1. Description of the Adopted Guidance

Description of the Adopted Guidance's purpose and its change control process.

1.1. Purpose of the Adopted Guidance

The Adopted Guidance is a document produced and proposed by the M0 Foundation, and approved through the M0 Two Token Governor (or, more simply, Governance) that outlines the core rules of engagement that exist outside of the enforceable domain of the protocol smart contracts for the various actors in the M0 ecosystem. In this document, Protocol refers to the deployment of the M0 Protocol on the Ethereum blockchain under the protocol address which defines the rules upon which M can be minted.

The Protocol Address is as follows: 0x866A2BF4E572CbcF37D5071A7a58503Bfb36be1b

While Protocol governors cannot be forced to take action for any breach of these rules, it is implicitly expected that holders of the appropriate Governance tokens will act in accordance with this document, or else change it.

The Adopted Guidance describes certain actors, characteristics (e.g. Approved Jurisdictions for Collateral Storage), as well as business practices, binding contracts and business behavior. It also indicates, among other things, the type and composition of collateral that is eligible to back Owed M.

Ultimately, the Adopted Guidance exists as the guiding manifesto for core business practices within the M0 ecosystem. The expectation is that as the ecosystem continues to grow and evolve, so will the Adopted Guidance through appropriate Governance oversight and approval. As such, this should be regarded as a living document that will continuously mature alongside the development of the M0 project at large.

1.2. Change Process for the Adopted Guidance

The nature of the Adopted Guidance is such that it must allow for only one valid version per voting epoch to be agreed upon.

In most cases, it is expected that a voting epoch will contain non-conflicting, Discrete Change Proposals which, if approved by governance vote, can be immediately put into effect. In such cases, it is expected that, upon executing the proposal, the new version of the Adopted Guidance (as specified by its document hash) is ratified and should be adopted by ecosystem Actors. While the physical act of ratifying an approved change proposal can be done by anyone, it is expected that the proponents, or the M0 Foundation as protector of the ecosystem, will perform such duties.

At scale, it can be expected that a voting epoch might contain conflicting Change Proposals. This poses a specific challenge in the case where multiple changes to the Adopted Guidance are being voted on simultaneously within a single epoch, especially since Governance requires the ability to accept or reject each change separately.

As such, when conflicting change proposals emerge, the process of amending and updating the Adopted Guidance should be split into two votes:

• 1. In the first voting epoch, one or multiple proposals are voted on. They can be accepted or rejected independently on an individual basis (i.e. the Discrete Change Proposal).
• 2. During the second voting epoch, all individually approved proposals are consolidated into a new version of the Adopted Guidance via voting (i.e. the Executive Change Proposal). While the physical act of consolidation and an Executive Change Proposal can be done by anyone, we are expecting some of the proponents, or the M0 Foundation as protector of the ecosystem, to perform such duties.

We expect proponents to clearly state whether a proposal should be considered as a Discrete Change Proposal or an Executive Change Proposal.

New proposals shall only be deemed valid upon confirmation of the relevant Executive Change Proposal.

An example flow is detailed below:

A proposal shall clearly reference each section and/or sentence that is subject to change and clearly state what it shall be replaced with. Any ambiguity that could lead to different interpretations for the consolidated version will be avoided. In order to facilitate individual votes, a proposal should be formulated in a way that is as atomized as possible.

The visual below shows an example of an appropriately proposed amendment to the Adopted Guidance:

In the event of conflicting versions or proposals, the most recently executed proposal that was executed onchain should be considered valid.