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StakerDAO Community Interviews Wrap Up

May 2021

I recently had the opportunity to interview five StakerDAO community members — Jonas Lamis, Luke Youngblood, Nicola Santoni, Spencer Noon, Olaf Carlson-Wee — about their take on DeFi, DAOs, and Governance.

The video interviews and transcripts have all been published here on the StakerDAO Medium site. This post offers a comprehensive look at what we can learn from the insights our community shared.

We welcome your thoughts in return! Crypto governance is a community-driven process; it’s critical to share ideas and learn from one another. That’s why we conducted these interviews in the first place, and why we are eager to share our insights with the larger DeFi community.

Please consider leaving your own comments and questions below!

What Good Governance Looks Like

As an introduction to what good governance looks like, let’s take a step back and consider what Spencer Noon identifies as the three modes of DeFi governance:

  • Hard governance refers to how a protocol changes or evolves at the level of code.
  • Soft governance refers to the way a community builds consensus around changes to a protocol.
  • Meta-governance refers to the deliberation among community members about how governance should work in the first place.

With this framing in mind, we can dig a bit deeper into what good governance looks like in action. What we heard from our community members is that — at a minimum — a healthy governance process includes a diverse set of stakeholders who are both knowledgeable and highly engaged in the process.

Without these features, the process risks being an echochamber of ideas from a small group of insiders instead of a collection of diverse ideas, opinions and proposals. In the worst case scenario, poorly defined governance structures can actually harm individuals and undermine the overarching interests of the community.

As Olaf Carlson-Wee told me, “defining governance very carefully, such that all the participants can align their interests, is critical to getting to increasingly better outcomes, rather than ending in a place where governance can actually hurt the system.”

True growth comes through complexity, which can be messy at first, and that’s OK.

Good governance also prioritizes what’s important, and it acts on those items first, which is in the best interest of the community. As Luke Youngblood mentioned, we would never expect a Fortune 500 CEO to have their board vote on every new hire, much the same way that we wouldn’t want the DeFi governance process to vote on every minor change. Instead, we should define key measures and metrics for achieving community consensus, what to vote on and why.

Healthy, active governance processes evolve over time. What governance and its evolution looks like necessarily changes across projects and protocols. At the same time, this lack of standardization introduces complexities that can inhibit participation among users who have to navigate vastly different governance processes that exist across the DeFi ecosystem. As Nicola Santoni told me, what’s needed is a clearer set of standards for engaging in governance within and across DeFi. We’re not there yet, but the wind is certainly at our back.

In summary, here are a some high-level recommendations to consider when building a governance model:

  • Include diverse stakeholders
  • Build an engaged community of informed voters
  • Align the governance process with the best interests of community members
  • Prioritize what’s important, and move on those issues first
  • Define key measures and metrics for what to vote on, and why
  • Develop a clear set of standards for engaging in the governance process

Now, let’s move on to the proposal, the essential first step in any governance process!

What Makes a Good Proposal?

In brief, a proposal is an idea — generated by a member or members of the community — to pursue a formal project, product or significant feature change or update. In the StakerDAO governance process, the seed of what will become successful proposals are typically germinated in our Discord channel, but they can come about from external conversations with other partners or community members on other channels as well.

Proposals help evolve and strengthen the DeFi ecosystem for StakerDAO and other blockchains, and they are an essential feature of an active and engaged community invested in building the future of DeFi.

“A good proposal is extraordinarily precise, it needs to be extremely clear how the proposal will be implemented.” — Olaf Carlson Wee

In our conversations with StakerDAO Governance Council members, we talked about what makes a great proposal. Below are a few highlights and key takeaways from these conversations.

  • Make risk management a core component of governance
  • Build in a comprehensive audit of the code when relevant
  • Deliver a well researched and supported proposal backed by data
  • Ensure the proposal is technically feasible before submitting

Now that we have some clear insight into building what makes for good governance, with a focus on the proposal — the essential first step in any process — let’s take a look at how mature, cross-chain governance will drive the future of DeFi.

The Future of DeFi

Among the most interesting insights from these interviews came by way of our community members’ responses to the question, “What are you most bullish about in the Defi ecosystem, whether on Ethereum today or any other networks that you follow?”

There was general consensus and enthusiasm around the idea that — in Jonas Lamis’s words — “the future of DeFi is cross chain,” which explains why the StakerDAO community is working to build bridges between the best Proof of Stake and Layer-1 networks. It’s this interoperability or “composability” that will enable assets and values to flow freely across the DeFi ecoystem.

The recent increase in composability across the ecosystem is among main reasons why both Nicola Santoni and Spencer Noon remain bullish about DeFi in general. In a sense, this kind of interoperability is starting to do for DeFi what open-source did for software development: bridges between chains make it possible to borrow from and iterate on the best elements of previous solutions, and this will drive the development of increasingly more efficient products and sophisticated financial instruments.

As Olaf Carlson-Wee notes, DeFi is moving incredibly quickly when it comes to financial product innovation, and that’s why he is excited about governance innovation. Through governance innovation we can better formalize relationships across token holders. Over time we are going to see more complex governance systems that are harder to reason about but are still simple enough to scale significantly and forge a clear path to good outcomes.

The Future of DeFi has Arrived

The StakerDAO community, a DeFi community with interests spread across a handful of L1s, has recently demonstrated that the Future of DeFi has arrived. By leveraging our cross-chain governance model — and continuing to evolve that process in keeping with the insights summarized here — the StakerDAO community has started building multichain DeFi projects.

Our community recently approved a proposal to build the Polkadot Index Network Token (PINT), an on-chain index token for the Polkadot Ecosystem. In this instance, StakerDAO governance brought together community members from two chains — Ethereum and Tezos — to create a new DeFi project on a third chain: Polkadot.

PINT will enable people and protocols to gain diversified exposure to the top projects in the Polkadot ecosystem using transparent and permissionless technologies. New governance models — like the one we’ve built at StakerDAO — will guide the development of similar, cross-chain projects across the whole DeFi ecosystem!

The future of DeFi is here . . . and it’s just begun!



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