Creating Proposals

Proposals are the core unit of governance in NovaDAO. Each proposal describes an action the DAO should take, and the decision markets determine whether it passes or fails. This page covers what proposals can do, how to create them, and best practices for proposal authors.

What Proposals Can Do

NovaDAO proposals can authorize a wide range of on-chain actions. Here are the most common categories:

Treasury Allocations

Transfer tokens from the DAO treasury to fund development, partnerships, grants, or operational expenses. The proposal specifies the recipient, amount, and vesting schedule if applicable.

Parameter Changes

Modify protocol parameters such as fee structures, TWAP observation windows, pass thresholds, or activation requirements. These changes take effect automatically upon proposal finalization.

Protocol Upgrades

Deploy updated contract code to upgrade the DAO, vault, AMM, or any other protocol component. Upgrades are executed atomically — the new code is live as soon as the proposal passes.

External Integrations

Authorize the DAO to interact with external protocols, register assets on other platforms, or establish cross-chain bridges. Any action that requires the DAO's contract authority can be proposed.

Activation Requirements

To prevent spam and ensure proposals have meaningful community support before consuming market resources, NovaDAO requires a token threshold for proposal activation.

Parameter	Value	Purpose
Activation Threshold	200,000 NOVA	Minimum tokens that must be staked to activate a proposal and open its conditional markets. This is not spent — tokens are returned after finalization.
Staking Source	Proposer + Supporters	The proposer can stake the full amount, or other token holders can add their stake to help a proposal reach the threshold.
Stake Lock Period	Until finalization	Staked tokens are locked in the contract until the proposal is finalized (passed or failed). This prevents the same tokens from activating multiple proposals simultaneously.
Stake Return	100% returned	Regardless of whether the proposal passes or fails, all staked tokens are returned to their original owners after finalization.

Why 200,000 NOVA? The threshold is set high enough to prevent spam but low enough that any serious proposal can gather support. Since stakes are returned after finalization, the cost of proposing is only the opportunity cost of locking tokens during the trading period — not the tokens themselves.

The Proposal Lifecycle

Every proposal follows a defined lifecycle from creation to execution or rejection:

Draft & Submit

The proposer writes a description of the proposed action, specifies any on-chain parameters (recipient address, token amount, contract call data), and submits the proposal to the DAO contract. The proposal enters a Pending state.

Gather Stakes

The proposer and supporters stake NOVA tokens toward the activation threshold. Once 200,000 NOVA are staked, the proposal automatically transitions to the Active state and conditional markets open.

Market Trading Period

The Conditional Vault splits NOVA into pass and fail tokens, and the AMM opens trading pools for each. Traders buy and sell conditional tokens to express their views on the proposal's impact. The AMM records price observations for the TWAP calculation throughout this period.

Grace Period

After the main trading period ends, a 24-hour grace period begins. Trading continues during this window, but it serves primarily to allow final price corrections before the TWAP is computed. See TWAPs for details.

Finalization

The DAO contract computes the final TWAPs for both markets and compares them. If the pass TWAP exceeds the fail TWAP (adjusted for any pass threshold), the proposal is marked as Passed and the on-chain action is executed. Otherwise, it is marked as Failed. Staked tokens are returned in either case.

Redemption

Holders of the winning conditional token (pNOVA if passed, fNOVA if failed) can redeem their tokens 1:1 for NOVA through the vault. The losing conditional token becomes worthless.

Proposal Parameters

Pass Thresholds

Not all proposals are treated equally. To protect against conflicts of interest, NovaDAO applies different pass thresholds depending on who submitted the proposal:

Proposer Type	Pass Threshold	Rationale
Non-team member	Pass TWAP > Fail TWAP	Standard threshold. The market simply needs to believe the proposal adds value. No additional hurdle is required because there is no inherent conflict of interest.
Team member	Pass TWAP > Fail TWAP + 5%	Higher threshold for team-originated proposals (such as compensation requests or insider transactions). The 5% premium ensures the market strongly believes the proposal is beneficial despite the conflict of interest.

Conflict of interest: If you are a team member submitting a proposal that benefits you directly (e.g., a compensation increase or token grant), the higher pass threshold applies automatically. Attempting to submit through a proxy address to circumvent this is a governance violation.

Budget Constraints

Proposals that request treasury funds are subject to budget constraints set by the DAO:

Per-proposal cap: No single proposal can request more than a configured percentage of the total treasury (default: 10%).
Concurrent proposal limit: The total value of all active proposals (currently in their trading period) cannot exceed a configured percentage of the treasury (default: 30%).
Cooldown period: After a treasury allocation proposal passes, a cooldown period may apply before another allocation of similar size can be activated.

Best Practices for Proposal Authors

A well-crafted proposal increases the likelihood of accurate market pricing and a fair outcome. Follow these guidelines:

Be Specific

Clearly define what the proposal does, how much it costs, who benefits, and what the expected outcome is. Vague proposals are harder for the market to price and more likely to be rejected.

Provide Context

Include relevant data, analysis, or precedents that support your proposal. Traders will use this information to form their views. The more evidence you provide, the more informed the market will be.

Define Success Metrics

State how the community can evaluate whether the proposal achieved its goals. This helps the market assess the probability of success and prices the conditional tokens more accurately.

Engage Before Submitting

Discuss your proposal in community channels before formal submission. Early feedback can help you refine the proposal, identify potential objections, and build support toward the activation threshold.

Right-Size Your Request

If your initiative requires a large budget, consider breaking it into smaller milestone-based proposals. This reduces risk for the DAO and makes it easier for the market to evaluate each phase independently.

Remember: The market decides, not voters. A well-researched, clearly articulated proposal gives traders the information they need to price it fairly. Your job as a proposer is to make the case — the market's job is to evaluate it.

Next: Finalizing Proposals (TWAPs) — understand how time-weighted average prices determine the final outcome. Or go back to Governance Overview for the big picture.