In brief

  • Snapshot, a decentralized governance coordination platform, is adding Aragon Agreements to enforce the will of voters.
  • Aragon Agreements require executors of governance votes to stake valuable tokens to perform their role.
  • Executors that don’t follow prescribed actions risk losing their staked tokens, securing the gap between off-chain votes and on-chain execution.

Sure, plenty of cryptocurrency traders are interested in speculating on the price of DeFi governance tokens. But, for the most part, they’re not interested in actually using those tokens to govern. A new integration could provide a model for changing that.

Aragon, a decentralized autonomous organization (DAO) management platform, today announced integration with Snapshot, a service for organizing and coordinating decentralized governance votes for DeFi platforms. Together, the tools will allow people to make off-chain votes that have on-chain consequences.

By itself, Snapshot offers DeFi protocol governance token holders a way to coordinate off-chain voting, but it relies on trusted third-party admins (often the original development team) to execute decisions on-chain. That doesn’t suit decentralization advocates because there’s no way to hold those admins accountable.

Aragon Agreements requires executors to lock up, or stake, valuable collateral like crypto tokens that are forfeited if they don’t follow the will of decentralized governance votes. By integrating with Aragon Agreements, Snapshot aims to bridge the gap between off-chain votes and on-chain execution by giving vote executors something to lose if they misbehave.

But why not just let people vote on a blockchain?

After all, distributed governance is about letting protocol users make decisions about the development and policies of blockchain applications. Holding “governance tokens” entitles users to voting power proportional to their share of the total supply.

Moreover, DeFi projects, which use smart contracts to provide financial services like loan origination and interest on crypto deposits without the use of third-party facilitators like banks, have emerged as proving grounds for decentralized governance because they are some of the first fully-functional use cases for blockchain technology, typically on Ethereum.

But the popularity of DeFi has, in some ways, made the Ethereum blockchain harder to effectively use. Submitting votes on-chain can get expensive quickly when transaction fees are high from network congestion, as was the case for several weeks in September

"Snapshot means higher participation rates for the governance of DeFi projects,” Aragon founder Luis Cuende told Decrypt. “Participation rates have been hit hard by expensive gas fees on Ethereum, which has weakened their communities.”

Voting off-chain is more cost-effective and practical, but it raises lots of coordination issues. That’s where Snapshot should come in handy. 

Snapshot was created by Balancer Labs, developers of the Balancer decentralized token swap and indexing platform. The platform already supports voting for a broad array of DeFi projects, including lending protocol Maker, yield optimizer, and token-swap platform Curve Finance.

Said Cuende in a press release, “Leveraging the unique software of Balancer’s off-chain governance product, we are providing a fully transparent DAO governance model through Snapshot that is free and infinitely scalable.”