Voting Power Within the Arbitrum
Track the consolidation of voting power within the Arbitrum DAO. How many unique wallets have delegated their ARB tokens? How many unique delegates received tokens? Create a dashboard that monitors the total voting power and number of unique delegators for the top 50 delegates. Identify the top 10 delegators (by total ARB) for each delegate in the top 50. Also examine the on chain activities of wallets that have chosen to delegate their voting power and note any patterns. Based on transaction histories, is it possible to identify which user segments are more likely to delegate tokens?
Arbitrum, Delegate, Voting power, Wallet
The Ethereum network has a lot going for it—it’s decentralized, reliable, supports smart contracts written in a programming language familiar to many crypto developers, and is home to a thriving decentralized finance (DeFi) industry. However, Ethereum is also slow and expensive to use, and will remain so unless users opt to move to another blockchain (like Solana, Fantom or Avalanche), or until planned Ethereum upgrades speed things up within the next couple of years.
While the world waits, a third fix has arisen: scaling solutions. These are pieces of software that sit atop the base layer of a blockchain, in this case Ethereum, to speed things up. Arbitrum is one such scaling solution, and it’s become a popular venue for Ethereum users to complete their transactions. On March 23, 2023, Arbitrum plans to airdrop its new ARB token, allowing holders to vote in decisions related to the protocol. In so doing, Arbitrum is enacting its long-awaited transition to a DAO (decentralized autonomous organization).
Arbitrum is cheap and quick to use, and relays all transaction information back to the main Ethereum blockchain. While Ethereum manages a mere 14 transactions per second, Arbitrum races ahead at 40,000 TPS. Transactions cost several dollars to complete on Ethereum, while they cost about two cents on Arbitrum. And Arbitrum also supports the Ethereum Virtual Machine (EVM), meaning that Ethereum DeFi developers can integrate their decentralized applications (dapps) with Arbitrum without having to make any modifications. Arbitrum was created by Offchain Labs. The company raised $120 million in a Series B funding round in September 2021.
Reference: https://decrypt.co/resources/what-is-arbitrum-speeding-up-ethereum-using-optimistic-rollups
Delegating is the process of contributing tokens to a node on a proof of stake protocol for the purposes of validating transactions in exchange for a reward.
Validators operate nodes and set a small service fee that is taken out of the earned rewards in exchange for the services provided.
Delegation allows token holders who lack the technological equipment or expertise to operate a validation node the ability to participate in the process of securing the network and earning a reward.
The main risk involved in delegation is slashing, which occurs when a validator conducts malicious or abnormal activity on the network.
Proof of work vs. proof of stake
To understand what delegating is, it's important to first understand the difference between PoW vs PoS or proof of work networks and proof of stake networks.With PoW blockchains, a decentralized community of mining nodes operates 24/7 gathering transactions into a block and searching for a special number known as a nonce that will allow them to create an acceptable block that can be added to the blockchain.
Specialized mining equipment is needed to try and determine the nonce, which requires a lot of energy and can be quite costly.
On PoS networks, individual nodes that wish to participate in the validation process are required to lock a minimum number of tokens in a staking contract as a way to help prevent nefarious actors from validating false information. If an attempt to submit false data is detected, validators risk losing the tokens they have staked on the network.
The incentive for both PoW and PoS networks is a reward in the form of the native token of the network, such as BTC or SOL.
Why delegate?
The process of validating transactions requires a minimum level of computing power and hardware that is simply not feasible for everyone to acquire and operate. Doing so requires a certain level of technical know-how as well as ample free time to ensure the process operates smoothly.For those who are unable to dedicate the time and energy needed to successfully validate transactions, the option of a delegator offers a way to participate in the process without the know-how or equipment.
In the process of delegating crypto, a token holder can earn rewards by adding their assets to the staked tokens on someone else’s node in exchange for a small commission that is taken out of the earned rewards.
For many PoS networks, nodes with larger balances are more likely to be selected to perform work and earn rewards, so validators welcome delegated tokens as it increases the number of opportunities for them to be able to earn more tokens.
The process of delegation can be seen as a win-win for both the delegator and validator as they can both increase the size of their holdings while also helping to secure the network in question.
For many protocols, there is no minimum amount of tokens required to participate in the delegation process, so even the smallest accounts have a chance to delegate their assets to an active validator node and earn rewards. Another benefit of delegating is the flexibility to unbond tokens at any time, depending on the protocol’s unbonding period, and the fees involved with participating in the delegation process are typically less than 10%.
Reference: https://www.soma.finance/learning-hub/what-delegator-crypto-understanding-pow-vs-pos
Enabled by blockchain-powered smart contracts, DAOs are decentralized, member-controlled organizations governed by computer encoded rules. Currently, there are two DAO membership models – token-based membership and share-based membership. While tokens and shares were originally the main forms of voting rights, today a number of DAO voting mechanisms have been proposed to ensure that voting and governance remain decentralized and to encourage more community members to take part in the decision making process.
What is token-Based Quorum Voting?
The token-based quorum is among the most basic DAO voting mechanisms. For a proposal to pass, a certain number of DAO members must participate in the voting process. If the threshold has been met, the decision that has received the most votes wins. Failing to reach the threshold means that the proposal fails.Although token-based quorum voting tries to encourage active member participation and consider the mass opinion, there are some challenges. It’s often a challenge to pinpoint the appropriate quorum. Requiring more members to vote may mean that the majority of proposals fail due to poor participation levels. However, setting a low quorum poses risks of bad practices and makes passing a proposal extremely easy, which could lead to the DAO developing in the wrong direction.
Regardless of the set quorum, encouraging members to participate is a time-consuming and expensive challenge for most DAOs. Some may prefer to remain inactive to sabotage a proposal being passed or they could simply not be interested in the decision-making process. Furthermore, as a token-based voting model, this mechanism ties in financial stability with voting power, as members with more tokens could manipulate and bribe others, potentially turning DAO voting into political activity.
Permissioned Relative Majority
In a permissioned relative majority DAO voting mechanism, the key factor is how many voters have voted ‘for’ and ‘against’ a proposal. There is no minimum voting requirement, and even one member can be the sole participator in the decision-making. The voting process is easy and straightforward, making it less expensive and less demanding. However, the mechanism allows a single DAO member to gain too much power and choose how to manage DAO funds. Additionally, the mechanism makes proposal passing a risky endeavour as it is a very easy process that doesn’t require too much attention from other members.One way to overcome these challenges is to require proposal sponsorship from DAO members. This option has already been explored by Moloch DAOs.
Rage Quitting
The rage quitting voting mechanism is one example of how sponsorship has been utilized to increase security in the DAO voting process. The mechanisms could potentially offer a solution to the relative majority challenges. Before a proposal can be voted on, it must be sponsored by members. If the majority approves the proposal, it enters a grace period, where voters can reconsider and withdraw their support from the vote or from the DAO. If the proposal no longer receives enough support after this stage, it is discarded.The main advantage of this voting mechanism is that it tackles the risk of majority voters gaining an advantage over minority voters. However, the voting process is extremely long, which may not be a viable option for all DAOs.
What is quadratic voting?
Under the quadratic DAO voting mechanism, voting power is directly linked to financial power. Every member has the right to repeatedly vote on a proposal, where the cost of the vote is the square of the number of votes a member wishes to acquire. For example, if a single vote costs one token, two votes will cost four tokens, and three votes will cost nine tokens. This enables members to show how strongly they believe in a proposal, especially on decisions that they’re strongly passionate about.This model of voting offers a solution to the risks of relative majority votes and clearly shows how strongly opinionated the DAO community is on certain topics. However, participation of a fake identity in the voting process could lead to unfair results, which is why proof of identity is a key necessity with quadratic voting.
Reference: https://limechain.tech/blog/dao-voting-mechanisms-explained-2022-guide/
Important:
Therefore, the power of the vote depends on the number of users and the amount of the token that is held!
We also checked this information through the (https://www.tally.xyz/profile/0x0eb5b03c0303f2f47cd81d7be4275af8ed347576?governanceId=eip155:42161:0xf07DeD9dC292157749B6Fd268E37DF6EA38395B9) site and made sure.
The top delegate on this site is TreasureDAO, whose voting power is more than 21 million. This delegate has more than 28,000 delegators, and the amount of tokens delegated by these delegators is equal to TreasureDAO
's voting power.
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