Vaulta Aims to Rebuild On-Chain Democracy with a Tripartite Governance Model

Over the past several months, the Vaulta ecosystem has endured a period of genuine turmoil. Yves La Rose, founder of the Vaulta Foundation, announced his resignation and dissolved the foundation. During the prolonged transition, the price of the $A token continued to decline amid uncertainty, triggering a series of escalating internal conflicts. At the governance level, Block Producers (BPs)—the highest governing authority—faced reduced rewards, nearing shutdown prices; some BPs withdrew from governance entirely or showed severely diminished engagement. At the community level, token holders suffered from a lack of transparency, remaining unaware of the transition progress from the former foundation and having no input into future network development plans, forced to watch helplessly as the token price fell. Organizational changes also shifted discussions about the network’s evolution away from narrative and technical progress, ultimately narrowing focus to the use of funds in the Vaulta Treasury (hereafter “Treasury”). Network development devolved into a battle over money distribution. The dissolution of the foundation has effectively stripped away the veil hiding DPoS governance failure—when you see one cockroach, it means hundreds more are nearby.

From the perspective of Vaulta Labs and the Treasury, this article will delve into the experiences and reflections of the Vaulta network in adopting the DPoS model, and propose solutions. Additionally, this article will sound the call for DPoS mechanism reform, serving as a commitment to the community and the starting point for Vaulta’s reconstruction of its governance order.

Imagine a world without banks, without governments, without any central authority—tens of millions of people jointly maintaining a ledger that no one can alter and no one can control alone. This is not a utopia; it’s the core problem blockchain seeks to solve: How can a group of strangers reach consensus without trusted intermediaries?

In response to this proposition, the blockchain world has offered several markedly different answers within just a few years. Bitcoin pioneered the solution with Proof of Work (PoW)—letting computational power speak: whoever contributes the most computing resources earns the right to validate transactions. It is secure and decentralized, but the costs are clear: slow speeds, extremely high energy consumption, and near-impossible participation for ordinary individuals. Ethereum later introduced Proof of Stake (PoS), replacing computational competition with staking by coin holders, improving efficiency, yet still leaving ordinary holders with little real influence over the network’s direction.

In 2013, Dan Larimer first proposed the DPoS (Delegated Proof of Stake) mechanism, charting a third path. Its logic cuts straight to the heart of the issue: instead of having everyone compete for computational power or stake capital, token holders directly vote to elect a small group of community-recognized representatives to maintain the network. Efficiency comes from the streamlined number of representatives, while democracy stems from the votes of token holders. DPoS was first implemented on BitShares and later adopted by numerous prominent projects including Steem, EOS (now Vaulta), and TRON, becoming a consensus mechanism proven in real-world blockchain competition.

In 2018, the EOS mainnet was officially activated, becoming one of the most closely watched projects among new blockchains. The election of 21 BPs (Block Producers) was hailed by many as "the first large-scale on-chain governance experiment in blockchain history"—node teams released whitepapers, committed to ecosystem development, and rallied community support, while token holders genuinely used their votes to shape the network’s direction. At that moment, DPoS’s promise seemed achievable—democracy and efficiency could coexist.

However, a good mechanism requires sound governance to complement it. DPoS provides us with a framework, but how it operates within that framework remains an unresolved question.

Breakthrough in on-chain governance

In the first two years after the activation of the EOS mainnet, DPoS governance came closest to its ideal state. BP elections were highly competitive, with node teams emerging from around the world, vibrant community discussions, and a surge of ecosystem projects. On-chain transaction volume once ranked among the top global blockchains, and token holders held great optimism for the network’s future.

During this period, EOS's DPoS governance also demonstrated its true breakthrough value—on-chain governance gained real enforcement capability for the first time.

Previously, governance on most blockchains was limited to off-chain discussions—communities could debate, but could not enforce actions directly. EOS changed this: token holders can vote at any time to replace underperforming BPs; BPs can freeze compromised accounts, enforce arbitration rulings, and drive protocol upgrades. In its early days, EOS used multi-signature BPs to freeze multiple stolen accounts—an action nearly impossible on traditional public blockchains. For the first time, blockchains gained a governance mechanism with government-like enforcement—rules were no longer just written in whitepapers, but could actually be executed.

However, this efficient execution did not last long; as voting evolved, it led to the other side—highly concentrated power—the formation of voting blocs.

Trilemma and Voter Base

EOS initially attempted to constrain power through an on-chain constitution (EOS Constitution) and an arbitration body, ECAF, but both failed due to the lack of enforcement mechanisms. This is not merely a regrettable flaw in institutional design—it reveals a deeper structural dilemma in DPoS: efficiency, decentralization, and fair governance cannot be maximized simultaneously.

The top 21 nodes on the Vaulta network today include some that were once prominent but have gradually become less active in governance, yet still retain decision-making power—a contradiction in itself. To achieve efficiency, the number of nodes must be small; but the fewer the nodes, the more power becomes concentrated. To ensure democracy, voting rights are allocated based on token holdings; yet the more tokens one holds, the greater their voting power, giving the largest token holders ultimate influence. Currently, nodes rely almost entirely on votes from token pools and hold minimal personal stakes, causing them to effectively act as representatives of token pools rather than conduits for ordinary token holders' opinions.

To understand this issue, it’s first necessary to understand the delegated voting mechanism of DPoS. Under Vaulta’s DPoS system, token holders have two ways to participate in governance: either by directly voting for BPs they support, or by using the Proxy (delegated voting) mechanism to delegate their voting power to a third-party proxy who votes on their behalf. The design of delegated voting aims to lower the barrier to participation for ordinary token holders—after all, not everyone has the time or resources to continuously monitor BP performance.

In practice, this mechanism has given rise to "vote farms"—third-party entities or individuals that aggregate large volumes of proxy voting power and collect a share of rewards from BPs. Vote farms are not ordinary token holders, but governance rent-seekers: they care neither about the technical development of the chain nor the long-term health of the ecosystem, only about stable voting revenue. To retain a top-21 position, BPs must pay a portion of their block rewards to these vote farms. As a result, the primary beneficiary of node operations has shifted from the token-holding community to the vote farms, rendering ordinary token holders completely silent in governance.

On-chain voting, off-chain decision-making

A deeper issue is that EOS governance has had a fundamental fracture from the start—there is a voting mechanism on-chain, but actual decision-making flows off-chain.

Major decisions are reached through consensus in Telegram groups, private meetings, and informal channels, then formally enacted through on-chain voting. Ordinary token holders only see the outcome, not the process—who exerted influence, how interests were exchanged, or the basis for decisions remains difficult to trace. The blockchain records the vote, but governance happens off-chain. This disconnect creates a gap between the stated vision of "decentralized governance" and its reality that cannot be ignored.

This gap was filled during the boom by soaring token prices and a vibrant ecosystem. But it never truly disappeared. And when the boom faded, what was left exposed was chaos everywhere.

DPoS practices on EOS have demonstrated that on-chain governance mechanisms can function in practice, but under a token-weighted voting system, they are prone to issues such as power concentration and利益 alliances. This experience, combined with other factors, has influenced the design direction of subsequent blockchains, leading newer projects like Solana, Aptos, and Sui to favor a consensus structure combining PoS with Byzantine Fault Tolerance, in order to enhance the security and finality of the consensus layer, while correspondingly reducing reliance on on-chain voting governance mechanisms.

These reflections hold value for the entire industry, but for EOS, the issues have never remained theoretical—it has reached this crossroads step by step on its own mainnet, with a real community, real assets, and real governance dynamics.

After EOS was renamed to Vaulta, the historical governance challenges do not automatically disappear with a brand refresh. To understand why we are proposing this solution today, we must first confront Vaulta’s current reality.

Power imbalance is not a new issue. History has shown that the solution lies not in dismantling elite governance, but in establishing genuine and effective checks and balances for it. This is the starting point of our proposed solution.

We have observed that during the turbulent period of the foundation handover*, a group of community members genuinely committed to the development of the Vaulta ecosystem spontaneously formed the EOS Community Foundation (ECF). Most of its members have been with the network since the EOS era, representing the interests of token holders. Today, they are striving to unify community voices and chart a path forward for the ecosystem during this vacuum period without centralized coordination. After careful consideration and thorough observation of the ECF organization, Vaulta Labs and the Treasury have decided to integrate it into network governance as part of optimizing DPoS governance—accepting oversight and returning power to the community.

About Treasury

First, it is important to clarify the role of the Treasury. The Treasury is a public asset reserve independent of BP, Vaulta Labs, and the former Vaulta Foundation, with the core responsibility of continuously creating long-term value for the ecosystem while ensuring asset security. During the foundation era, the Treasury’s primary function was to support the network’s strategic development, ensure the network’s continued operation even under adverse conditions, generate returns through active investment initiatives, and use the profits to continuously repurchase $A.

Currently, the Treasury's position is to actively convert assets into tangible momentum for ecosystem governance and sustainable development, rather than letting money sit idle.

Step 1: Stake on-chain to let your assets generate continuous returns

The Treasury will first address the issue of funding network development, quickly moving attention away from the struggle over token distribution. The assets currently held by the Treasury primarily originate from the dedicated RAM Ecosystem Fund established under EOS’s 2024 new token economy model, along with additional tokens acquired through market-making buybacks. The total value exceeds 350 million $A, with a portion allocated as outlined in the whitepaper to support the $V (RAM) market, another portion designated for market-making, custody, marketing, and exchange listings, and the remainder held and managed by the Treasury.

Currently, the Treasury plans to lock up and deploy 220 million $A into REX. Locking up means selling the tokens becomes transparent, so this locked portion can also be seen as a show of confidence in $A by the entire ecosystem.

REX (Resource Exchange) is the on-chain staking system on the Vaulta mainnet—holders who deposit $A into REX earn continuous on-chain staking rewards, with a minimum lock-up period of 21 days during staking; rewards are sourced from a pre-allocated staking reward pool on the network.

Depositing 220 million $A into REX is the first step toward providing the network with growth funding without utilizing existing cash reserves.

Step 2: Introduce a democratic oversight mechanism and return power to the community

The Treasury does not participate in network governance. We restore the effectiveness of the DPoS governance mechanism by introducing the community governance organization ECF to oversee existing BPs.

The initial seven-member ECF committee, composed of members from the Chinese, English, and Korean communities, operates entirely independently of all other governance bodies within the network and speaks solely on behalf of the community. Members will rotate every six months, with a maximum tenure of 12 months to prevent power consolidation. The official committee election will commence six months after the Treasury vault is activated, and any community member holding at least 10,000 $A will be eligible to participate. Representatives of affiliated organizations are ineligible to run for the ECF committee. Specific details will be gradually disclosed by the ECF over the next two weeks.

ECF represents the broad community of token holders and evaluates and allocates voting power to BPs through a proxy voting mechanism—the on-chain voting rights generated after depositing REX into the Treasury are delegated to ECF, making it one of the largest single voting proxies in the Vaulta network. ECF will publicly disclose its transparent BP scoring criteria through independent communication channels, assigning weighted votes based on node rankings: higher scores receive more votes, directly linking voting power to actual contributions. This approach fundamentally resolves the dilemma of voting power dominating node behavior: on one hand, nodes are freed from the cost pressure of sharing profits with vote pools, increasing their earnings; on the other hand, nodes must actively participate in network governance to earn higher votes. Meanwhile, the community gains greater influence in network development through its evaluation of BPs. By integrating centralized power into decentralized governance while simultaneously decentralizing authority, this represents a more pragmatic exploration of the DPoS governance model.

Step 3: Network incentives, with returns flowing back into the ecosystem

Based on the current yield, the funds deposited by Treasury into REX are projected to generate approximately $20 million in on-chain returns annually. This revenue will be entirely allocated to incentivize active BP participants and other ecosystem projects contributing to the network, aiming to establish a positive feedback loop for sustainable ecosystem growth.

Same oversight mechanism applies to the allocation of these funds: ECF has the authority to review every on-chain funding request within the network and holds a veto power over treasury expenditure decisions.

A clear division of powers exists among the three: the Treasury manages assets without participating in governance, the ECF represents the community in oversight and veto power, and the BP is responsible for network maintenance and governance; any decision requires majority support of 15/21—no single party can override the others.

Of course, whether this mechanism can truly be effective ultimately depends on sustained community participation and support from BPs. To this end, the community has proposed a clear three-phase roadmap for governance reconstruction: Phase one is to break the chain of BP vote-buying and vote-trading, purifying the governance environment while alleviating the BPs' income challenges; Phase two is to activate the BP contribution incentive mechanism, ensuring that genuine contributions receive appropriate rewards; Phase three is to gradually reduce nodes' dependence on the ECF vote pool and return voting power to decentralization. We encourage BPs to establish close communication with the ECF to help the network return to a healthy state as soon as possible.

Trusting a person requires evaluating their character. Trusting a system requires only verifying its rules.

Every component of this scheme—on-chain staking of the Treasury, vote delegation to the ECF, BP scoring criteria, incentive distribution rules, and veto trigger conditions—is on-chain verifiable, community-monitored, and publicly accountable. It relies neither on anyone’s moral integrity nor on any organization’s unilateral promise.

This is Vaulta’s historic, sweeping achievement—the foundation for rebuilding market trust and our duty to everyone who remains here.