Pivotality: The influence of whales in DAO Governance
Contents
Pivotality: The influence of whales in DAO Governance#
Definition#
On a given proposal, whales are considered pivotal voters when, taken together, casting their votes altered the result. [1] [2].
Aims of this report#
This article aims to analyze the top 60 DAOs, ranked by treasury size to determine the impact of large token holders (whales) on their governance.
Our main contribution is the whale pivotality metric, representing how governance decisions in a given DAO are affected by whale votes.
In this report we produce:
The whale pivotality metric on each of the top 60 DAOs
On three proposals, a case study on the influence whales held over the outcome
For the purpose of this report, whales are defined as the top 5% voters in terms of voting power for a given proposal (voters with voting power at or above the 95th percentile of voting power for that proposal).
The whale pivotality metric is calculated for each DAO as the percentage of proposals, the outcome of which change once whale votes are not counted.
This report relies on on-chain data as well as Snapshot data about proposals and voters.
For more detailed data and case studies, check out our extensive report here.
This is a work in progress and will be updated as we learn more, so stay tuned!
Takeaways#
Out of 60 DAOs:
5 of them (8%) have a whale pivotality metric > 20%
16 of them (27%) have whale pivotality > 10%
In 16 DAOs, whales’ votes produced a different outcome than minority votes in 10 proposals of the last 100.
Reviewing proposals (in Decentraland, Curve Finance and Radicle) in detail, we hint at the reasons why whale votes diverge from minority votes. Namely:
Massive whale voting power dominance coupled with meager participation from minority holders
Divergence of interests
Calculations#
Below, a brief summary of calculations performed to build the whale pivotality statistics.
See the repository for more details.
Load data#
Load each voter’s choice and voting power for up to the last one hundred proposals in each DAO.
Compute score differences#
For each choice of each proposal, get:
Actual score.
Hypothetical score that would have been produced if whales didn’t vote.
Then compute if the outcome is different, meaning if the outcome would have been changed if whales didn’t vote.
Then compute, for each DAO, the changed outcome propotion among the last 100 proposals.
Synthesis#
For each DAO, show the percentage of proposals, the outcome of which would have changed if whales didn’t vote (_whale pivotality).
| # of whales | all voters | whale pivotality | |
|---|---|---|---|
| DAO | |||
| 1inch Network | 26 | 604 | 0% |
| Aavegotchi | 47 | 5624 | 7% |
| Alchemix | 49 | 2212 | 4% |
| Ampleforth | 6 | 119 | 6% |
| Angle Protocol | 17 | 475 | 10% |
| ApeCoin DAO | 192 | 6812 | 12% |
| BadgerDAO | 251 | 11169 | 5% |
| Cryptex | 4 | 24 | 6% |
| Curve Finance | 21 | 285 | 21% |
| Decentral Games | 45 | 1540 | 17% |
| Decentraland | 58 | 1665 | 27% |
| ENS | 321 | 9742 | 4% |
| Euler | 29 | 782 | 15% |
| Frax | 1 | 340 | 4% |
| Gearbox | 32 | 886 | 0% |
| Gitcoin | 191 | 6309 | 12% |
| Hector Network | 139 | 6554 | 6% |
| Hop | 30 | 1506 | 4% |
| Instadapp | 3 | 75 | 10% |
| JPEG’d | 29 | 845 | 7% |
| Klima DAO | 140 | 6503 | 0% |
| Lido | 167 | 5060 | 6% |
| Magic Internet Money | 56 | 1676 | 0% |
| Merit Circle | 16 | 981 | 0% |
| Metronome DAO | 1 | 9 | 0% |
| New Order | 22 | 578 | 3% |
| Nexus Mutual Community Fund | 3 | 198 | 17% |
| Notional Finance | 7 | 149 | 0% |
| Pangolin Songbird | 5 | 105 | 0% |
| Popcorn | 8 | 249 | 14% |
| Qi Dao | Mai.Finance | 51 | 4112 | 20% |
| Radiant Capital | 244 | 4783 | 0% |
| Radicle | 18 | 396 | 17% |
| Rally | 1313 | 1531 | 0% |
| Redacted | 11 | 369 | 16% |
| Rook | 12 | 273 | 5% |
| Sarcophagus Ambassadors Voting | 2 | 22 | 14% |
| Silo | 8 | 316 | 3% |
| Spool DAO | 3 | 57 | 0% |
| Stargate DAO | 2479 | 65410 | 5% |
| SuperRare DAO | 17 | 563 | 0% |
| Synapse Protocol | 15 | 487 | 0% |
| Uniswap | 813 | 23337 | 16% |
| Unlock Protocol | 5 | 97 | 23% |
| Vesta | 689 | 15382 | 12% |
| ssv.network | 6 | 268 | 0% |
Case studies#
Decentraland#
Proportion of Outcomes Changed:#
27% of Decentraland's proposal outcomes change after filtering out whale voting power.
Proposal Analysis:#
For example, this proposal to set a duration period for the tenure of Decentraland DAO committee members had pivotal whale votes; had whales not voted, the outcome would have been inversed.
| Yes | No | Invalid question/options | |
|---|---|---|---|
| Scores | 168338.2 | 1394610.4 | 0.0 |
| Whale-only scores | 166209.6 | 1392896.0 | 0.0 |
| Non-whale scores | 2128.6 | 1714.4 | 0.0 |
99.9% of voting power was attributed to whales, with 94.85% of proposal voting power allocated to voting for the proposal not to pass.
We also observe that non-whale voting power is very low in this proposal.
Curve Finance#
Proportion of Outcomes Changed:#
21% of Curve Finance's proposal outcomes change after filtering out whale voting power.
Proposal Analysis:#
Another proposal which would have passed if not for whale intervention is this proposal to add the XSTUSD-3CRV pair to Curve’s gauge controller to accrue CRV for liquidity providers of XSTUSD-3CRV. XSTUSD is a stablecoin deployed on Polkadot and Kusama that is backed by a synthetic token called XOR (Sora’s native token).
The governance discussion about the vote shows reckless promotion of XST.
Quite a few people had their concerns about XST early on.
We looked at the first 16 accounts which showed really strong support for this proposal, and almost every single one was created within 2 days of the proposal’s forum post. One can reasonably conclude that they were created for the sole purpose of “shilling”.
| Yes | No | |
|---|---|---|
| Scores | 45352.6 | 529201.3 |
| Whale-only scores | 23463.0 | 511330.5 |
| Non-whale scores | 21889.6 | 17870.8 |
Just over 4% of voting power for this proposal was allocated by whales to vote “Yes” (which is just over half the total voting power allocated to the “Yes” choice for this proposal), whereas 89% of whale voting power was allocated to voting “No” (97% of total voting power for this choice).
Clearly, large token holders had an incentive not to let this proposal pass. It seems some such large CRV whales voted sensibly.
Just over 10% of whale voting power for this proposal was allocated to voting “Aye” on this proposal (27% of voting power allocated to the “Aye” choice came from whales). Whereas 45% of voting power from whales was allocated to the “Nay” choice (73% of whale voting power allocated to “Nay”).
Radicle#
Proportion of Outcomes Changed:#
17% of Radicle's proposal outcomes change after filtering out whale voting power.
Proposal Analysis:#
For Radicle, we look at this proposal to distribute RAD remaining following a Liquidity Bootsrapping (LBP) round conducted in February ‘21. This leftover RAD was proposed to be redistributed to participants of the LBP, i.e. people who bought RAD in this period from the Balancer LBP for RAD tokens.
| Aye | Nay | |
|---|---|---|
| Scores | 78136.3 | 123126.4 |
| Whale-only scores | 20708.3 | 90218.7 |
| Non-whale scores | 57428.0 | 32907.8 |
Just over 10% of voting power for this proposal was allocated by whales to vote “Aye” on this proposal (27% of voting power allocated to the “Aye” choice came from whales). Whereas 45% of voting power that came from whales was allocated to the “Nay” choice (73% of whale voting power allocated to “Nay”).