Snapshot Death Match: NFT vs. Token-Based Voting Participation Rates
Authored with Isabel Orchard
Preamble
We wanted to know if NFT communities are more active in governance than token-based communities. To find out we’re staging a DeathMatch. The ring: Snapshot polls. The combatants: Below.
To familiarize ourselves with the differences, NFT community members participate in governance around — you guessed it — an NFT project, and access to governance depends on holding one or more of the artworks, ranging from fictional fantasy adventuring gear to community-based VCs, leveraging a non-fungible asset to derive governance rights.
On the other hand, (fungible) token based governance is most often used for DeFi protocols. The exceptions to that rule on Team Token are Gitcoin, a public goods funding protocol, ENS, a way to make Ethereum addresses human readable, and BanklessDAO, a media production and consulting DAO.
NFTs differ from tokens by implementing a different technical standard. The former is an ERC-721 and the latter is an ERC-20. NFTs are tokens where no two are exactly the same, called non-fungible, and they can’t be divided. Fungible and non-fungible token holders alike can use the Snapshot platform to vote on the direction of their respective DAO without incurring any transaction costs.
NFT spaces have much fewer members than their token-based counterparts. However, don’t let size determine might. Smaller groups with feisty members can really throw a punch.
We dug up the top ten Snapshot spaces with the most members in each category and compared voter activity, proposal counts, and how many people put forward proposals by querying Flipside Crypto Snapshot data.
Here’s what we found:
Round 1: Voter Activity
To kick things off, the charts below display the number of unique voters for Team Token and Team NFT in the 90 days before their last active vote. The frontrunner for Team Token is Optimism with 14,983 unique voters while thegurudao.eth leads Team NFT with 12,058.
Aave is on par with thegurudao.eth in absolute terms with 9,455 distinct voters. However, that figure is equivalent to 19.7% of the Aave community, whereas thegurudao.eth storms through with a near 100% participation rate. Almost everyone who owns the GURU Season Pass NFT has been an active voter in the past three months.
Curve significantly trails behind both teams in this round with only 33 distinct voters in the last 90 days (approximately 0.002% community members). The NFT space with the smallest number of distinct voters is Mutant Cats DAO with 151 (4.1% NFT holders).
Curve is a special case, because most of the voting is outsourced to less than a handful of vote-bribing aggregators. If you’re into the story behind buying votes in Web3, you’ll love our blog post on the subject.
Let’s look further into % of token supply voting.
NFT spaces have an average maximum of 19.05% supply voting, average median of 13.07% supply voting, and average across the board of 12.07% supply voting. Token-based spaces have an average maximum of 6.88% supply voting, average median 2.82% supply voting, and overall average of 2.92% supply voting in Snapshot polls.
To sum it up: NFT based spaces have 4.14x more voter participation than token based spaces.
Round 2: Number of Proposals
The number of proposals is a good indicator of DAO development. The more honest and worthwhile proposals are put forward, the more decisions for DAO members to make and the more active a DAO can be seen to be.
Optimism, Pancakeswap, and Aave have had 40, 39, and 34 proposals listed on their Snapshot spaces, looking 90 days past their last active Snapshot vote. For Optimism, that’s approximately one proposal every 375 unique voters. One every 278 Aave voters and one every 95 PancakeSwap voters.
On Team NFT, grayboys.eth had 14 proposals while thegurudao.eth and astardegens.eth followed closely with 12 and 11 proposals. Roughly one proposal per every 27 distinct voters in grayboys.eth, while its every 1,005 voters for thegurudao.eth and every 102 voters for astardegens.eth.
It seems as though token-based spaces have more to govern and discuss, but a much smaller percentage of token holders discussing. NFT spaces, on the other hand, are simpler but more engaging.
Round 3: Number of Community Members Who Put Proposals Forward
But what about the people behind the proposals? Agenda setting is important. Members who list proposals are able to influence the importance of topics — right?
Pancakeswap is the space with the highest number of distinct addresses, 31, listing proposals on Snapshot. Aave has 19 authors and grayboys.eth have 10. Of all the spaces we looked at, 60% have ≤3 proposal authors.
Since Snapshot is not the platform to initiate proposals and hold discussions, these graphs are mixing apples and oranges. Some spaces have gated the amount of people who can put forward proposals to admins only, who are then responsible for taking Discourse or Discord discussions to a — mostly binding — off-chain vote. Author numbers are artificially suppressed for those spaces, while spaces that allow everyone who holds enough tokens to propose would see bigger numbers.
In absolute terms we see Team Token lead by 4:1, which is not a big revelation. These spaces have more members than NFT spaces.
We’ll call off round three because the issue of unique proposers depend less on the kind of token and more on the kind of access-gating implemented on Snapshot, aka: who can do what.
Now, to the judges…
After three bloody rounds in the ring, it’s judging time. Let’s review each round so we can choose a winner.
Round 1
Voter activity is a significant metric to look at because DAOs fundamentally rely on participation from their members to function. Snapshot data shows members use their respective tokens to participate in off-chain polls. Maximum participation in voting is needed to ensure that the community sentiment for a proposal is accurately recorded.
When protocols have on-chain voting rounds after a successful Snapshot vote, like Aave does, Snapshot results indicate whether or not a proposal is likely to pass on-chain and signals to the author if further discussion is warranted or amendments should be made. The more voters pitch in, the more the on-chain result will reflect the off-chain consensus. We are assuming that community members vote the same way in Snapshot polls than they do on-chain here. Whether or not this is actually happening is a fascinating question that we want to cover in a future blog post. Stay tuned for more, ladies and gentlemen.
Thegurudao.eth stands out as the space with the highest participation. With 12,058 distinct addresses at the time of data collection, the space has a 64.1% mean, 77.04% median, and 82.56% maximum of NFT supply holders voting in the three months before the last poll there. The space’s most frequent turnout numbers are almost 10 percent higher than the last US presidential election.
The top Team Token space for this metric does not even come close. Pancakeswap’s largest turnout was 28.25%. While a third of the community might be enough to gauge accurate consensus on a proposal, the space would need to churn out those numbers time and again to be considered anywhere close.
Looking at the team-wide averages, the supply voting in token based spaces was under 3% while more than 12% for NFT spaces.
Winner Round 1: NFT spaces
Round 2
The number of proposals suggests a level of active participation within a DAO — because members are actively putting forward technical improvements, fund allocations, and general experimentation ideas. Without proposals, there is nothing for the community to sink its teeth into. Proposals are the prerequisite for passive participation, voting.
NFT space Grayboys.eth have an excellent proposal to voter ratio at one proposal for every 27 distinct voters. I mean you can’t even see second place from the rear view mirror! This indicates strong active participation as it suggests that the size of the DAO does not need to grow as much to enable more proposals put forward. However, token based spaces dominate this round in absolute numbers. Optimism, PancakeSwap, and Aave have over double the number of proposals than the top NFT space.
Two things this metric cannot tell us are 1) the quality of proposals and 2) proposal author. The quality (or value) often cannot be boiled down to a number. Sure, some proposals will include new revenue streams for the DAO but I think a decent chunk of the value is determined in the level of forum engagement and clear communication with community members on how this will improve the DAO. This was not quantifiable on Snapshot.
Winner round 2: Token-based spaces
As for proposal authors…
Round 3
This was a bit of a curve ball. Snapshot is an off-chain voting platform. Authors bring their proposals to the table on each DAO’s respective forum (Discourse, Commonwealth etc.) for discussion. Once substantial back and forth has occurred between the community, proposals are copied and pasted onto Snapshot to hold the vote.
Since this is an administrative role, we cannot take diversity Snapshot proposal list-ers to mean diversity in proposal authors. It’s not a given that they are the same people!
We have discussed the limitations of this metric in the respective chapter, and will exclude this metric from influencing the death-match.
Winner round 3: Round terminated due to technical difficulties
And the winner is: It depends….
We hope you’re not disappointed by this anticlimactic ending. The judges’ results are in: Token-based spaces can attract more unique voters, but NFT-based spaces rock participation.
Having an easy way to query Snapshot voting data with SQL on Flipside opens up new ways to analyze voting behavior. Huge shoutout to Fabien and the whole Snapshot team for their product and making the data available for ingestion into our Snowflake data warehouse.
But, why do NFT-based spaces outperform token-based spaces in voter participation so much?
One possible explanation is size. Let’s look at the data once again:
While more distinct voters participated in token-based voting they represent a much smaller percentage of the total supply. Size matters!
Participation does not scale well.
NFT-based spaces have a smaller token supply, so that every vote counts. When a holder of a BAYC pitches in, he feels heard, whereas the holder of one single CRV token has no real effect on the decisions made.
Whales are also less common in NFT spaces whereas many DeFi protocols have struggled to rein them in. DAOs that use a 1T1V system, a small number of wallets can accrue a significant portion of the token supply to secure their influence over the DAO. Not only does this mean that much of the recorded participance relies on one user, but also contributes to apathy felt by smaller players in turn making them less inclined to vote.
Token-based projects have financial aspects front and center and unless voting is financially incentivized, it is not strictly rational to participate. NFT projects are focused on community and identity, on the other hand. Participating in governance has social and reputational benefits.
When governance decisions touch users’ identities, their willingness to set aside time and bandwidth to participate increases.
The clear advantage of NFT-based spaces suggests that intangible rewards like Soulbound Tokens can play a role in increasing voter participation. If there is one takeaway from our research it is this: The more personal and non-fungible access to governance is, the more DAO members feel like they matter.
Authored by Raphael Spannocchi and Isabel Orchard
