# Overview

## DAO

The Prism DAO governs the protocol's economic parameters, specifically Limit Order Mining (LOM) incentives, protocol fee switches, and treasury allocations. It operates as a decentralized system where $PRSM token holders vote directly on-chain to determine the protocol's strategic direction.

### Governance Scope

The DAO is responsible for high-level economic decisions rather than day-to-day management. Its mandate explicitly includes:

* **Limit Order Mining (LOM)**: The DAO retains the power to amend the LOM reward structure, including adjusting the total epoch budget, changing emission schedules, or modifying the eligibility criteria for incentivized markets.
* **Tokenomics**: Any significant changes to $PRSM tokenomics proposed by Prism Labs Team—such as vesting schedule alterations, must be ratified by a DAO vote.
* **Treasury Management**: The DAO actively governs the protocol's financial assets. This includes activating or adjusting protocol fees and determining the allocation of revenue towards $PRSM buybacks.
* **Ecosystem Grants**: Approving funding for CEX listings, community tools, and marketing initiatives.

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### Voting Mechanics

Governance utilizes a token-weighted voting model. A user's voting power is calculated automatically at the time of the vote by summing their liquid balance and the value of their staked assets.

$$
\text{Voting Power} = \text{PRSM Balance} + (x\text{PRSM} \times \text{Conversion Rate})
$$

* PRSM Balance: The number of governance tokens held in the user's wallet.
* xPRSM: The number of liquid staking tokens held by the user.
* Conversion Rate: The current exchange rate at which xPRSM can be converted back to PRSM.

> Note: All votes are cast via the Hedera Consensus Service (HCS), ensuring every vote is immutable, verifiable, and recorded on-chain.

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### Proposal Categories & Timelines

The governance process is split into two distinct tracks to balance speed with security.

#### 1. Limit Order Mining Rewards

Designed for speed. This process allows the protocol to rapidly incentivize new markets or adjust weights for live events.

* Duration: 24 Hours
* Scope: Limit Order Mining rewards adjustments.
* Process: Immediate On-Chain Vote -> Execution.
* Requirements: 1M voting power for enactment 

#### 2. Core Proposals (Standard)

Designed for security and deliberation. This track is used for all non-LOM decisions, such as Treasury spends, Fee Switch toggles, or Protocol Upgrades.

* Scope: Treasury, Ecosystem, Tokenomics, Upgrades.
* Total Duration: 4 Days

Phase 1: The Signal (Discussion)

* Duration: 1 Day
* Venue: Governance Forum
* Details: Proposals begin as a "Request for Comment" (RFC) to gather community feedback. This phase filters out low-quality proposals before they move to a formal vote.

Phase 2: The Proposal (Temperature Check)

* Duration: 1 Day
* Venue: Prism Interface (On-Chain)
* Details: Proposals that garner support are submitted formally. To prevent spam, the proposer must meet a minimum Voting Power threshold. This stage acts as a "temperature check" to confirm broad backing.
* Requirements: 500k voting power for Phase 3

Phase 3: The Election (Binding Vote)

* Duration: 2 Days
* Venue: Prism Interface (On-Chain)
* Details: The final binding vote. If an Election meets Quorum (minimum participation) and receives a Majority (>50%), it is ratified.
* Requirements: 1.5M voting power for enactment

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