Authors: Redsteep Blockchain Lab
Introduction
Greetings ShapeShift community,
We are a team of passionate blockchain developers with over 5 years of experience in blockchain/web3 development and more than 12 years in software development overall. We have experience in DAOs both from the user perspective and from the developer perspective as we’ve been building some projects. We’re constantly looking into different ways to improve governance process for DAOs.
Abstract
This proposal introduces an approach to improve DAO governance by establishing an on-chain governance hub on the Internet Computer (IC) blockchain, thereby reducing reliance on multi-signature wallets, reducing operational costs, allowing multi-chain proposal executions. Our solution leverages on a set of key feature of IC such as Reverse Gas Model and Cross-Chain support, enabling the automated, trustless execution of proposals. This system simplifies governance processes, increases transparency, and enhances security.
Motivation
Many DAOs allocate funds across multiple programs with dedicated budgets for maintaining multi-sig signing operations, leading to substantial operational costs. For example, at Arbitrum DAO the combined cost reaches 470K ARB ($627K) annually, translating to $6500 per transaction — amounts paid to 19 multi-sig signers to approve transactions for the DAO.
This structure highlights significant fragmentation within DAOs, as each funded program manages its own multi-sig. This results in redundancy and inflates overall operational costs. This problem becomes especially problematic with higher volume of proposals to be executed, and even more challenging when such proposals have to be executed on multiple chains because it requires to manually create separate transactions on each chain affected by proposal. Each time pinging, waiting and getting multi-sig holders to sign them.
Additionally, individuals responsible for multi-sig signing are typically not elected, raising concerns about consistently ensuring that only the most reliable and competent members hold these crucial roles.
Moreover, DAO contributors may encounter difficulties advancing proposals due to the need to coordinate with multiple signers, causing delays and potentially deterring the proposal process.
Lastly, multi-sig can be seen as a crutch to DAO governance, not a great addition to it. Why do we need multiple signers to validate a transaction? Obviously, because we can’t put the whole DAO at risk by trusting one person. But why do we need trust involved in execution of proposals? Why not execute proposals in a trustless, automated and multi-chain way without involving human beings to create, manage and signs transactions?
Proposed solution
Our idea is to keep all votings on-chain and execute them automatically unless any other specific scenario is needed. For that purpose we’re choosing IC blockchain, it’s going to contain an on-chain governance hub service (Hub) to do votings. It will allow assets for votings no matter which is the source blockchain and allow to execute passed voted proposals on multiple targets blockchains as well.
No need for another wallet, reverse gas model
Users don’t have to install and use specific IC wallets as well as they don’t have to buy the IC native token (ICP). This is achieved due to the Reverse Gas Model of IC blockchain. Transaction fees are paid from the balances of the smart contracts. This looks like a traditional web model where computational costs are paid but the developers and already included in the economy of a project. It means only a limited number of selected users will have to maintain the balances to keep the system up and running when the majority of the users can just leverage from a better UX. It looks like Snapshot from the UX/UI perspective but this time on-chain giving the transparency. 3 years in production have shown the sustainability of this model.
Bridging with EVM-blockchains
For the start we’re choosing EVM-blockchains, Ethereum itself in particular and ERC-20-like token standards. So users can connect their traditional ERC-20-enabled wallets to the Hub and use them to create new proposals and vote for existing ones. The Hub will keep in sync the snapshots of votings assets for each proposal which requires to access the source blockchain data on IC. This is partially being done by the existing bridging solutions and the evolving inter-blockchain infrastructure. One of the outstanding IC-enablers here is HTTPS outcalls feature which allows to build trustless bridges without involving off-chain infrastructure. After a successful launch we plan to extend it beyond Ethereum and EVM-blockchains.
Multi-chain proposal executions
Once a voting is done by the users fully on-chain, the Hub will keep the results of this voting. But we suppose some protocols can leverage more from that. Multi-chain protocols can then execute passed proposals on multiple blockchain semi- or fully automated which will allow “one voting to rule them all” approach, no need to handle it manually. Some protocols would like to use off-chain multi-sig infrastructure such as Safe. In this case the Hub will help to prepare multi-sig transactions automatically. This is enabled by above-mentioned features and the other one to mention here is the Chain-Key cryptography which allows IC smart contracts to sign messages for targets blockchains. Besides that it might allow DAOs to hold their assets on the balances of IC-managed crypto keys, turning into an alternative multi-sig solution.
Conclusion
Despite the list of enablers there’s a lot of work to be done yet. We’ve already done a Tally-like solution for on-chain voting on IC, it’s live but it helps only IC projects. We would like to scale it cross-chain.
Call to action
We’re calling all active DAO members, admins, people responsible for DAO governance and operations to provide your feedback on our idea.
Also you are welcome to share any other challenges or operational overheads you are facing with multi-chain proposals execution, multi-sig operations and DAO governance process in general. It will help us better tailor our next proposal and solution.
We are looking forward to hear your honest thoughts on this topic to help move DAO governance at ShapeShift to the next level!