revisiting solana governance

the past, present, and future of DAOs on solana

Apr 24, 2024

welcome back to the Tally newsletter, your weekly source for DAO governance insights in the Tally ecosystem. we’re tommy and ellie and this week we’re talking Solana.

✦ DEEP DIVE

dedicated subscribers may remember CHG’s newsletter No. 125: the solana scoop, which dove into the budding solana DAO ecosystem last december. if you missed that one feel free to check it out here. today we’ll be covering the evolution of the solana DAO ecosystem over the past few months and what we hope to see in the future.

recap

solana has a reputation for its high transaction throughput, low latency, efficiency, and ultra-low fees which makes it an ideal playground for DAOs. there are already 140 DAOs on solana managing over $1B in funds. not to mention, the average transaction fee is $0.0025, not bad. DAOs like Jito and MetaDAO are already capitalizing on Solana’s advantages and paving the way for future DAOs on Solana.

Jito

since the $JTO token airdrop and DAO launch a few months back Jito has continued to thrive.

JitoSOL is the largest and fastest-growing Liquid Staking Token (LST) on Solana, boasting a Total Value Locked (TVL) of 6.8m SOL, while the Jito MEV network of validators running the Jito-Solana client operates 41% of network-stake weight (163m SOL TVL).

The launch of JTO enables token holders to make key decisions to shape the future of Jito Network so that it continues to evolve in alignment with the needs of those it serves, and of the broader Solana ecosystem. These decisions and initiatives include:

Setting fees of the JitoSOL stake pool
Updating delegation strategies by controlling parameters of the StakeNet programs
Managing the treasury of JTO tokens held by the DAO and fees generated from JitoSOL
Contributing to the ongoing development and improvement of Jito’s protocols and products

MetaDAO

an interesting development since the last newsletter no 125 is the introduction of MetaDAO’s futarchy governance model, an ambitious experiment to implement an economic system invented by economist Robin Hanson in 2000. MetaDAO is the first known implementation of the model. here it is directly from the docs:

“MetaDAO uses a mechanism called futarchy to make its decisions. Futarchy was invented by economist Robin Hanson in 2000 and MetaDAO is the first known instantiation of it.

The basic idea of futarchy is to give decision-making authority to markets.

We can demonstrate with an example: a company deciding whether to fire the CEO. A company organized as a futarchy would do the following:

Create two markets for the company’s stock: one ‘retain CEO’ market and one ‘fire CEO’ market.
Allow investors to trade in these markets for some time period, such as 10 days.
After the time period has elapsed, look at prices of the company’s stock in both markets. If 'retain CEO' stock is more valuable, retain the CEO and revert all trades in the ‘fire CEO’ market. If ‘fire CEO’ stock is more valuable, fire the CEO and revert all trades in the ‘retain CEO market.’

In essence, the market speculates on what the value of the company would be if the company fired the CEO, and then the company fires the CEO if the market speculates that it would make the company more valuable.

Given a reference asset, such as a stock or governance token, we can use the same process for any decision. First we have the market speculate on how valuable the asset would be conditional on a few potential actions, and then we select the action with the highest associated value.”

Tl;dr futarchy gives decision making to markets.

obviously there are pros & cons to abstracting human intervention from the DAO, we’ve seen implementations tangential to futarchy (i.e. ungovernance with Reflexer, HAI, & OpenDollar,) but this takes ungovernance to the a new paradigm.

MetaDAO is beginning the Futarchy experiment with Vota:

“Vota is Solana's premier vote market. Vote sellers earn money by selling their voting power. Vote buyers pay for that voting power in order to influence proposal outcomes.”

learn more about Vota here.

learn more about Futarchy here.

Drift DAO

Drift is the #1 perpetual DEX on Solana and recently announced its airdrop to launch the Drift DAO. Drift DAO’s architecture features 3 different pillars:

A traditional governance token model using Realms, a security council (see Arbitrum SC), and a Futarchy DAO. Drift DAO will be an illuminating experiment in integrating multiple types of DAO infrastructure & will guide the future of Solana governance. Solana is in the early stages of DAO activity, but the future is bright.

As always, the Tally newsletter will keep you updated on all the exciting waves being made in the ecosystem. A rising tide raises all ships.

Multigov & solana governance

as the solana ecosystem continues to grow the need for battle tested governance infrastructure is becoming even more important.

the recent Multigov™ announcement from Tally, Wormhole and Scopelift, MultiGov™ provides the rails for functioning & safe onchain governance. Multigov connects multichain DAOs across Solana, Ethereum mainnet, and EVM-compatible L2s; as more projects expand to multiple chains, MultiGov™ will lower barriers to DAO participation and increase user reach in nearly all major ecosystems. We mean it when we say the future is MultiGov™. Governance is becoming chain agnostic & Multigov allows all users to benefit from the progress being made in the Solana DAO ecosystem.

❉ ONCHAIN PROPOSALS

Arbitrum: Double-Down on STIP Successes (STIP-Bridge)

This proposal introduces the STIP Bridge, aiming to sustain and enhance Arbitrum’s market leadership by extending support to key protocols amidst intense competition from other Layer 2 solutions. It serves as a strategic interim solution, maintaining incentive alignment and ensuring continuous engagement of vital projects within the Arbitrum ecosystem until the Perpetual Incentives Program is initiated.