Understanding Saddle’s Proof of Governance Guarded Launch
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Over the weekend, the Saddle multisig disabled the Proof of Governance (PoG) requirement that had previously allowed only addresses with proven track records of dapp governance to act as liquidity providers in the Saddle tokenized BTC pool. With the requirement lifted, anyone can now deposit tokenized BTC (and, soon, tokenized ETH and stablecoins) into the Saddle AMM and earn rewards.
When we launched Saddle on January 19, 2021, we implemented Proof of Governance as part of our guarded launch. Saddle’s Proof of Governance allowed users to provide liquidity only if they had previously participated in at least one of the following governance processes:
- On-chain voting or delegation (MKR, COMP, YFI, YAM, CRV, UNI, UMA, Moloch DAO)
- Off-chain voting on Snapshot (all protocols)
- Staking SNX and minting sUSD (>$20)
(The cutoff date for all activity was October 1st, 2020, with the exception of UNI, which was January 1st, 2021).
Now, one month after launch, we are removing the guard to allow anyone to participate in Saddle’s AMM. During the period of PoG, we saw around 500 liquidity providers deposit ~263 BTC ($13.2MM USD) in the Saddle tokenized BTC pool.
We implemented this guarded launch to establish a more controlled environment that allowed us to ensure a stable launch and remain responsible with users’ funds. Our objective above all else was to ensure the application performed to its expectations, users’ funds remained safe, and our community of supporters, developers, and users continue to remain confident in our ability to successfully and fairly launch.
Moreover, we believe Saddle’s Proof of Governance launch signals a larger trend in the Web3 and DeFi ecosystem, especially in the wake of so many new projects launching within the last year: your wallet as an asset. On-chain data availability lets any dapp quickly assess which users have previously participated in any type of on-chain activity, from simple DEX exchanges to more complex governance and DeFi activities. Float Protocol created a whitelist address group based on prior activity, and we’re seeing tools emerge (albeit, somewhat meme-ified) that allow people to establish their reputation without needing to prove their identity.
For Saddle, Proof of Governance was always meant to be temporary, and we’re happy to be able to open up liquidity deposits to the entire community so soon after launch. We, too, think this is a critical component of any future guarded launches. Whitelisted address groups can allow companies to minimize volatility and ensure robust participation in the immediate days and weeks following a protocol launch. However, permanently restricting access to new applications only to those who have been active on-chain in the past is antithetical to the vision of an open, decentralized, accessible financial ecosystem. For our part, we believe decentralized applications that go live with a guarded launch should endeavor to lift the restriction as soon as possible after launch. By being transparent with the community about their intentions, dApp teams can both ensure successful launches while remaining true to core principles of DeFi and Web3.
