Today Tally launched its governance app – which lets anyone easily create and vote on proposals put forth by various DeFi projects.
The app brings much needed transparency to on-chain governance, not only within specific proposals so users can see which stakeholders are voting and how, but also more broadly within DeFi, by regrouping key projects on a single platform.
What are DAOs?
DeFi projects are, as the name suggests, decentralized by nature. This means they are not managed by a central team and instead democratize their decision making to allow anyone with a stake in the system to take part in governance. The winning action is then autonomously executed by smart contracts.
This type of organization is known as a DAO – or Decentralized Autonomous Organization.
“DAOs are an old idea that kept failing but got closer each time it failed. Now the problem is not abstract anymore. There are hundreds of millions of dollars that they [DeFi projects] need to govern in some decentralized way.” explains Rafael Solari, CTO and Co-Founder of Tally.
For now, these decentralized organizations are largely used to execute financial transactions. They allow users to borrow crypto, lend crypto for interest (and in some cases, additional tokens), purchase, and sell. Raf breaks down DAO proposals into two categories:
”The two main categories of governance actions we see are spending money from the protocol treasury and changing parameters. Governance often spends funds on things like grant programs and yield farming user incentives. The parameter changes tend to be things like tuning risk parameters, adjusting fees, or listing new assets.”
But this new way of coordinating people on the internet doesn’t end with finance, it could be applied to any sector of society.
Raf put it this way: “Crypto is trying to reinvent finance to be internet native. DAOs are reinventing the corporation to be internet native.”
So why has participation in on-chain governance remained so low?
Participating in on-chain governance has been greatly hindered by a lack of transparency and awareness. Stakeholders have to be actively following each project separately on social to know when and how to take part in voting.
What is Tally Doing Right?
- It Brings Greater Transparency
In an effort to tackle the transparency issue, Tally’s interface provides a clear overview of each projects’ governance activity – as seen in the screenshot below.
Then at the proposal level, Tally provides access to who has voted and how. The app does this by connecting the user’s address to their social account, highlighting exactly which VC fund, celebrity, or podcast is voting and why.
Compound, Uniswap, Indexed Finance, PoolTogether, Radicle, Idle Finance, Inverse Finance, and Unslashed Finance are all on there already. Fei Protocol will join next week.
- It Allows Users to Set up Alerts
Instead of having to do your own research every day to know what’s going on and when, you can opt in for email alerts to be notified when a new proposal is up for you to vote on.
- It Provides Better UX
The powerful aspect of decentralized applications like these is that anyone can call the functions, which means stakeholders can vote directly from the Tally app or website. There is no need for an API access, you just need enough gas ($ETH to pay for transaction fees).
Yes – gas. That is the next big issue the Tally team wants to tackle.
“First we wanted to make things more transparent. Now we’re at the second barrier, which is fees. That’s what we’re focused on next.”
High transaction fees is an issue that is closely tied to Ethereum’s current blockchain technology (where most DeFi protocols are built), which is struggling to scale.
Ethereum developers are actively upgrading their platform to Ethereum 2.0 which will solve for this. Layer 2 solutions are also proliferating.
And there is always the option of integrating with other Layer 1s!
“Right now we’re focused on Ethereum governances, but eventually we want to support other DeFi applications wherever they exist.”
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And if you have any questions for their team, feel free to email firstname.lastname@example.org