DeFi’s match in creating decentralized networks are shifting the paradigm from traditional financial products and services to trustless and open protocols devoid of third parties. The sector keeps intriguing many people, especially those who are avidly following and interacting with the ongoing developments.
The innovations emerging out of the scene are enormously impactful, which no doubt will alter the way we transact, invest, and raise funds soon. From Derivatives, Asset Management Tools, Alternative Savings Apps to DEXs, Margin Trading, Insurance, Asset Tokenization, Lending, and many more.
Remarkably, Decentralized Autonomous Organisations (DAO) are part of this astounding revolution with unique products that enhance business models and corporate governance in the 21st Century. This review is an analytical look at one such infrastructure you must take note of at all costs.
Snapshot In Focus
Snapshot defines itself as an off-chain, gasless, multi-governance community with a polling dashboard. The platform claims it is effortless to verify and, at the same time, completely hard to dispute its outcomes.
From the stables of the Balancer lab, it is open-source and licensed by the prestigious Massachusetts Institute of Technology (MIT). Moreover, there is nothing like tracking or advertisement on their website. The project enables communities to run token holder votes on an off-chain level. Considerably impressive, the voting upshot is provable, and the voting process cannot be forged while the ballots go into storage in an IPFS.
Snapshot solves two significant problems:
- Censorship Resistance, which is absent with on-chain voting
- Down-time is a hindrance to allowing everyone to vote
When creating a proposal and voting on Snapshot, there are no charges to the individual, and there is no transaction involved. To verify signatures, one can go online and use the “eth_sign” set up. This arrangement takes a few minutes to be able to go through the verification process.
Interestingly, when it comes to tokenization, Snapshot is yet to be in that category at the moment, which means it has no token of its own. More importantly, at no cost, anyone/entity can create a space on the platform within five minutes.
Further, those who are creating a space on the Snapshot ecosystem have the opportunity to customize domain names, which is quite helpful for businesses. Consequently, participation in the system is based on the full involvement and utilization of their requirements.
How it works
Most of the time, a multi-signature of commissioned community members can execute a contract or depository. During an election, the multi-sign signers’ role is to monitor the poll’s outcome and administer the decision for the community. This method creates the room for elections to get rigged and thwart the community’s will since multi-sig signers have no incentives to act correctly. Reasonably, the likelihood for malicious actors to be part of the voting system is high.
With Snapshot, in place of the multi-sign is a DAO with a different approach altogether that eliminates intermediaries like the signers who can subvert the desire of the community. Applying the Aragon Agent, the power of execution goes to a DAO.
The Aragon Agent is an on-chain delegate that implements activities everywhere on the Ethereum Blockchain. Therefore, concerning any task that can be performed with a multi-sig, Agent permits it via DAO.
Use case comprises of renewing protocol parameters, maintaining a treasury, and fastening together DeFi legos. Consequently, when voting is over, the results go to the DAO on-chain for implementation based on the decision.
There is a mechanism named Dispute Delayer responsible for dispute resolution in the Snapshot community governance. It engages a timelock point preceding the execution of the action.
It is during this period that everyone has the opportunity to present any grievances before the Aragon Court. In an instance where there is an ill-disposed activity in contradiction with the consequence of a passed vote, then the jurors will rule, and the proposer gets severed.
However, if no one has any ambivalence with the action, the next stage is to go ahead to the execution. Considering the basis that malicious acts receive a penalty, it discourages people from wrongful behavior, which promotes an incentive for solely lawful actions in the chain.
Also known as the Optimistic Voting, the proposal system empowers community members to have the liberty to deliver work in support of the organization if they comprehend their action is legitimate. Besides, it saves the members a lot of time since the need to monitor or engage in the on-chain performance of all votes as they cab resort to dispute.
Projects like Balancer, Aave, Yearn.Finance, Yam Finance, Rarible, Swerve, Sushi, and others. These entities rely on Snapshot for various governance activities.