Snapshot is getting popular as a very simple voting interface that allows holders to participate in governance without spending gas. Creating a proposal and voting are both free. Proposals and votes are just signed messages, stored on IPFS. Signatures are easily verifiable online .
Votes on Snapshot can be weighted by the number of tokens on (or delegated to) the address used to vote. For example, KNC tokens have to be held by, staked by, or delegated to the address prior to the start of the voting campaign (e.g. by a given block height). By using Snapshot, after staking KNC users do not need to spend gas voting, actions which eat into the final rewards received.
It might be worthwhile for KyberDAO to consider transitioning to a popular off-chain tool like Snapshot instead of using the current on-chain voting model on the separate site kyber.org, which can be expensive and inefficient at times.
Pros
- Off-chain voting is gasless so it’s much cheaper and easier for users to vote; Kyber will get more individual voters and higher voter engagement.
- There will be much less reliance on 3rd-party staking pools and CEXs to vote on users’ behalf; Less likely to have a situation where a CEX like Binance holds too much voting power.
- Etherscan is a clunky platform for those who need to use a Hardware wallet + Metamask combo to sign transactions and vote on chain. Snapshot removes the need to do so.
- Many popular DeFi projects are already using Snapshot for governance with high community engagement.
Cons
- Snapshot uses off-chain voting and has its own hosted site, which means it may not be as transparent and verifiable when compared to on-chain voting directly on Ethereum.
- A lot of developer resources have to be allocated to redesign KyberDAO governance to involve Snapshot. This is a complex process that might take time to implement.
The number of unique voters on KyberDAO has fallen over time as more KNC holders delegate their tokens to 3rd-party staking pools (although amount of KNC staked remains high). Since 3rd-party staking pools vote and collect rewards on their behalf, some KNC holders might become less interested in the progress and outcome of the voting campaigns. This is less likely if they are able to vote on their own via a cheap and convenient process.
Other Potential Improvements
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Moreover, there seems to be some overheads maintaining two separate domains and UI, with the KyberDAO on Kyber.org and the main website Kyber.network. For the purpose of more cohesive branding and better operational efficiency, it might ideal to merge them and allow voting to take place (via a Snapshot integration) on the main kyber.network site; as a subdomain.
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We have also received feedback from KNC liquidity providers (e.g. KNC/ETH LPs) that they should be allowed to vote and get KNC rewards as they are key stakeholders in the ecosystem. This is similar to what Sushiswap is doing by assigning voting points as seen here: https://docs.sushi.com/governance/proposals-and-voting
- Example: SUSHIPOWAH is Sushi’s voting metric, and is decided as follows: Each SUSHI in the SUSHI-ETH pool is worth 2 SUSHIPOWAH Each SUSHI held via xSUSHI tokens equal 1 SUSHIPOWAH
- We also want to work with other projects to see how staking KNC on KyberDAO or being a KNC LP can provide mutual benefits while adding more utility and value for KNC.
How the new process might look
1. Stake KNC to get voting power on:
- Kyber.network: New KyberDAO governance tab there (instead of a separate kyber.org site)
- 3rd-party staking pool such as Unagii or xToken or Binance
- KyberDMM dmm.exchange: On a staking tab or having KNC LP tokens in your address (as a KNC LP)
2. Voting
- Doesn’t require gas anymore
- Kyber.network: New KyberDAO governance tab there (instead of a separate kyber.org site) which uses Snapshot for gasless voting
- Proposals that go to a community vote on kyber.network will be filtered by the Kyber team based on a public guideline
3. Claiming Rewards
- Kyber.network: New KyberDAO governance tab there (instead of a separate kyber.org site)
Conclusion
Snapshot might provide a convenient voting tool that saves voters time and money (gas), thereby encouraging KNC usage and active voting by the Kyber community, as well as less reliance on intermediaries. Kyber is one of the few reputable DeFi projects that have not started using Snapshot. We’re also considering other ways to improve KyberDAO, whether in terms of UI/UX or better aligning stakeholder incentives.
Overall, our objective is to optimize the governance process so that it is much easier and cheaper for the Kyber community to stake KNC, vote and claim rewards.
What do you think? Let’s discuss this as a community!