8.5 Conflict-of-Interest Guidelines

Conflicts of interest (COIs) are inevitable in any open ecosystem where participants hold multiple roles—developer, investor, auditor, delegate. NXT mitigates COI risk through explicit rules, disclosure requirements, and enforcement procedures that combine on-chain attestations with off-chain accountability.

Mandatory Disclosure Statements All proposal authors, delegates controlling more than 0.5 % of supply, grant recipients, and working-group reviewers must submit a signed COI declaration stored on IPFS and hashed on-chain. The declaration lists financial stakes in entities that could benefit from proposals, employment relationships, advisory roles, and any received compensation (tokens or fiat) linked to advocacy work. Updates are mandatory within seven days of any change; non-compliance triggers a governance-imposed freeze on voting power and grant eligibility until rectified.

Real-Time Flagging Engine A smart-contract “Conflict Oracle” cross-references wallet holdings with token contracts tied to proposals. If a delegate voting on a proposal holds more than a certain threshold of the affected asset, an on-chain flag registers next to that vote. The vote still counts—ownership alone is not wrongdoing—but public visibility allows other voters to weigh potential bias.

Recusal & Abstention Norms For any grant-allocation proposal where a delegate is part of the applicant team, best practice is voluntary abstention. The governance portal includes a one-click Declare Conflict & Abstain button, recording the delegate’s wallet hash, proposal ID, and abstention reason. Recusal logs feed into the reputation system; consistent, transparent recusals improve a delegate’s trust score.

Enforcement & Sanction Ladder If undisclosed conflicts are later discovered—via whistle-blower reports or blockchain forensics—a community-elected Ethics Committee initiates a three-step process: (1) Fact-Finding, (2) Deliberation, (3) Sanction Vote. Sanctions scale from public reprimand and temporary voting suspension to slashing of delegate bonds and permanent disqualification from working-group roles. Severe cases—fraudulent documentation, bribery—trigger legal referral clauses under relevant jurisdictions.

Third-Party Audit & External Assurance An independent audit firm reviews COI declarations against blockchain data annually. Findings are summarised publicly, and raw attestations are shared under NDA with regulators upon legitimate request. The audit scope includes financial flows from the treasury to delegate-controlled wallets and compares them with declared relationships, catching undisclosed self-dealing.

Anonymous Whistle-Blower Portal NXT hosts a TOR-and-Signal-compatible portal where community members can submit evidence of undisclosed conflicts. Submissions automatically receive a hash that is stored on-chain to prove receipt while preserving whistle-blower anonymity. If the Ethics Committee verifies the claim, the whistle-blower may opt (anonymously) to receive a bounty from a predefined treasury allocation.

Continuous Improvement Cycle COI policy itself is subject to governance amendment, but changes undergo elevated scrutiny: they require a supermajority vote plus an external legal memo assessing regulatory compliance. This meta-safeguard prevents powerful delegates from watering down ethics standards.

By weaving disclosure obligations, automated detection, reputational incentives, and punitive consequences into a coherent framework, NXT’s Conflict-of-Interest Guidelines strive to make transparent, impartial governance not just aspirational rhetoric but actionable, enforceable practice.