Learnings from v3 Governance

dYdX Foundation
Feb 22, 2023

Context

This blog post provides an overview of the key insights and reflections gained from our experience and observations with governance on dYdX v3. It aims to synthesize learnings on governance and provoke discussion in the dYdX community about potential improvements to governance.

Here's a tl;dr of the long-form blog, which can be viewed here. We welcome any feedback from the dYdX community on these learnings and look forward to the community engaging in more discussions about governance.

TL;DR

Governance Participation

  • On average, across 30 proposals on dYdX v3, 26M $DYDX (~7.0% of votable supply) and 412 unique addresses (~1.1% of all eligible wallets that can vote) participated in a given vote.
  • Despite market volatility, voter participation in dYdX governance generally increased quarter-over-quarter in 2022.
  • In the last 6 months, 1,950 unique addresses (~5.2% of all eligible voting addresses) and 16.1M $DYDX (~4.3% of votable supply) voted in at least one off-chain snapshot and/or one on-chain DIP. Excluding DIP 4, there is a relatively consistent increase in the number of unique addresses participating in a vote and the $DYDX voted.
  • More unique addresses participated in off-chain votes compared to on-chain votes, but the amount of $DYDX participating in on-chain votes was generally higher. This could be attributed to:
  • ///Longer lead times between off-chain vote conclusion and on-chain vote creation could result in the proposal losing momentum and fewer unique addresses voting.///
  • ///Large token holders holding their tokens with custodial services like Coinbase Custody and Anchorage not being able to participate in off-chain snapshots.///
  • Efforts to clarify proposals through explanatory tweets and AMA sessions have likely contributed to increased participation in governance and engagement in the dYdX community.

Reaching Consensus

On average, across the proposal lifecycle, the lead time between forum discussion and Snapshot polling and the creation of an on-chain vote is 17 days and 48 days, respectively. To improve efficiency in dYdX governance, the dYdX community is encouraged to explore ways to streamline the proposal lifecycle. One potential solution could be delegating decision-making authority for certain parameters to specialized working groups or subDAOs.

Delegation

As of February 1, 2023, 25 community members have onboarded as endorsed delegates. After the launch of the endorsed delegates program on February 11, 2022, endorsed delegates account for an average of 41.43% of voting weight in a given proposal. The distribution of voting power and proposal power is skewed. 9 endorsed delegates hold the majority of voting power and proposal power.

  • Average voting and proposal power for Endorsed Delegates: 1.6M $DYDX
  • Minimum voting and proposal power for Endorsed Delegates: 1 $DYDX
  • Maximum voting and proposal power for Endorsed Delegates: 9.3M $DYDX

Looking ahead, we are hopeful that voting power and proposal power will be further distributed and decentralized as a result of (1) more endorsed delegates being active,  and (2) more $DYDX holders (not otherwise participating in governance) delegating.

The release of dYdX v4 on Mainnet will mark a turning point in the decentralization and governance of the dYdX protocol. We are extremely excited by the level of governance participation so far and we look forward to the time when the dYdX protocol is entirely controlled by the dYdX community.

The long-form blog can be downloaded here. We welcome any feedback from the dYdX community on these learnings and look forward to the community engaging in more discussions about governance.

Stay up-to-date with the dYdX governance by following us on Twitter @dydxfoundation, joining our Discord, and contributing to the discussions in the community forums. If you have any questions about getting involved with the dYdX community, please reach out to ecosystem@dydx.foundation.

Are you interested in building the future of finance? Join us! Get involved with the dYdX community or check out the dYdX Foundation's open positions on our career page dydx.foundation/careers.

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