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Transparency has long been an ideal of blockchain enthusiasts and an essential feature for DAO governance. Now, that may be changing, and it's not all bad.
To limit the downsides of transparency and protect voters from what it calls the "tyranny of the masses," the popular DAO voting site, Snapshot, announced the launch of shielded voting today.
A decentralized autonomous organization is an organizational structure where control is spread out rather than hierarchical. They also typically use smart contracts on a blockchain, with participants using governance tokens to transparently vote on proposed actions.
Snapshot believes DAO governance is still in its infancy, and transparency has allowed more democratic oversight.
However, as DAOs mature, the project says this transparency hints at certain less-desirable characteristics.
"On the one hand, the transparency of digital governance has been one of DAOs strengths because of the element of social control around votes," Snapshot ecosystem lead Nathan van der Heyden tells Decrypt. "On the other, having the results updated with each vote can lead to voting apathy, lowered participation, and information asymmetry."
Often is the case that when potential voters see that an important issue is being dominated by, say, a handful of whale tokenholders, they may withhold their vote. The thinking goes that "if you see your option winning strongly, it may not be worth your time to vote," he said. "And if you see your option losing strongly, why would you waste your time trying to help it?"
It's a minor adjustment for some, but van der Heyden says private voting could resolve this "low-hanging fruit" of voter apathy.
Unpacking shielded voting
Launched in August 2020 by Snapshot Labs for the Balancer community, Snapshot is a free-to-use platform that has become a popular place for over 2,000 decentralized communities to gauge member sentiment on a particular course of action.
Snapshot partnered with Shutter Network, a layer-2 project aimed at preventing front running on Ethereum, to launch the voting update using threshold cryptography.
Threshold cryptography or encryption is a technique that enables a group of key holders to provide a cryptographic lock. A lock can only be opened if a threshold number of members collaborate.
"This ensures that neither a single party nor a colluding minority of Keypers can decrypt anything early," Luis Bezzenberger, product manager at Shutter, told Decrypt via Telegram. "Nor can they stop the DAOs from revealing the results of a vote. The protocol functions as intended as long as a certain number of Keypers (the ‘threshold’) are well-behaved and act honestly."
Front running in voting is when an observer can see how a vote is progressing and then take action, so their desired outcome occurs.
Snapshot to give DAOs ‘as many options as possible’
Snapshot says shielded voting can be enabled in the DAO's admin view and will encrypt individual votes until the proposal reaches its end.
Van der Heyden says the aim is to provide a good middle ground between transparency and privacy. While the proposal is ongoing, the only available information for anyone, including Snapshot, will be the total amount of voting power already deployed.
"When voting ends, all votes are revealed - as well as who voted for what," Van der Heyden continued. "In that sense, we don't lose many benefits, but we will certainly miss the sense of urgency that can arise in tightly contested votes."
Snapshot cautions DAOs that the shielded voting feature should be considered in beta and may contain bugs.
"Our philosophy is to give as many options as possible to DAOs. There is still so much to explore and figure out - we want to make sure they have the tools to do so," Van der Heyden said.
The feature is currently in a closed beta, but will be ready for use this week.