued protocol development and ecosystem growth while preserving oversight of the VLR token by its token holders.

Specification

Governance Scope

Snapshot governance will remain available for structural decisions affecting the VLR token, including:

  • migration of VLR to a new token contract
  • deployment of VLR on additional blockchains
  • activation of the existing token minting mechanism defined in the VLR contract
  • future updates to the VLR token framework within the governance scope defined in this proposal

The VLR token contract allows minting of up to 2% of total supply per year, and any use of this mechanism requires governance approval.

Operational decisions, protocol development, infrastructure management, and treasury administration will continue to be handled by the Foundation and Laita Labs.

To reflect the narrower scope of governance, the minimum threshold required to submit a governance proposal will be 0.5% of the total VLR supply.

Existing governance mechanisms not aligned with the updated governance scope, including PIP-49 (shielded voting), will be phased out as part of this transition.

Staking Program

The staking program will be retired due to inactivity, as rewards have already become inactive in recent months.

  • No further rewards will be distributed to stakers
  • New staking deposits will be disabled
  • The exit lockup period will be set to 0, allowing withdrawals without delay

Following implementation:

  • Admin privileges over the staking contract will be removed
  • Staking parameters will no longer be adjustable

As staking is retired, seVLR will no longer function as a governance voting token, and governance voting power will be based solely on VLR holdings.

Any unclaimed staking rewards will remain claimable via the staking contract.

The official staking interface will remain available for at least one year following approval. After that period, staking contracts will remain accessible via IPFS or direct contract interaction.

Revenue Handling

DAO-level fee routing will be discontinued.

Protocol-generated fees, whether received in ETH or other assets, will support ongoing protocol operations.

DAO Treasury

Assets currently held in addresses and contracts associated with the Snapshot governance framework are reflected in the treasury snapshot described above and represent the remaining DAO treasury balance.

As part of closing the DAO treasury accounts, the remaining treasury balance — including assets temporarily deployed in DAO initiatives such as the PIP-72 futarchy pilot — will be applied toward infrastructure services that have supported and will continue to support the protocol’s development, provided by Laita Labs Ltd.

The remaining treasury balance will be used exclusively to support the continued development and operation of the protocol.

The treasury balance includes both external assets and VLR tokens that were previously held by the DAO. No new tokens are created or transferred as part of this proposal. The existing treasury balance, including VLR, is applied toward the final treasury accounting described above.

  • Assets will be transferred in-kind
  • No asset conversion or rebalancing will be required
  • Asset values remain subject to market fluctuations

A transaction summary will be published following execution.

As a result of these changes, the DAO will no longer maintain an operational treasury, and governance will focus exclusively on structural decisions affecting the VLR token.

This change simplifies governance operations while preserving oversight of the VLR token by its token holders.

Multisig Administration

Multisigs previously associated with DAO administration will be updated to reflect the narrowed governance scope.

Signer configurations will be adjusted to ensure operational security and continuity.

Clarifications

This proposal does not alter the structural characteristics of the VLR token.

Previous staking and fee routing mechanisms were incentive programs rather than ownership or revenue rights.

Implementation

Upon approval:

  • Snapshot governance will remain available for token-level decisions
  • New staking deposits will be disabled
  • The exit lockup period will be set to 0
  • Admin privileges over the staking contract will be removed
  • DAO fee routing will be discontinued
  • Multisig configurations will be updated
  • DAO treasury assets will be transferred in-kind to settle infrastructure services supporting the protocol

Conclusion

This proposal evolves Velora’s governance framework while preserving oversight of the VLR token by its token holders.

By focusing governance on structural token decisions and reducing operational overhead, the project can concentrate on continued protocol development and ecosystem growth.

Over time, Velora has grown beyond its early DAO experimentation into a broader community of users and token holders participating through ideas, feedback, and adoption of the protocol. Going forward, governance will remain responsible for protecting the integrity of the VLR token, while the forum continues to serve as a high-signal space where the community can discuss ideas and contribute to the protocol’s development and ecosystem growth.

Update: added PIP-49 (shielded voting) for clarity in the Governance Scope section.

4

Good evening, I have three questions that come to mind following your proposal:

Usefulness of $VLR: With the end of fee sharing (20%) and staking, what is the concrete value proposition for a token holder beyond pure speculation?

Decentralization: Doesn’t the 0.5% threshold (10 million $VLR) effectively exclude the entire community, exclusively benefiting the team and initial investors?

Future transparency: Without a DAO treasury, how will future third-party developers be funded if Laita Labs now holds all the resources and revenue?

5

I’ll add one more question:

In what specific scenarios does the Foundation plan to request this 2% mint? Is it intended for liquidity incentives, strategic partnerships, or other needs?

I think this has a direct link with the integration of Ledger which prefers to deal with a clear entity rather than with a DAO?

6

Hey @Asou — really appreciate you taking the time to write this out, these are all fair questions.

On VLR / token usefulness:

You’re right that with staking and fee routing going away, the token isn’t tied to those mechanics anymore. Those were originally introduced as incentives, but they haven’t really been active or meaningful for a while — rewards have effectively already slowed down and participation has been low.

So this is less about removing something that was still working, and more about aligning the structure with how things already are today. The token itself isn’t being changed, and governance still exists for structural decisions around VLR — this proposal just simplifies everything around it.

On the 0.5% threshold:

Totally get the concern. It’s not about excluding people — just making sure proposals are serious.

If the threshold is too low, you end up with a lot of noise. Requiring some coordination filters that out. If something is worth proposing, it’ll find enough support or delegation. The forum is still open for discussion.

On ecosystem funding / treasury:

In practice, development and infrastructure have already been handled through the Foundation/Laita Labs for a long time. This proposal is just aligning the structure with that reality.

Instead of routing things through a DAO treasury, it goes directly through the teams doing the work. That makes accountability clearer and things move faster. It doesn’t mean ecosystem support disappears — it just happens in a more direct way.

On the 2% mint:

Nothing new is being introduced here — that mechanism already exists in the contract (since PSP launch). There are no immediate plans to use it. If it ever came up, it would go through governance and be tied to something specific like a partnership or ecosystem need.

Happy to keep discussing — if anything still feels off or unclear, let’s dig into it.

7

I am strongly against this proposal. It is a slap in the face to every staker, especially those who have staked for years and those who bought and staked VLR after the rebranding. The proposal reminds me of the Aave situation, where the company responsible for development and maintenance ensures they receive all the revenue.

To argue that “previous staking and fee routing mechanisms were incentive programs rather than ownership or revenue rights” is ridiculous. Participation in revenue, similar to that of a shareholder, is the main reason for staking and was presented as one of the Paraswaps/Velora core features.

2 Likes
8

I hear you and I understand why this feels frustrating, especially for people who’ve been staking for a long time.

Just to add some context, staking and fee routing weren’t part of the original PSP design — they were introduced later as part of PSP 2.0 as incentive mechanisms. Like a lot of things in early-stage protocols, they evolved over time.

More recently though, those mechanisms haven’t really been active — rewards slowed down a lot and participation dropped — so this proposal is mainly about aligning the structure with how things are already working today.

The goal isn’t to take something away that’s actively functioning, but to simplify things and focus on keeping the protocol running and improving. Keeping staking or fee routing in place when they’re no longer meaningful in practice doesn’t really help anyone.

I do understand that expectations may have been different at certain points, and it’s fair to raise that. Happy to keep discussing if there are specific concerns we should look at more closely.

9

They don’t care what you say anyway—the final proposal will pass no matter what.

1 Like
10

Against PIP-77 – Please don’t remove the revenue incentives for stakers

I have been a VLR staker since day 1. I staked my tokens because the project clearly promised that stakers would share in the protocol’s future revenue as it grew.

I fully support the evolution of governance and simplifying by removing dead weight and inactive parts. That makes sense for the project.

However, permanently retiring the staking program and ending all DAO revenue routing goes too far. I believe the quiet rewards right now are temporary. The protocol has real users and real volume. When the market improves and the team adds new features, revenue will come back. That future revenue share was the main reason I bought and held through the tough times.

After this proposal passes, stakers like me will have no way to earn anything even if the protocol starts making good money again. We will be forced to unstake and either hold a pure governance token with zero yield or sell at a loss.

I am not asking to keep the old bloated system. I am asking for a better evolution:

• Keep a sustainable, smaller revenue share for stakers (even 5–10% instead of 20%).

• Or retain a portion of the treasury specifically for future incentive programs or buybacks once revenue recovers.

• At minimum, make staking retirement conditional (e.g., sunset only if annualized holders revenue stays below X for another 6–12 months) instead of immediate and permanent.

Please amend the proposal or vote it down. Don’t take away the upside we were promised.

Thank you.

11

Hi @VeloCryptor

Thanks for taking the time to write this and for sticking with the project that long, that’s genuinely appreciated!

On the staking point, I get where you’re coming from. A lot of people did see it as a way to participate in the protocol’s upside. At the same time, it was introduced later as an incentive mechanism and always subject to governance, rather than something fixed. You can find the initial proposal here.

More recently though, it hasn’t really been active, rewards slowed down a lot and participation dropped. So this change is mainly about aligning the structure with how things already are today, rather than keeping something in place in the hope that it becomes meaningful again later.

On the alternatives you mentioned, like keeping a smaller share or making it conditional, the issue is that it brings back the same complexity we’re trying to move away from. The goal here is to simplify things and make the setup sustainable based on what’s actually working now.

I do understand the frustration though, especially if that upside was part of why you chose to stake. That’s fair to raise. Happy to keep discussing this.

12

I am strongly against this proposal.

While I understand the intention to simplify governance and align the structure with the current state of the protocol, the consequences of this proposal are being significantly underestimated.

Removing staking and eliminating all revenue routing fundamentally changes the nature of VLR. It shifts the token from something that had a clear economic alignment with the protocol’s success into a pure governance token with no direct value capture.

In practice, this will likely have several negative effects:

  • It removes the main incentive for long-term holders to keep holding or staking VLR;

  • It creates immediate selling pressure, as stakers are forced to unstake without any remaining upside;

  • It weakens the overall attractiveness of the token for new participants;

  • It breaks the implicit expectation that holders could benefit from the protocol’s growth.

Even if staking participation has declined recently, that does not justify permanently removing any form of value accrual. Market conditions change, and so can participation. Designing governance based only on the current low-activity phase risks eliminating future upside entirely.

A simplified system does not need to be a zero-incentive system.

There were more balanced alternatives that could have preserved alignment between the protocol and its holders, such as maintaining a smaller revenue share, conditional incentives, or future buyback mechanisms.

By removing all of this, the proposal effectively turns VLR into a token that relies solely on belief in future decisions, without any tangible mechanism to capture value.

For these reasons, I cannot support PIP-77 in its current form.

2 Likes
13

The DAO model is evolving. The ecosystem is realizing that DAOs, as they were initially conceived, are utopian and inefficient. I find Velora’s desire to evolve positive, even important and necessary. Decisions will be strategic, made quickly, and no longer driven solely by short-term speculative interests. The only drawback to this proposal concerns the usefulness of holding or even buying the VLR token. Do you already have a plan for the future? What about maintaining the token’s future liquidity? I don’t believe you’re planning a token with no value other than allowing participation in a few DAO decisions. That’s why I’m asking again: what is the real future plan? Are you awaiting legal clarification on crypto laws?

1 Like
14

Hey @Julio Appreciate the perspective, and I agree with your view that the model is evolving. This proposal is really about aligning the structure with how things have already been operating, rather than forcing something that isn’t working in practice.

On the future side, the focus right now is pretty simple: keep improving execution, grow usage, and build something people actually rely on. That’s where we think the long-term value of the ecosystem comes from.

We’re not trying to force a predefined role for the token or introduce artificial mechanisms. If the token evolves further over time, it’ll come from real usage and adoption, not something designed in isolation.

On liquidity, nothing changes at the token level with this proposal. Markets continue to function as they do today.

So the approach here is to simplify things, focus on building, and let the rest evolve from there.

1 Like
15

The 7-day debate period for this proposal has now concluded. In accordance with the PIP Lifecycle approved under PIP-57, we are closing the debate stage and initiating the 2-day frozen period. After this period, the proposal will be submitted to Snapshot for voting.

Thank you to everyone who contributed to the discussion!

16

About the liquidity

If staking disappears and therefore all 80/20 VLR/ETH are destaked, who will ensure the liquidity of the token?

17

That’s a fair concern.

Just to clarify, there’s still liquidity across other venues like DEXs and CEXs, so this doesn’t change how the token can be traded today. the Balancer pools have been relatively thin already, so any impact there is expected to be limited