Tellor leverages simple crypto-economic incentives to decentralize the delivery of a Snapshot vote result on-chain, making real and meaningful participation possible for every token holder in your community.
On-chain token-weighted governance allows smart contract developers to democratize blockchain processes in a way that wasn’t really possible before the first voting platforms were coded up on Ethereum. The ability to create these unique decentralized governance structures has famously inspired the creation of thousands of DAOs on Ethereum alone.
Token weighted voting is important for both DeFi and NFT projects. Their smart contracts often need to be updated to fix bugs or add/change functionality, and they use on-chain governance to decentralize the process.
The challenge for many of these teams is that there are gas costs associated with on-chain voting. In many crypto communities, some of the most vocal participants are smaller holders with only a few tokens. For these individuals, paying a $100 gas fee to vote on a proposal is not practical. Proposals may pass with the votes of a few large holders, but the majority of holders are actually priced out.
Snapshot Governance as it is
Snapshot eliminates the gas fees altogether, removing a key barrier for community participation in governance votes. The Snapshot protocol simply calls a node to record wallet balances at a certain block height to create a point in time record (commonly referred to as a “snapshot”) that is saved in IPFS. Then the holders may connect their wallets and sign a message to vote.
Even though this is a powerful tool for token projects, a contract on a blockchain like Ethereum cannot actually execute functions programmatically from the vote result because the results of the vote are stored off-chain.
Many projects use Snapshot as a way to “temperature check” their community to gauge interest in an upcoming on-chain governance vote. Some teams use Snapshot votes for pseudo-decentralized governance pushing the proposed changes through using an administrator account. This might be ok if you trust the team, but there is no oversight for the community to verify that the upgraded code matches the proposal. There’s no link between the governance process and the smart contract that lives on Ethereum.
On Ethereum, projects prioritizing full decentralization need a simple and secure way to bring the result of a snapshot vote on-chain where it can be used to execute protocol upgrades in a transparent, permissionless, and censorship resistant manner.
Enter The Tellor Snapshot Oracle
Protocol decentralization is a core value at Tellor. This is why Tellor developed a new query type that allows their open network of data reporters to bring the results of any Snapshot proposal on-chain leveraging simple crypto-economic incentives.
This is how it works. After a Snapshot proposal / vote has been tallied and the result is final, a user can tip the Snapshot proposal query type on the Tellor network with a small amount of TRB, and Tellor’s network of anonymous reporters will compete to place the results of the requested proposal vote to the Tellor database. Telliot, Tellor’s open source reporting software, will perform a check to make sure that the requested proposal ID is valid prior to submitting. As with all Tellor data, the gas fee to write the value on-chain is paid by the data reporter.
Alternatively, the user can submit the result themselves and rely on the community at large to verify the accuracy of the report. As with any submission to the Tellor database, values (vote results) are subject to dispute if any TRB holder believes that the vote result is incorrect or malicious. If a dispute is initiated challenging the reported vote result, a replacement value is quickly provided by another reporter, because the same query is automatically tipped 10% of the dispute fee. Disputes on Snapshot vote results are easily resolved by Tellor governance, because Snapshot vote results are open and easily verifiable.
(You can read more about Tellor’s security model and dispute system here)
The Tellor Snapshot Oracle provides a simple, decentralized, and cost effective solution for projects that want to empower their token holding communities. It allows users to maximize the number of addresses that come out to vote while maintaining a truly decentralized alignment. A broad mandate from the community is more readily achieved, because every token holder is able to participate in a meaningful way.
For more information about Tellor and its permissionless oracle protocol, check out tellor.io. Join our community on Discord!