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Governance Participation

How validators participate in Pilier governance: converting PIL to tPIL, voting on proposals, and shaping protocol evolution.

Reading time: 10 minutes

Why Validators Must Participate​

Validators are infrastructure operators. Governance decisions directly affect your operations:

Decision TypeDirect Impact on Validators
Runtime upgradesMust update node binary, test on testnet
Fee adjustmentsChanges network operational costs, affects revenue sustainability
Validator set changesYour peers join/leave, affects block production distribution
Treasury allocationsEcosystem funding affects adoption (more users = more fees)
Free transaction policyDetermines which transactions are sponsored (cost implications)
Governance parametersVoting thresholds, proposal deposits affect your voice

If you don't vote, others decide for you—potentially against your interests.

PIL vs. tPIL: Understanding Governance Power​

PIL = operational token (pay fees, exchange for EUR) tPIL = governance token (earned by locking PIL, 1 tPIL = 1 vote)

Lock duration determines voting power:

  • 12 months: 2.0× multiplier (1,000 PIL → 2,000 tPIL)
  • 24 months: 3.5× multiplier (1,000 PIL → 3,500 tPIL)
  • 48 months: 5.0× multiplier (1,000 PIL → 5,000 tPIL)

Key principle: Time commitment = governance power.

👉 Full tPIL mechanics: Tokenomics: Governance

Converting PIL to tPIL​

Validators should lock PIL for governance power.

Validator-Specific Recommendations​

Lock duration: 24-48 months (maximum governance influence as infrastructure operators)

Why longer locks for validators?

  • Validators vote on operational parameters (fees, free tx policy, runtime upgrades)
  • Long-term commitment = credibility (community trusts validator votes more)
  • Higher tPIL = stronger voice in critical network decisions

How to Lock PIL​

Option 1: Governance Portal (easiest)

1. Visit governance.pilier.net
2. Connect wallet (validator account)
3. Navigate to "Lock PIL" → "Convert to tPIL"
4. Enter amount: 1000 PIL
5. Select duration: 24 months
6. Confirm: Receive 3,500 tPIL
7. Transaction signed (minimal fee)

Option 2: CLI

# Lock 1,000 PIL for 24 months
pilier-cli governance lock \
  --amount 1000 \
  --duration 24 \
  --account validator-lyon-01

# Output: Locked 1,000 PIL → 3,500 tPIL

Confirmation:

On-chain event:
├─ governance.pilLocked(validator-lyon-01, 1000 PIL, 24 months)
├─ tPIL balance updated: +3,500 tPIL
└─ Unlock date: January 15, 2029

Trust Decay Mechanism​

tPIL decays linearly as lock period approaches expiration.

Example: 1,000 PIL locked for 12 months → starts at 2,000 tPIL → decays to 0 at expiration.

Why this matters for validators:

  • Must periodically renew locks (maintain governance power)
  • Set calendar reminder: renew 30 days before expiry
  • Can extend lock anytime to refresh tPIL

👉 Full decay mechanics: Tokenomics: Governance

Extending Locks​

You can extend lock duration at any time to refresh tPIL.

Example:

Current state:
├─ 1,000 PIL locked, expires in 2 months
├─ Current tPIL: 333 (decayed from 2,000)

Action: Extend lock by 12 months
├─ New expiry: 14 months from now
├─ New tPIL: 2,000 (refreshed at 2.0× multiplier)
└─ Voting power restored ✅

CLI:

pilier-cli governance extend-lock \
  --additional-months 12 \
  --account validator-lyon-01

Can you unlock PIL before expiration?

Yes, but you forfeit all tPIL immediately.

Example:

Current state:
├─ 5,000 PIL locked for 24 months (10 months remaining)
├─ Current tPIL: 14,583 (decayed from 17,500)

Action: Early unlock
├─ Receive: 5,000 PIL (unlocked)
├─ Lose: 14,583 tPIL (forfeited)
└─ Governance power gone ❌

Why harsh penalty?

  • Prevents gaming: Lock → vote → immediately unlock
  • Ensures voters have skin in the game
  • Protects protocol from short-term manipulation

Exception: Emergency unlock (protocol vulnerability, force majeure) may be approved via governance with reduced penalties.

What Validators Vote On​

1. Runtime Upgrades​

What: Changes to blockchain logic (pallets, consensus, storage)

Examples:

Proposal: "Add pallet-identity for on-chain identities"
├─ Why: Validators can set verified name/website/contact
├─ Impact: Validators must update node binary after upgrade
├─ Vote: Aye (supports validator transparency)

Proposal: "Optimize GRANDPA finality (reduce vote size by 30%)"
├─ Why: Improve network bandwidth efficiency
├─ Impact: Faster finality rounds, lower bandwidth costs
├─ Vote: Aye (technical improvement, no downside)

Validator considerations:

  • Will this require node restart?
  • Is testnet upgrade successful?
  • Any breaking changes to session keys?

Voting threshold: 66% approval + 10% quorum

2. Fee Adjustments​

What: Changes to transaction costs

Examples:

Proposal: "Reduce DPP creation fee from 0.004 to 0.003 PIL"
├─ Why: Attract more SME adoption (lower barrier)
├─ Impact: Lower network revenue (but more volume expected)
├─ Validator analysis:
│   ├─ Current: 10,000 DPPs/month × 0.004 = 40 PIL
│   └─ Proposed: 15,000 DPPs/month × 0.003 = 45 PIL (net positive)
└─ Vote: Aye (volume increase compensates for fee reduction)

Proposal: "Increase agent execution fee from 0.005 to 0.008 PIL"
├─ Why: Agent execution is compute-intensive (justify cost)
├─ Impact: Higher revenue per agent call
├─ Validator analysis:
│   ├─ Will this reduce agent usage? (price elasticity)
│   └─ Are validators' costs justified? (YES - agents require more resources)
└─ Vote: Aye (fair pricing for compute-intensive operations)

Validator considerations:

  • Does this maintain network sustainability? (cover operational costs)
  • Will it hurt adoption? (too expensive for SMEs?)
  • Is it fair pricing? (reflects actual resource cost)

Voting threshold: 60% approval + 15% quorum

3. Free Transaction Policy ⭐ Key Validator Responsibility​

What: Determining which transaction types are sponsored (free for users)

Why this matters for validators:

  • Sponsored transactions consume validator resources (block space, compute)
  • Costs covered by User Credits & Civic Pool (20% of supply = 600,000 PIL)
  • Validators vote to balance public accessibility with network sustainability

Examples:

Proposal: "Sponsor DPP verification for NGOs (verified on-chain identity)"
├─ Cost analysis:
│   ├─ Estimated volume: 5,000 verifications/month
│   ├─ Normal fee: 0.0025 PIL × 5,000 = 12.5 PIL/month
│   └─ Annual cost: 150 PIL (affordable from Civic Pool)
├─ Impact: Encourages NGO adoption, aligns with public utility mission
└─ Validator vote: Aye (low cost, high civic value)

Proposal: "Sponsor all timestamping for universities (no limits)"
├─ Cost analysis:
│   ├─ Estimated volume: Unlimited (could be 100,000s/month)
│   ├─ Potential cost: 10,000+ PIL/month → unsustainable
│   └─ Civic Pool depletion: <6 months
├─ Impact: Network subsidy becomes too expensive
└─ Validator vote: Nay (propose alternative: quota-based sponsorship)

Validator responsibilities:

  • Analyze cost implications (is Civic Pool sufficient?)
  • Ensure network sustainability (don't bankrupt treasury)
  • Balance public good vs. operational reality

Voting threshold: 60% approval + 15% quorum

Quarterly review: Free transaction policy re-evaluated every 3 months based on actual usage.

4. Validator Set Changes​

What: Adding or removing validators

Examples:

Proposal: "Add validator-amsterdam-01 (University of Amsterdam)"
├─ Technical review: PASSED (30-day testnet trial, 99.5% uptime)
├─ Mission alignment: Research university, digital rights focus
├─ Geographic diversity: First Netherlands validator
├─ Governance analysis:
│   ├─ Will dilute existing validators' block production (5 → 6 validators)
│   └─ But strengthens network decentralization
└─ Validator vote: Aye (supports decentralization goal)

Proposal: "Remove validator-paris-03 (persistent downtime, 15 days offline)"
├─ Evidence: On-chain heartbeat data (no activity since Jan 1)
├─ Contact attempts: 5 emails, 3 phone calls, no response
├─ Impact: Network operating fine with remaining validators
└─ Validator vote: Aye (Charter violation, non-responsive)

Validator considerations:

  • Does new validator strengthen network? (decentralization, expertise)
  • Does removal follow due process? (warnings issued, opportunity to cure)
  • Personal conflicts aside, what's best for network?

Voting threshold: 75% approval + 20% quorum (high bar for validator changes)

5. Treasury Allocations​

What: Spending from Ecosystem & Modules Fund (40% of supply = 1,200,000 PIL)

Examples:

Proposal: "Grant 50,000 PIL to SAP connector development (3 milestones)"
├─ Rationale: SAP is major ERP used by 10,000+ EU SMEs
├─ Milestones:
│   ├─ M1 (design doc): 10,000 PIL
│   ├─ M2 (testnet deployment): 20,000 PIL
│   └─ M3 (mainnet audit): 20,000 PIL
├─ Expected impact: Enable 500+ SAP users to adopt Pilier
└─ Validator vote: Aye (strategic integration, reasonable budget)

Proposal: "Grant 100,000 PIL to marketing campaign (social media ads)"
├─ Rationale: Increase brand awareness
├─ Validator analysis:
│   ├─ Is marketing effective? (unclear ROI)
│   ├─ Better spent on technical infrastructure? (connectors, tooling)
│   └─ Ecosystem Fund = technical grants (not marketing budget)
└─ Validator vote: Nay (better use of treasury funds available)

Validator considerations:

  • Does this strengthen ecosystem? (more integrations = more users = more fees)
  • Is budget reasonable? (compare to market rates for similar work)
  • Are milestones clear? (accountability, clawback if not delivered)

Voting threshold: 55% approval + 10% quorum

6. Governance Parameters (Meta-Governance)​

What: Rules about governance itself

Examples:

Proposal: "Lower runtime upgrade threshold from 66% to 60%"
├─ Rationale: Faster iteration, less gridlock
├─ Risk: Lower security bar (malicious upgrades easier to pass)
├─ Validator analysis:
│   ├─ Runtime upgrades are critical (security, consensus changes)
│   └─ High threshold = appropriate caution
└─ Validator vote: Nay (maintain 66% for security)

Proposal: "Increase proposal deposit from 1,000 to 5,000 PIL"
├─ Rationale: Reduce spam proposals (currently too easy to submit)
├─ Impact: Higher barrier for small community members
├─ Validator analysis:
│   ├─ Recent spam proposals: 2 in last 6 months (not a crisis)
│   └─ 5,000 PIL = too high (excludes legitimate small proposals)
└─ Validator vote: Nay (proposal: increase to 2,000 PIL instead)

Validator considerations:

  • Does this improve governance? (efficiency, quality, participation)
  • Unintended consequences? (excluding voices, centralizing power)
  • Balance: accessibility vs. quality control

Voting threshold: 80% approval + 25% quorum (highest bar for changing rules)

How to Vote​

Validators should vote on all proposals (Charter obligation).

Step 1: Review Active Proposals​

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Step 2: Read Proposal Details​

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Step 3: Participate in Discussion​

[keep this section - validators' comments carry weight]

Step 4: Cast Your Vote​

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Step 5: Track Vote Progress​

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👉 Full proposal lifecycle: Tokenomics: Governance

Validator Veto Power​

What is Veto Power?​

Validators can block proposals that pose existential threats to network sustainability.

Requirements:

  • 3/5 validators must vote "Nay" (60% consensus)
  • Must provide alternative proposal within 30 days
  • Only for proposals that would kill network operationally

Example:

Proposal: "Set all transaction fees to 0 PIL"
├─ Community vote: 65% Aye (passes normal threshold)
├─ Validator analysis:
│   ├─ Zero fees = zero revenue
│   ├─ Validators cannot cover costs (€500/month target)
│   └─ Network becomes unsustainable within 3 months
├─ Validator votes:
│   ├─ validator-lyon-01: Nay
│   ├─ validator-paris-01: Nay
│   ├─ validator-berlin-01: Nay (3/5 validators = veto triggered)
│   ├─ validator-amsterdam-01: Aye
│   └─ validator-madrid-01: Aye
└─ Result: Proposal blocked (validator veto invoked)

Alternative proposal (submitted within 30 days):
├─ "Reduce fees by 50% (not 100%)"
├─ Rationale: Balance affordability with sustainability
└─ Community + validators approve ✅

Why veto power exists:

  • Validators are infrastructure operators (understand operational costs)
  • Community may vote for populist measures (free everything!) without realizing consequences
  • Veto protects network sustainability (not validator profits—they're non-commercial)

Limitations:

  • Cannot veto for personal gain (e.g., "increase validator compensation to €5,000/month")
  • Cannot veto regularly (undermines governance legitimacy)
  • Must provide constructive alternative (not just block)

Expected Participation​

Minimum (Acceptable)​

Vote on proposals affecting validator operations:

Required:
├─ Runtime upgrades (affects node operation)
├─ Validator set changes (your peers)
├─ Fee adjustments (revenue sustainability)
└─ Free transaction policy (cost implications)

Result: ~50-60% participation (operational focus)

Vote on all proposals:

Includes:
├─ Treasury allocations (ecosystem growth)
├─ Governance parameters (meta-governance)
├─ Community initiatives (civic engagement)
└─ All of the above

Result: 80-100% participation (active governance)

Performance Tracking​

Governance metrics (visible on telemetry dashboard):

Validator: validator-lyon-01

Last 90 days:
├─ Total proposals: 15
├─ Voted on: 14 (93.3%) ✅
├─ Aye: 10
├─ Nay: 3
├─ Abstain: 1
└─ Rating: Excellent governance participation

Consequences of low participation:

<50% for 6 months: Warning issued
<20% for 12 months: May trigger removal proposal
Reason: Governance participation is Charter obligation

Example: Validator's Governance Journey​

Month 1: Onboarding

├─ Lock 500 PIL for 24 months → 1,750 tPIL
├─ Vote on first proposal (#040: Add validator-berlin-01)
└─ Vote: Aye (supports decentralization)

Month 3: First Fee Adjustment

├─ Proposal #045: "Reduce DPP fee to 0.003 PIL"
├─ Analysis:
│   ├─ Current volume: 8,000 DPPs/month × 0.004 = 32 PIL
│   └─ Projected: 12,000 DPPs/month × 0.003 = 36 PIL (net positive)
├─ Forum discussion: Validator-lyon-01 posts cost-benefit analysis
└─ Vote: Aye (volume increase justified)

Month 6: Controversial Treasury Proposal

├─ Proposal #050: "Grant 150,000 PIL to marketing campaign"
├─ Validator concerns:
│   ├─ Ecosystem Fund = technical grants (not marketing)
│   ├─ ROI unclear (no success metrics defined)
│   └─ Better spent on connectors, integrations
├─ Forum discussion: Validator-lyon-01 proposes amendment (reduce to 50k, add KPIs)
├─ Vote: Nay on original, Aye on amended proposal
└─ Outcome: Amended proposal passes (community accepts validator input)

Month 12: Runtime Upgrade

├─ Proposal #065: "Add pallet-contracts (smart contracts support)"
├─ Testnet trial: Successful (validator-lyon-01 tested for 14 days)
├─ Impact: Must update node binary within 7 days of mainnet upgrade
├─ Vote: Aye (technical improvement, testnet validated)
└─ Post-approval: Validator updates node binary (smooth upgrade)

Month 24: Validator Now a Governance Leader

├─ Total tPIL: 35,000 (from continuous locking strategy)
├─ Proposals voted on: 48/50 (96% participation) ✅
├─ Proposals submitted: 3 (technical improvements)
├─ Community reputation: Top-tier governance participant
└─ Impact: Validator's voice carries weight in discussions

Best Practices​

Do:​

  • ✅ Lock PIL for 24-48 months (maximum governance power)
  • ✅ Vote on all proposals (especially those affecting validators)
  • ✅ Explain your votes in forum (transparency, educate community)
  • ✅ Propose alternatives if voting Nay (constructive, not just negative)
  • ✅ Renew locks before expiry (maintain governance power)

Don't:​

  • ❌ Vote without reading proposal (uninformed voting harms governance)
  • ❌ Vote based on personal gain only (consider network health)
  • ❌ Abstain on critical proposals (validators should have opinion)
  • ❌ Let tPIL decay to zero (lose governance power)
  • ❌ Veto proposals arbitrarily (use veto only for existential threats)

Summary: Validator Governance​

Why validators must participate:

  • Governance affects operations (fees, upgrades, validator set)
  • Infrastructure operators' perspective is critical
  • Charter obligation (expected participation >80%)

How to participate:

  1. Lock PIL for tPIL (24-48 months recommended)
  2. Review proposals (governance portal or CLI)
  3. Discuss in forum (validators' input valued)
  4. Vote (Aye/Nay/Abstain with reasoning)
  5. Renew locks (maintain governance power)

Key responsibility:

  • Free transaction policy voting (balance public good with sustainability)
  • Validators analyze cost implications (Civic Pool sufficiency)
  • Ensure network remains operationally viable

Veto power:

  • 3/5 validators can block existential threats
  • Must provide alternative within 30 days
  • Protects network sustainability

Next Steps​

Ready to participate in governance?

  1. ✅ Lock PIL for tPIL (start building governance power)
  2. ✅ Read Security Procedures (incident response)
  3. ✅ Check Onboarding Guide (application process)
  4. 🗳️ Browse active proposals: https://governance.pilier.net

Support​

📧 Governance questions: validators@pilier.net
🗳️ Governance portal: https://governance.pilier.net
💬 Telegram: @pilier_org/validators
🌐 Forum: https://forum.pilier.net/governance