Kain Warwick, the founder of Synthetix, a program that enables users to create crypto assets that mimic both real-world assets and crypto assets, spoke in depth with Decrypt’s Dan Roberts at Chainlink SmartCon 2022 that DeFi governance has gotten worse than it was one year ago.
Worse Than Before
The founder said he believes DeFi governance “is actually worse today” compared to one year ago. Warwick said, “Governance just gets thrown out the window during a bull market, right?”.
He added, “No one cares, it’s like, ‘Let’s just try and move as quickly as possible, do the dumbest possible thing only.’ All of that stuff that is really critical, but takes a lot of thoughtfulness, and experimentation just gets blown away.”
This critique is all the more noteworthy considering Synthetix is credited with creating what we now know as decentralized finance.
A token distribution model based on yield farming was pioneered by the platform. ProtocolDAO, GrantsDAO, and SynthetixDAO were the first DAOs to spin off to support Synthetix.
The Next Key Problem Crypto Governance
Additionally, he noted that “governance theater” is the next problem crypto governance must solve. In particular, Warwick focused on the multi-signature problem.
“User-owned” doesn’t just mean “has a token”
“Community-driven” doesn’t just mean “has a discord”
“Active in governance” doesn’t just mean “votes on proposals”
Bullish on the real Web3; not Web3 theater.
— Spencer Noon 🕛 (@spencernoon) October 25, 2021
“User-owned” doesn’t just mean “has a token” “Community-driven” doesn’t just mean “has a discord” “Active in governance” doesn’t just mean “votes on proposals” Bullish on the real Web3; not Web3 theater,” tweeted Spencer Noon.
The multi-sig wallet consists of multiple crypto wallets which are owned by different people. It may contain three, five, or even ten wallets. There must be a majority consensus among the many owners of that multi-sig wallet before it can move any money.
Many large DAO treasuries use this type of wallet, since you don’t want one individual to be able to take all of a treasury’s funds, so multisig is used to limit risks.