"Why do you want to tell me about governance in Defi? We ttalked about it on specific topic." You are right John, but I want to take a more general approach now :
Governance in DeFi is like managing a global online community where everyone has their own ideas, and it's tough to communicate because people are from all over the world and often stay anonymous. Plus, there's a lot of money involved. Unlike regular companies, DeFi projects don't have strict rules; instead, they follow "Code is Law."
To make decisions, DeFi projects use something called Decentralized Autonomous Organizations (DAOs), which are like self-operating groups on the blockchain. DAOs let people work together without a boss, following rules they all agree on.
One way to manage this is with "governance tokens." These tokens give people the power to vote on ideas for the project. But this system isn't perfect and has issues like not enough people voting, high fees, and votes that don't always count.
However, DeFi is still new, and there might be better ways to do governance in the future. For now, this is how it's done. And some projects, like Aragon and Snapshot, help with these governance decisions.
"I quess that you want ot tell me abouth the 2 mentioned above. I will bite. Tell me about Aragon please." You are waysmarter than the average John guy that I know of, Johny :
Aragon is a project that aims to give power back to the people by creating tools for groups that don't want a central authority telling them what to do. They want to make sure that as technology gets more advanced, it doesn't lead to a world where a few big organizations control everything.
Aragon helps create and manage different kinds of groups, like companies, without needing a middleman.
The project is guided by a non-profit organization in Switzerland and controlled by people who own Aragon Network Tokens (ANT).
"I have seen the term *court* while reading about them. What is this?" Here is your answer John : Aragon Court is like a digital version of a real-world court for settling disputes. When people have disagreements, they can bring them to Aragon Court, and a group of randomly chosen jurors will decide who's right.
These jurors use a special type of digital money called ANJ tokens. Instead of being completely neutral like regular judges, jurors get rewarded for agreeing with the majority. If they don't agree with the majority, they lose some of their ANJ tokens, which get given to the jurors who were on the winning side.
If someone doesn't like the decision, they can pay a fee to have more jurors look at the case. This can keep happening until a big group of jurors decides the outcome.
Jurors also get paid a monthly fee when they're not working on cases.
"How to become a juror?" Well, you are gonna need to invest some money :
To become a juror in Aragon Court, you need to have at least 10,000 Aragon Court (ANJ) tokens. You can buy these tokens from places like Uniswap. ANJ tokens are made by locking up Aragon (ANT) tokens in a special way. The more ANT tokens you lock up, the more ANJ tokens you get.
There used to be two types of tokens, ANJ and ANT, but the community thought it was too complicated. They're merging them into one token. The first part of this merger started in April 2021, where ANJ holders can change their tokens into ANT at a rate of 0.015 ANT for each ANJ. The second part of the merger will let ANJ holders change their locked-up ANT tokens into ANJ at a rate of 0.044 ANT for each ANJ, but they have to wait for 12 months to do this.
"And who uses Aragon?" Big players use it John :
Big DeFi projects like Aave and Curve use Aragon. By September 2020, over 1,600 DAOs (Decentralized Autonomous Organizations) were made with Aragon, and they held $350 million worth of stuff.
"Ok. I am also ready for the step-by-step guide, as always" That is very nice of you John. Here is the guide for you :
- Go to https://client.aragon.org/#/ and pick "Open an existing organization."
- Let's say you want to vote for the Aavegotchi protocol. Type its name, and if it's available (a green tick shows), click "Open organization."
- On the left side, click "voting." You'll see the open votes. Choose the one you want to vote on.
- Pick "Yes" or "No" and finish the transaction using Metamask. Your vote is counted now.
"Ok, so that wraps Aragon. What about Snapshot now?" See this John, this is how I like it. When the person really shows interest on the subject :
Snapshot is a solution to a problem. Voting on the Ethereum blockchain can be super expensive because of high fees. This makes it hard for small token holders to join in and vote. So, Snapshot does something cool – it takes a picture of the votes without using the blockchain, and this doesn't cost anything in gas fees.
Lots of DeFi projects like Snapshot because it helps them with voting. As of January 2021, it's free to use, and loads of projects (418 to be exact) are already using it.
"What are the shortcomings of using Snapshot?" Here is your answer John :
Snapshot is pretty cool for voting without high fees, but it has a downside. When people vote with Snapshot, those votes don't have to be followed on the blockchain by smart contracts. Instead, the project team or other people in charge have to do it on the blockchain. If they don't agree with the vote or it's a tricky decision, they might not do it.
So, while Snapshot is good for letting people vote, it doesn't guarantee that the votes will be put into action on the blockchain. But still, it's a handy and cheap way for DeFi projects to let their community have a say.
"Now I want a guide on how to use it." That's the spirirt John :
- Go to https://snapshot.page/#/ and choose the project you want to vote for. For example, let's say you want to vote on Sushiswap (SUSHI).
- Click on the proposal you're interested in. In our case, let's pick the first proposal.
- Read the proposal details and scroll down until you see the voting options. You can also check who has already voted. To vote, you might need some SUSHI tokens. Click on the option you want to vote for and hit the "vote" button.
- Double-check your voting choice and make sure everything is correct. If it looks good, click "vote."
- Now, click "sign" to confirm your vote. This won't cost you any fees.
That's it! You've cast your vote, and you can always go back to the proposal page to see your voting history. It's a simple way to have your say without worrying about high fees.
TL;DR :
Governance in DeFi is about decision-making for decentralized projects. It uses tools like DAOs and governance tokens for voting. Challenges include low participation and high fees. Projects like Aragon and Snapshot help with governance decisions in the evolving world of DeFi.
All of this info was put togheter by me with the help of the How to Defi book from Coingecko. Hope it helped others like it did for our boy John here!
Kreditna kartica nije potrebna 