# DerivaDAO Governance
## Introduction to the DerivaDAO
The DerivaDEX protocol is governed by the DerivaDAO. DAO is shorthand for “decentralized autonomous organization”, a concept often used in decentralized applications to refer to smart-contract based governance, where token holders are able to make proposals regarding changes to a protocol, and vote on them.
### Governance structure
#### The DAO and voting power
All DDX token holders participate in governance, with voting power proportional to their token holdings.
Governance decisions include:
* Approving protocol updates
* Managing DAO-owned funds
* Appointing Bond Providers and Foundation directors
#### Types of proposals
1. **On-chain Proposals**: Direct changes to protocol code or smart contracts.
2. **Hybrid Proposals**: Combine on-chain changes with off-chain activities.
3. **Off-chain Proposals**: Non-binding, ratified by the DAO.
#### Proposal process
1. **Draft Creation**: Shared on the [Governance Forum](http://forum.derivadex.com).
2. **Security Council Review**: Assesses potential risks.
3. **DIP Submission**: Created and submitted on the [DIPs Repository](https://gitlab.com/derivadex/dips).
4. **Voting**: Open for 3 days; 4% quorum needed.
5. **Execution**: If approved, the proposal is implemented on-chain.
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