Osmosis Governance | Part 2: Profile of a Governance Participant
Meet the Governors
In Part One of this series on Osmosis governance, we discussed the importance of governance to the blockchain and investigated factors that drive users to participate in governance. If you have not read that article already, it is highly suggested as an introduction to this follow-up piece.
In the previous article, it was found that interesting governance proposals can drive users to onboard onto Osmosis and that existing users are highly motivated to vote on proposals dealing with liquidity pools involving popular IBC tokens and new feature implementation. This leads us to an important question — who are these Osmosis Zone governors?
In this article, some questions are addressed to try to profile the “average” Osmosis governance participant. What do the holdings of an average governance participant look like ?What percentage of active wallets on Osmosis Zone participate in governance? Do they also provide liquidity and make swaps on the Osmosis Zone application? Let’s use the Osmosis data provided and being built by Flipside Crypto to answer these questions!
Wallet Holdings
177,664 unique wallets have voted on governance proposals on Osmosis since the genesis of the blockchain, compared to 1,073,070 unique wallets that have transferred funds onto Osmosis at any time. In other words, 16.55% of all wallets that have used Osmosis have voted on a governance proposal.
Using Flipside Crypto data, it was calculated that 155,937 unique wallets hold either a liquid or staked balance on Osmosis as of July 7th, 2022 (Table 1). Of these wallets, 140,093 wallets or 89.8% have voted on a governance proposal at least once. Almost all the wallets that have an active balance hold OSMO, regardless of whether they have voted on governance proposals or not. The patterns of other popular tokens were similar. Voters and non-voters held them on Osmosis at a similar rate.
Rate of Governance Participation for Active Wallets
A wallet is considered active on a day if it holds either a staked or liquid balance. On July 7th, 2022, 89.9% of all active wallets had voted on at least one governance proposal. But how does this statistic look over time?
In short, the users of Osmosis Zone may be one of the top crypto communities for governance participation. In Figure 1, it is typical that at least 80% of active wallets on any given day have voted on at least one governance proposal. The lowest percentage of governance participation is 69% and occurs around Dec. 13, 2021 to Feb. 1, 2022.
Interesting governance proposals can also onboard new users. In Figure 4 in my previous article on the drivers of Osmosis governance participation, the time between the first transaction performed and first vote for proposals 205–210 is less than one day. Proposals 205–210 occurred around the start of May 2022 and account for the jump in percentage of active wallets that participate in governance that occurs around that time.
What Else Governance Participants Are Doing on Osmosis
Besides voting on proposals, what else do active wallets who have voted on at least one governance proposal do on-chain? In order to participate in governance, one must delegate their OSMO to a validator. So it can be safely assumed that all of these users stake their OSMO tokens. Other popular activities on-chain include swapping one token for another and providing liquidity to a pool. Let’s take a look at what percentage of active governance participants performed these actions.
In figure 2 above, the percentage of active wallets that have voted on at least one governance proposal that have either performed a swap or provided liquidity can be seen. Swapping is a slightly more popular activity, roughly 20% of active wallets that have voted on a governance proposal have performed a swap versus 13% that have provided liquidity to a liquidity pool.
However, this percentage is declining. Since the start of February 2022, a higher percentage of active Osmosis governance participants are electing to leave their OSMO tokens and other tokens staked.
Age of Active Wallets Participating In Governance
While governance can attract new users to the chain, the average age of a wallet active in governance on Osmosis is maturing (Fig. 3). During the genesis of the chain, the average age of voters was very young, as expected.
The average age of a wallet active in Osmosis governance begins to drop around Oct. 1, 2021. During this time, there were several major on-chain events such as Keplr wallet integration and the enabling of IBC transfers between Terra and Osmosis that brought new users to the chain.
Another point where the average age of wallet voting on Osmosis proposals decreases is between Dec. 13th, 2021 and Mar. 15th 2022. During this time, there were yet again several major events such as stable coin integration and the enabling of superfluid staking. The latter which also brought a fair amount of new users to the chain.
Since Mar. 15, 2022, the age of the average wallet that participates in governance has been steadily growing. One notable event that goes against this trend is the voting on proposals 205–210, which discuss technical implementation for an Ethereum bridge. Thus, a sharp decrease in average voting age can be seen on May 1st when voting on these proposals took place.
Further Discussion
Active wallets are largely most interested in Osmosis governance in comparison to swapping tokens or providing liquidity. There are several reasons that this could be. It could be that users who are interested in swapping tokens are largely uninterested in holding their tokens on Osmosis, and transfer their swapped tokens off chain almost immediately. Liquidity providers may hold a majority or all of their Osmosis in a pool, rendering them ineligible to vote. These questions will be explored in a later article.
As of writing, the staking rewards percent for OSMO is 29.69%. This is lower than staking rewards that can be generated by staking other popular IBC chains such as JUNO and EVMOS. It could be that users that stake OSMO are largely motivated to do so to help shape the future of the blockchain via governance voting. If nothing else, governance participants are a dedicated group of users. Active wallets vote at an 89.9% rate on governance proposals and the current voting average wallet age is over 100 days old.
Stay tuned by subscribing to Flipside Governance and myself for Part 3 of this series where we tackle additional questions about Osmosis governance.
Additional Information About the Data Source
Charts and statistics used in this article were created by using the Osmosis database provided for free by Flipside Crypto. Some information about the balances of Osmosis wallets is only available internally, but will be publicly exposed and quarriable soon.
Flipside Crypto provides queryable Osmosis data back to the genesis block for Osmosis, as well as specialty tables to make analysis for staking, liquidity providing, governance, swaps, and transfers easy to perform. Flipside Crypto also provides API access via the ShroomDK NFT, allowing users to embed query results in external webpages.
To learn more about Osmosis data on Flipside Crypto, one can read the documentation here: https://docs.flipsidecrypto.com/our-data/tables/osmosis-tables
