Decentralized, permissionless governance can be a tricky thing to manage and nurture. Aligning a global and decentralized community with the same goals can be difficult. Still, at ShapeShift we continue to curate and implement some tools with our friends at protocols such as UMA and Snapshot to help us make governance as fair, permissionless, and frictionless as possible.
Since decentralizing in 2021, we have made it our mission to ensure that the governance power has been retained with our FOX token holders.
Today, we couldn’t be more excited to integrate one of the most anticipated governance tools: oSnap.
Scalability in Favor of Decentralization
ShapeShift, like several other DAOs, uses Snapshot because it makes DAO governance simple, but there are tradeoffs.
In 2021, most onchain DAOs migrated their governance to Snapshot or built it from scratch using the tool. This choice enabled many communities to coordinate efficiently without forcing their members to pay high fees and grow DAOs. However, there is a tradeoff. The votes cast in Snapshot are offchain and are not immediately recorded on the blockchain. With this, their execution depends on third parties, centralizing the entire DAO in a multisig predefined by the community.
Typically, the members who execute the results of a proposal are reputable people in the community and trusted. However, the more intermediaries in a transaction, the more risk vectors one has for a decentralized organization.
oSnap is a solution merging the best of the onchain and offchain governance: a vote offchain with an immediate result onchain. This way, DAO members will not need to rely on others to execute the proposal.
oSnap: Uniting the Best of Two Worlds
TLDR: Snapshot is a beloved governance tool that lets DAOs come to token-based consensus, but it does not have any native way to push results on-chain. oSnap is a joint effort between UMA and Snapshot to add this execution functionality, specifically for (formerly Gnosis) Safe multi-sig wallets. The result is that DAO tokenholders are able to propose and execute on proposals from start-to-finish, without any specific person’s signature required.
oSnap is an abbreviation for Optimistic Snapshot Execution. The tool enables the execution onchain of transactions performed offchain immediately but with protections against harmful proposal execution. All of this is managed in a trustless and permissionless way.
This protection is introduced through bonds and a “challenge period,” combined with UMA’s oracles.
How does this work?
A bond is collateral deposited when someone submits a proposal in a DAO. For example, if I want 10 ETH from the organization's treasury, I must bond 1 ETH as collateral during the challenge period.
If a malicious proposal aims to steal funds from the DAO, someone may contest it during the challenge period. If it is proven that the proposal is indeed malicious and someone challenges it successfully, all the money bonded will be divided between the challenging person and UMA.
All this information is found thanks to UMA's Optimistic Oracle. UMA specializes in providing this service for various markets–the governance of decentralized organizations is one of them.
These new features bring more security to the governance of a DAO and remove the dependency on third parties to execute approved proposals: and ShapeShift couldn’t be more excited to bring this functionality to the FOX community.
Above is the natural path for a proposal submitted to ShapeShift with our integration with oSnap. For the voter, there is no change to how you have put your FOX tokens to work–simply connect your wallet to Snapshot or Boardroom just as you always have. Only behind the curtains will a more secure, decentralized, and onchain system be integrated for all.
Moving Governance Mountains with UMA
Our partnership with UMA to integrate oSnap into our voting mechanism is one of the many ways ShapeShift continues to improve our FOX fam's ability to participate in our decentralized governance.
What do you think of oSnap? Do you have questions or need any additional information?
Join our Discord and shoot us a message! The FOX fam is always here to help.
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