6 - Vote Locked SHx (lSHX)

This proposal asks whether SHx holders should be able to lock their tokens into a smart contract to receive lSHX (locked SHx) with increased voting power.

Event	Date	Notes
Snapshot Time	Sep 07, 2025 20:00 GMT
Vote Start	Sep 08, 2025 20:00 GMT
Vote End	Sep 12 2025 20:00 GMT
Results Published
Implementation

Description

Allow SHx holders to lock their tokens into a smart contract to receive lSHX (locked SHx) with increased voting power. Unlike traditional time-lock systems where users commit to a fixed lock duration, this mechanism would allow users to select a notice period upfront—the longer the notice period chosen, the greater the voting power multiplier received.

Under this system, locked tokens (lSHx) would maintain their enhanced voting power indefinitely until the holder initiates a withdrawal. To convert lSHx back to SHx, holders must declare their withdrawal intention and wait for their chosen notice period to elapse. Alternatively, holders can bypass the waiting period by accepting a penalty, receiving fewer SHx tokens than they originally locked.

Further, a locking mechanism provides a natural platform to build upon for offering additional benefits in the future, such as an equivalent to staking rewards or new utility.

Background

Current SHx governance operates on a one-token-one-vote basis, which can lead to short-term oriented decision-making and allows large holders to influence governance without demonstrating long-term protocol alignment. Many successful DeFi protocols have implemented various locking mechanisms to address these challenges and create stronger alignment between voting power and long-term protocol success.

'Traditional' vote-locking models (like Curve's veCRV) require users to commit to specific lock durations upfront, with voting power decaying over time. This creates friction as users must repeatedly re-lock to maintain voting power and cannot access their capital during emergencies without forfeiting all benefits.

Our proposed notice period system offers several advantages:

• Persistent voting power: Once locked with a chosen notice period, voting power remains constant without decay, eliminating the need for periodic re-locking.

• Flexibility with commitment: Users can initiate withdrawal at any time, but must honor their committed notice period or pay a penalty.

• Risk-adjusted alignment: Longer notice periods represent greater protocol alignment and illiquidity risk, justifying higher voting multipliers.

• Emergency exit option: The penalty mechanism provides liquidity in urgent situations while maintaining the integrity of the commitment system.

Multiplier Structure: Specific parameters would be finalized in a subsequent vote. For illustration of notice tiers:

• 1 week notice: 1.25x voting power

• 1 month notice: 1.5x voting power

• 3 months notice: 2x voting power

• 1 year notice: 4x voting power

Penalty Mechanism: Early withdrawal penalties would be proportional to the remaining notice period bypassed, with fees burned to benefit all SHx holders through supply reduction or redistributed to other locked balances. This creates a cost for breaking commitments while providing an emergency exit option. Specific parameters would be finalized in a subsequent vote.

The notice period model aligns with Stronghold's partner/merchant-focused ecosystem, where business planning cycles and capital commitments often operate on predictable timeframes rather than indefinite locks. This system rewards stability and commitment while acknowledging that circumstances change and flexibility has value.

Voting Notes

This vote contains a single question asking whether the SHx protocol should implement a locking mechanism where tokens can be locked for enhanced voting power based on chosen notice periods for withdrawal.

If this proposal passes by simple majority, the development team will begin implementation of the lSHx smart contract system on Stellar. A follow-up proposal will be presented detailing the specific notice period tiers, voting multipliers, and penalty structures based on economic modeling and community feedback.

Key implementation considerations that will be addressed post-approval:

• Exact notice period options and their corresponding voting multipliers

• Penalty calculation formula for early withdrawals

• Whether penalties are burned or redistributed

A "FOR" vote indicates support for implementing the notice period-based token locking system with enhanced voting power. An "AGAINST" vote indicates that voting power should remain strictly proportional to token holdings without any locking mechanisms. An "ABSTAIN" vote indicates no preference on this matter.

As a Governance Rules amendment, this proposal requires a two-thirds (2/3) super-majority and a quorum of 25% of the active circulating supply to pass. If necessary, Stronghold will vote in alignment with the simple majority's preference to help implement the community's desired outcome.