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Premia is enabling token holders to trustlessly elect Parliament members and grant the power to execute specific transactions on the Premia multisig, increasing protocol decentralization and resilience
Premia, a decentralized finance (DeFi) options platform, sought to advance its governance framework to increase its resilience and decentralization. Premia is using Hats to establish a trustless and decentralized governance structure to increase its resilience as well as to power its Parliament elections in composition with Snapshot and oSnap.
"This is the only solution that works for what we wanted. So we're happy to be working with Hats." - DK, Contributor, Premia Finance
Since its launch in 2021, Premia has relied on a multisig for ownership of its protocol contract and Treasury. As a DeFi protocol, it was seeking a way to give token holders more control over the protocol’s core mechanisms and contracts.
In 2023, Premia launched its Parliament, an elected group of 10 token holders who are tasked with helping to govern and set the direction of the protocol. In the process of forming its Parliament, Premia ran into one of the most common issues of today’s DAO election systems: the lack of automated granting of roles and permissions for election winners. Specifically, DAO elections fail to automatically delegate permissions to election winners (and only to election winners) without requiring that the community trust a group of executors (often multisig signers) to accurately implement the results of the election. This leads to centralization risk and potential capture vectors.
Premia wanted to ensure that the protocol could continue to operate even if the multisig members disappeared or were unable to execute transactions. How could Premia give its token holders the ability to trustlessly elect members to Parliament, and ensure those members could govern the protocol if multisig signers were corrupted or MIA?
Using Hats, Premia introduced a structure that enabled token holders to elect parliament members directly via Snapshot and give them the power to execute transactions on the Premia multisig.
The system works as follows, as detailed in the graphic below:
This new trustless election system substantially increases the protocol's resilience. By allowing parliament members to execute multisig transactions, Premia ensures that if the original multisig signatories were suddenly unavailable, the protocol would maintain operational continuity. This is critical for the platform's longevity and trustlessness, as it places control in the hands of elected community members. Integrating Snapshot votes with oSnap oracles from UMA automates the enforcement of these decisions, further embedding resilience into the governance model by minimizing reliance on any single point of failure.
"The Hats interfaces are awesome. They have thought through how to amend, add on, delete from a Hats tree... Everything I need in the hats interface is there." - DK, Contributor, Premia Finance
Premia's approach has set the stage for a future where token holders and elected parliament members have a greater say in the protocol's direction, paving the way for a more participatory and dynamic governance model. For example, Premia has expressed interest in using Hats to enable token-holders to add and remove multisig signers directly. Ultimately, it will be up to the newly empowered Parliament Members to decide where to go from here.