GOVERNANCE STRUCTURE

Summary

Governance is the core proposition of a public chain, and only a decentralised governance public chain will have sufficient vitality. Through a combination of on-chain and off-chain governance, SHC introduces both people and code into the complex governance system of the public chain, thereby ensuring the decentralisation of governance while ensuring its effectiveness. Every SHC asset holder has the right to participate in this decentralised governance, and the operation and development direction of the public chain ecology will be decided by all SHC holders through consultation and voting. 
The SHC's on-chain governance structure is composed of the Council and Trust Nodes. The on-chain council is composed of 11 members and can propose modification of the dynamic global parameters of SHC. The Shelter Chain node group is composed of 21 node members and is responsible for transaction accounting, transaction verification, block packaging, and confirmation of the SHC network.
The Council: equivalent to a board of directors on the chain, this is responsible for global parameters such as SHC blocks, transactions, and handling fees. It consists of 11 members, and each member must be one of the shelter chain node miners responsible for SHC transaction accounting, transaction verification, block packaging and confirmation. 
Shelter chain node: there will be at least 21 nodes, but the first 11 Shelter Chain nodes automatically become members of the SHC Foundation: a non-profit organisation, registered in Singapore, which is composed of seven departments including a decision-making committee, an advisory committee, an executive committee, and an ecological construction committee. They are responsible for the major decisions on SHC, technology development, global promotion, financial management, and conference organisation. 
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Mechanism

Chain governance of SHC is achieved through the SHC council and the use of Shelter module nodes. SHC holders can easily and quickly exercise their governance rights in Shelter Chain through these nodes. There are 21 Shelter chain nodes in the Shelter Chain ecology, each providing Shelter Chain with network, storage, and computing infrastructure. SHC encourages each Shelter chain node to build its own community, so that each Shelter chain node community can develop in mutual competition and strengthen the SHC ecosystem. Eleven nodes of the Shelter chain are elected as members of the SHC Council, the core chain governance organization of the SHC community. 

There are three roles in the SHC governance ecosystem: 
1) Currency holders: individuals or institutions holding any number of SHC. 
2) Shelter Chain nodes: Individuals or institutions are voted for by all SHC holders, with votes counted every hour, to form a total of 21 Shelter Chain nodes. In node election voting, the top 21 candidates are Shelter Chain nodes. A Shelter node is responsible for SHC network transaction verification, transaction accounting, block packaging and confirmation, and the successful packaging of a block will receive the corresponding reward. The nodes of the Shelter Chain are thus supervised by the SHC community. 
3) SHC Council: Eleven nodes of the Shelter Chain are elected as members of the SHC Council, based on votes. 
The SHC Council is the governance organisation of the core chain of the SHC community. Its main responsibility is to set reasonable global parameters for the public chain to promote the long-term healthy development of SHC. These include 
1) Modifying the dynamic parameters of the blockchain, such as block size and block interval; 
2) Creating block rewards for Shelter Chain nodes, and determining the number of nodes and the number of active board members; 
3) Transferring and issuing assets and setting various transaction fees; and 
4) Creating smart contract and call rates. 


Every SHC holder can become a candidate for a Shelter Chain node. Candidates need to mortgage 10,000 SHC to the system (or a specific amount decided by council vote) that can be retrieved after 30 days (system dynamic parameters can also be adjusted by council vote) on exiting the election; however, if the node performs illicit operations, the mortgaged SHC can be voted by the council. In order to ensure the efficient conduct of node elections, SHC has formulated a series of standards and rules for nodule node candidates. The Ecological Construction Committee of the SHC Foundation will review the candidate nodes according to these standards and rules. 
Candidates for the Shelter module node must meet the following basic conditions:
It must 
1) Have a legally established organisational body and an official website and public social media platform account; 
2) Have a node for community members to test; 
3) Have a server that can run the node, including both operation and maintenance; 
4) Mortgage a certain amount of SHC to create a Shelter Chain node; if the mortgaged SHC is retrieved, it is considered to have withdrawn from the campaign; 
5) Have budget support, technical solutions, and hardware expansions formulated for the next three years, along with a community support plan; and
6) Have an adequate user community. 

Shelter Chain mainly operates via block reward, and the amount of block reward is decided by a council vote. After each block is packaged, the matching Shelter Chain node will receive the corresponding block reward. The block generation reward pool consists of two parts: transfer fees and foundation donation node rewards. In order to incentivise positive contributions from the nodes in the Shelter Chain ecosystem, the SHC Foundation will donate 4 million pieces. The SHC injection system capital pool will then be used as a node block reward. The reward will be distributed over eight years, with 500,000 pieces released each year. 
Voting for the nodes of the Shelter Chain is such that each SHC is regarded as one vote, which can vote for multiple candidate nodes. The SHC participating in the voting for a node of the Shelter will be pledged from users’ wallets; if these assets are transferred out, the vote will be deemed to be withdrawn. The top 20 nodes with the highest cumulative votes are automatically elected as Shelter Chain nodes, and the 21st node is randomly generated from the remaining candidate nodes. The main voting channel is thus exchange voting. If the user's SHC is in their exchange wallet, and the exchange supports the SHC's Shelter node voting, they can use this method to vote. 

The SHC Foundation will be formally established in Singapore in May 2020. It aims to promote and maintain the foundation and ensure the development and health of the SHC ecosystem through the imposition of scientific, reasonable, and effective governance mechanisms. It will provide SHC holders with appropriate protection and rights and build efficient communication channels between various stakeholders such as SHC holders, communities, nodes, and app developers. The SHC Foundation will disclose the current development, operation, and use of SHC to the community every year, as well as inviting a third-party audit agency to supervise the financial operation of the project. The audit report will be announced as part of the annual information disclosure.