> For the complete documentation index, see [llms.txt](https://docs.polyquest.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.polyquest.xyz/prediction-oracle/stage-2-governance-group-and-validator-role.md).

# Stage 2: Governance Group and Validator Role

As the system matures, **Stage 2** introduces the **Governance Group**, which consists of **$POLY token holders**. This group will serve as validators, with more authority to approve or deny proposed event outcomes, further decentralizing the power of resolution.

## **How Stage 2 Works**

1. **$POLY Holder Delegation**
   * **$POLY holders** will gain the ability to participate as validators, responsible for reviewing and approving the proposed outcomes submitted by the oracle nodes in Stage 1.
   * Validators are delegated their authority by **Polyquest**, giving them a shared responsibility for outcome validation.
2. **Validator Rewards**
   * Validators will earn rewards from a portion of the **platform fees** generated by Polyquest.
   * These fees will incentivize accurate and fair validations, as validators are compensated for the successful operation of the prediction markets and accurate outcomes.
   * Validators will be held accountable, as any attempt to manipulate outcomes could result in slashing mechanisms or reputation loss, reducing their future earnings.
3. **Delegation of Powers**
   * Power is shared between the **oracle nodes** (Stage 1 participants) and the **governance group**.
   * While oracle nodes submit initial outcomes, the governance group validates or denies those resolutions, creating a balance between decentralized reporting and validated consensus.