Key Terms and Explanations

Below you will find a comprehensive list of important keywords related to Lucid and their explanations.

Organisation

Represents an entity or community within Lucid, configured with governance, treasury, and operational modules. It enables structured management of multi-chain operations and decentralised decision-making.

Module

A functional building block that adds specific features to an organisation. Examples include Bonding Engine, Multi-Bridge, Safe Treasury, and Protocol Upgrades. Modules provide modular capabilities for governance, treasury, liquidity management, and more.

Governance

The decision-making process within an organisation, typically involving proposals and voting. Governance modules include 1 Token 1 Vote, Quadratic Voting, Pre-Vote Veto, and Pre-Execution Veto. This facilitates democratic and decentralised control over an organisation’s operations.

1 Token 1 Vote

A governance model where each token represents one vote. It ensures proportional influence based on token holdings.

Quadratic Voting

A governance model where voting power increases at a slower rate compared to token holdings, reducing the dominance of large token holders. It promotes fairness and prevents disproportionate influence in governance.

Pre-Execution Timelock and Veto

Veto Functionality

A governance feature that enables community-elected multi-sig wallets to block proposals before voting (Pre-Vote Veto) or before execution (Pre-Execution Veto). It is a critical security measure for protecting the organisation’s operations.

Pre-Vote Veto and Vote Delay

Pre-Vote Veto is a veto mechanism that allows proposals to be blocked before the voting phase. It prevents potentially harmful proposals from entering the voting stage. If the Pre-Vote Veto module is selected, the Vote Delay setting is linked to the veto functionality. The number of days chosen for the vote delay corresponds to the time available to veto a proposal through the Pre-Vote Veto module. This action can be performed via the organisation’s summary page.

Pre-Execution Veto and Timelock

A veto mechanism that allows proposals to be blocked after voting but before execution. It provides a final safeguard against undesirable actions. The Pre-Execution Timelock correlates with the Pre-Execution Veto module. The time selected for the timelock defines the window during which a proposal can be vetoed before execution.

Multi-Bridge

A module enabling secure cross-chain messaging and asset transfers using multiple blockchain bridges. It ensures redundancy and security in cross-chain transactions by requiring consensus across multiple bridges.

Safe Treasury

A module for managing an organisation’s treasury across multiple chains. It tracks inflows and outflows and provides tools for secure multi-sig wallet operations. It is an essential module for decentralised treasury management and governance transparency.

Protocol Upgrades

A module that facilitates upgrades to contracts, UI elements, and other organisational components. It enables seamless updates to protocols while maintaining operational continuity.

Bonding Engine

A liquidity management module that optimises Protocol-Owned Liquidity (POL) through bonding mechanisms. It enhances liquidity provisioning and treasury diversification. Bonds represent agreements where the protocol exchanges governance tokens for liquidity assets at a discounted rate, aligning incentives between stakeholders and the organisation.

Quadratic Threshold

A hybrid governance model, combining 1 Token 1 Vote and Quadratic Voting. Up to a specified percentage of the token supply, voting follows the 1 Token 1 Vote mechanism. Beyond this threshold, Quadratic Voting is applied.

For example, if a user holds 10% of the total token supply and the organisation sets a quadratic threshold of 5%, then:

• The first 5% of tokens follow 1 Token 1 Vote.

• The remaining 5% are calculated using Quadratic Voting, reducing the influence of large token holders (whales).

This feature is designed to ensure fairness and reduce the disproportionate impact of large token holders on governance outcomes.

Bonds

Financial instruments managed by the Bonding Engine that allow users and protocols to exchange governance tokens or other assets for liquidity. Bonds help improve liquidity depth, diversify treasury holdings, and support long-term growth.

What are Bonds?

Bonds serve as a mechanism that allows protocols to issue vested tokens for rapid asset acquisition. In a bond market, bonders exchange one asset (referred to as the quote token) for another vested asset (the payout token) at a predetermined discount. Key parameters such as vesting type, duration, capacity, and auction type are fully configurable, enabling issuers to tailor the bond markets to their specific needs, offering maximum flexibility for asset acquisition.

Bond markets are permissionless for creating bonds tied to a project's own liquidity strategy, meaning anyone can create bonds for their own project or token. However, only users with multi-sig permissions can create bonds for a specific project—no one can create bonds for another project without the proper authorization. These markets are accessible to all users wishing to exchange the specified quote asset for the vested payout asset.

To incentivise participation, payout tokens are offered at a discounted rate, encouraging users to engage with bond markets instead of the open market. A vesting period is applied to prevent immediate resale of all discounted tokens. Users can check their Dashboard regularly to claim tokens at which point they can hold or sell. This design ensures aligned incentives between issuers and bonders, fostering sustainable market activity.

Bond Market Participants

1. Issuer:

• Defines and creates the bond market.

• Issues Bond Tokens to users in exchange for their provided assets (Quote Tokens).

• Receives the Quote Token at the end of the transaction.

2. User:

• Provides the Quote Token (e.g., USDC, ETH) to the bond market in exchange for a discounted Bond Token.

• Redeems the Bond Token after the vesting period for the Payout Token.

Bond Market:

• The marketplace where the exchange happens.

• Users interact with the issuer’s bond markets to exchange their Quote Token for a vested Payout Token.

Purpose of the Bond Market

• Allows issuers (DAOs, protocols, etc.) to acquire assets (liquidity or reserves) quickly and efficiently.

• Incentivises users by offering discounted tokens while ensuring that vesting prevents immediate resale for profit.

• Aligns incentives between issuers and bonders to create sustainable market dynamics.

Working Group

A module for creating multi-sig wallets and managing collaborative tasks within an organisation. It supports decentralised collaboration for specific operational needs like marketing or event planning.

Refund Mechanism

A feature that reimburses users for transaction fees incurred during their governance participation. It encourages participation in on-chain governance by eliminating cost barriers.

Vesting

A process where tokens are distributed to recipients gradually over a predefined schedule. It ensures long-term alignment between the organisation and its stakeholders.

Asset Transfer Portals

A module for managing cross-chain token transfers with minting and burning capabilities. It facilitates efficient and secure movement of assets across different blockchains.

Gitcoin Passport Integration

An optional feature for identity verification and sybil-resistance. It enhances governance security, especially in Quadratic Voting models.

Multi-Sig Wallet

A wallet that requires multiple approvals (signatures) to execute transactions. It increases security and decentralisation in decision-making.

Timelock

A delay mechanism that postpones the execution of proposals or transactions. It provides a buffer period for review and potential veto.

Snapshot

A lightweight off-chain voting tool for governance that integrates with on-chain execution mechanisms through oracles. It allows organisations to hold low-cost governance votes while maintaining decentralised integrity.

Tally

A governance analytics and delegation platform integrated with on-chain governance modules. It tracks proposal history, voter participation, and delegation activities, providing detailed insights for governance stakeholders.

Cross-Chain Governance

Governance actions that span multiple blockchain networks. It ensures unified decision-making in multi-chain organisations.

Minimum Bridge Requirement

A threshold for the number of bridges needed to approve a cross-chain transaction. It enhances security by requiring consensus from multiple bridges.