Frequently-asked questions about Hone
Is dALGO pegged 1:1 to ALGO?
Not necessarily. When the Staking Pool launches, the ratio of ALGO in the Staking Pool to dALGO in circulation will be 1:1 unless ALGO is sent to the Staking Pool outside of a staking action. After each governance period, Algorand Governance rewards are deposited into the Staking Pool meaning that there will now be more ALGO in the Staking Pool than dALGO in circulation. Each dALGO is therefore redeemable for more ALGO. This means the relative price of dALGO to ALGO will increase over time.
Where is the dALGO supply held?
The dALGO supply is held in the Staking Pool smart contract and can only be moved by staking ALGO to receive dALGO.
Can I still vote in Algorand Governance if I stake ALGO for dALGO?
No, unfortunately due to the liquid nature of dALGO—where anyone who possesses dALGO is entitled to the underlying ALGO—there is no way to avoid double-voting, therefore the Staking Pool votes with the lead of the Algorand Foundation. In the future, HONE token-holders will be able to stake their tokens and vote on behalf of the Staking Pool.
Who manages the multisig for the Staking Pool admin functions?
The Staking Pool smart contract is managed by an Algorand multisig account with six signers and a signing threshold of four. Only one member of the Hone team is on the multisig; of the other signers, one is from the Algorand Foundation, one is from Algorand Inc, and the other three are core contributors of Algorand projects.
Is the Staking Pool smart contract upgradable?
Yes, however it can only be updated after making a request and waiting for the 14-day protection window to lapse, and the requested update code must match the final update code.
When an update request is made, a hash of the TEAL Approval Program and Clear State program is stored in the smart contract’s global state. This request also sets a flag that keeps open the Staking Pool so that those who wish to deposit their dALGO and unstake their ALGO before the update can do so. The updated TEAL code and its hash will be made public at the time of the request. If there are any issues found with the code in the protection window, a subsequent update request can be made with either the original smart contract code or an amended version of the requested update, which will restart the 14-day protection window. After the protection window has lapsed, a final update request is made. The hashed contract update Approval Program and Clear State Program is then checked against the hashed Approval Program and Clear State Program stored in global state. If it matches, the update will succeed, otherwise it will fail.
We thought long and hard about how to safely manage the dALGO supply in case of future changes to Algorand Governance. In the end, having an updatable contract that is enforced by a protection window meant that we could account for future Algorand Governance changes while also keeping the dALGO supply safe.
What fees are charged for liquid governance?
The protocol takes a 7.5% fee on Algorand Governance rewards and other ALGO payments that enter the pool outside of staking operations. This is to cover maintenance and operational costs.
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