[Discussion] Centralization in Index Coop Governance

Authors: @jackiepoo, @alexwdong (AWG)
Written: 2021-12-14, Data pulled as of 2021-12-09


While it is well known that the INDEX token distribution is heavily weighted towards investors (VCs, OTC trades) and founders (Set, DFP) over contributors (Jack has written about this here ), in practice, most token voters do not participate in most proposals, and as a result the largest holders do not actually dominate the IIP process the way the token distribution would suggest.

Alex and I decided to study what actually happened historically for Index Coop’s Snapshot proposals, and objectively measure participation and centralization in Index Coop’s governance process. We used Snapshot’s GraphQL API and downloaded all of Index Coop’s voting activity, and did some number crunching. This is best summarized in the following table:

Table 1: This counts the number of proposals in each category. “No Quorum” indicates when proposals don’t reach quorum. The “Has Deciding Voter” column indicates how many proposals were decided by a single vote.

First, Index Coop has a participation problem, with a large number of proposals unable to reach quorum. This problem is especially bad with Metagovernance.

Second, of the proposals that do reach quorum, half the time they are “decided” by a single vote. In our terminology, a “deciding vote” is a single vote that is on the winning coalition that, if it had decided to vote the other way, would cause the other side to win. In other words, a deciding vote is a vote that wins no matter which way it votes on that proposal.

Third, there are only nine voters who ever got to be the “deciding vote”. Most of them we actually already know and have informal relationships with, for example, 1kx. In fact, when there are important IIPs that we need passed, since we (the contributors) don’t actually have enough votes to reach quorum, we will often reach out to these voters to help us avoid deadlock!

What’s on display here is a dysfunction in the IIP governing system, where the people who are executing (the contributors) are consistently unsure if they will have the mandate to execute on anything unless they have the backing of specific activist whales who have the voting power to swing entire proposals. This has not been a problem large enough to threaten the legitimacy of the voting process so far, but is a significant vulnerability in our system.

Our recommendations:

  1. Move decision making power out of the IIP process and delegate it to formal bodies of contributors. This is already happening - for example the Metagovernance Committee was formed precisely to allow Index Coop to exploit its metagovernance power when the proposal does not reach quorum. We also recently formed a Wise Owls committee that was selected entirely by the contributors, and thus we formed an alternative body that can create mandates without needing the input of token holders. Index 2.0 was conceptualized precisely to advance this objective.
  2. Formalize and make transparent our relationships with activist whales. A prime example here is 1kx. They are an activist whale who consistently swing the results of our proposals, but they have no formal position in our org structure. My proposal is to create something like a board of directors, with whom we can have dialogues with, and represent directly the views of token holders who dominate the IIP process regardless.


The key thing we are looking for in the data are what we call “deciding voters”, which in voting theory are called “critical voters”. A voter is considered a deciding voter for a proposal if:

  • They were on the winning side of a proposal
  • Assuming everyone else’s votes stayed the same, if they were to change sides, they would cause the proposal’s result to change with them, meaning that they would still win

In voting theory, deciding voters are contrasted with “dummies”, who are non-critical voters. A “dummy” is a voter whose contribution is individually non-essential to the outcome of the vote. This is not necessarily a bad thing - a large scale democratic election, ideally, consists of 100% dummies, wherein there is no person who single handedly makes the difference between victory and defeat. Therefore, it’s less that having dummies is bad, but more that the presence of deciding voters is indicative of the centralization of power.

An existing way to summarize the power differential between voters is the Banzhaf power index, which estimates the probability that a given voter will be the deciding vote based on voting power. See: Wikipedia, Jake Brukhman applied this concept to MolochDAO

There’s a few problems with this model for our use case. One is that it equally weighs all permutations of voting preferences, which does not reflect reality (46% of our proposals are unanimous). More importantly, however, the Banzhaf power index assumes everyone participates, whereas in Index Coop specifically and across DAOs generally, most voters (by token weight) do not participate. Quorum for Index Coop is 5% of circulating INDEX, and most proposals struggle to reach even that.

Thus, metrics like the Nakamoto Coefficient that imagine a supermajority of the largest whales colluding with one another are completely theoretical and don’t capture the reality on the ground. In truth, one could dominate the IIP process with only 2.5% of the INDEX, assuming you reach quorum and are the biggest fish in the voting pond. More importantly, it’s relatively predictable whether or not voters participate at all, with the vast majority of potential voters not participating.

It’s best to look at the historical votes and actually measure who the deciding voters were and how often they decided the outcomes.

Methodology and Findings

What follows is a more detailed description of our methodology, assumptions, and findings. You can line this up with the code that’s in the Python Notebook in the Analytics repo.

Using GraphQL, we first pulled a list of all proposals from Snapshot. Then, we iterated over the proposals and pulled each individual vote for each proposal and collated it into a large data frame. From there, we can group and pivot by either proposal or by voter.

Data Processing steps:

  • Proposals with total 0 votes are ignored as either test proposals or Snapshot data not fully propagated
  • All proposals pass with 50% majority except for DG2, which requires 60% majority
  • Quorum is set at a flat 100k INDEX across all proposals (we know this is not strictly true, but I think it’s a close enough approximation)
  • Multi-choice poll style proposals were excluded
  • For binary proposals, the first choice is FOR, the second choice is AGAINST. Specifying this is important - for all historical proposals in our analysis this is true, but future proposals may swap this order if we’re not careful.
  • Proposals were categorized as IIP, DG1, DG2, or Metagovernance based off the presence of specific substrings in their titles


We’ve made all of the processed and pivoted data available in a spreadsheet here, that you’re free to copy and pivot to your heart’s content. I’m sure there are more ways to slice the data up that we haven’t done in this report.

Proposal Level Findings

Table 1 replicated from summary for convenience.


There are quite a few proposals that fail to reach quorum. The No Quorum rates are as follows:

  • DG1, 5 out of 19 = 26% No Quorum
  • DG2, 2 out of 12 = 17% No Quorum
  • IIP, 8 out of 73 = 11% No Quorum
  • Metagov, 81 out of 102 = 79% No Quorum

We talked to the Governance Working Group (GWG) about this. Anecdotally, everyone already knows this is an issue. The GWG pointed out that the Metagovernance Committee was formed precisely to allow the Index Coop to act when the voters are apathetic about the outcomes of the Metagov proposals, and furthermore when it came to other critical votes, we would proactively reach out to activist whales that we trust and have them push proposals through to reach quorum.

Deciding Voters / Decision Centralization

Among the votes that do reach quorum, about half the time the votes are dominated by at least one deciding voter, which we term “centralized”. The Deciding Vote Rates are as follows:

  • DG1, 8 out of 14 = 57% centralized
  • DG2, 5 out of 10 = 50% centralized
  • IIP, 30 out of 65 = 46% centralized
  • Metagov, 10 out of 21 = 47% centralized

Of the 53 proposals that were centralized, only 51 of them had one deciding vote, and 2 had more than one deciding vote. One proposal had 2 deciding votes, and one had 3 deciding votes. If a proposal has more than one deciding vote, that means a vote was close enough to the margin that multiple whales were needed in collaboration to make the decision go in that direction, and if any of them defected, the defector would have changed the outcome.

We decided to smooth all that out so that each proposal could be categorized as either having a deciding vote or not.

Voter Level Findings

When we group the proposals by voter and whether or not they were deciding voters or not, we find that only 9 addresses ever manage to be the deciding voter, but the distribution of decisions among those 9 addresses is also highly unequal, both along voting power lines as well as participation lines.

Table 2: This is a partial table showing all of the users who were deciding voters and some of the users who were not. “vp” here stands for “Voting Power”, i.e. the IndexPowah that they had. This amount can fluctuate across the various proposals each user votes on, so we summarized it as mean, minimum, and maximum across all the proposals they voted on.

There’s a clear difference between, say, 0x8627 that voted 33 times and was the deciding voter 100% of the time, vs. 0xaAa6, who voted 40 times, a quarter of those proposals failing to reach quorum, and only was the deciding voter once. There’s obviously a threshold minimum voting power required to even have a chance to be the deciding voter (empirically, about 24k INDEX).

Furthermore, there’s a clear difference between 0x3650, with 196k INDEX but only voting 6 times and was the deciding vote each time, and 0x4a3e, with 71k INDEX but voting 20 times and was only the deciding vote 8 times.

Evidently, included in this list of 9 is a band of “dolphin” type voters who are highly active, contribute to many votes, and as a result end up being the deciding vote sometimes or another, especially on closer margin votes. I think that’s less of a concentration of power than the voters with nearly 200k INDEX who essentially single handedly make decisions.


My (Jack’s) recommendations come from a place of minimizing governance dysfunction and trying to empower contributors to have the latitude to grow Index Coop without legislative deadlock. Put another way, I do not think the centralization of power is inherently bad - it’s only bad if it leads to perverse outcomes. Given the structure I see right now, there’s two main dysfunctions in the IIP governance system:

  1. Contributors do not have the ability to make decisions on their own, as evidenced by the high rate of proposals that do not hit quorum
  2. De facto nexuses of power can make single handedly make decisions, but there’s no mechanism to make these decisions transparent or accountable

These dysfunctions are a side effect of the one token one vote (1t1v) system that we’re using today. 1t1v has a lot of advantages, in that it’s a very simple way to create a legitimate group consensus, but as we’re growing as a DAO we have the opportunity to amend it to make something better.

Correspondingly, my recommendations are to rely less on 1t1v for operations, and formalize the positions of powerful activists to make their voices and decision making process clear, transparent, and accountable.

To be clear, as we get into recommendations we are moving away from concrete data and more into Just My Opinion, so obviously all of this stuff is up for debate and discussion and I welcome everyone’s thoughts on the matter.

Recommendation 1 - Rely less on token voting for operations, delegate more decision making power out of the IIP process

This is something that everyone already recognizes and we are actively taking steps towards - I just wanted to reiterate that this is the path forward, and the stakes are avoiding centralized IIP processes and proposals that fail to reach quorum. The Wise Owl council just started and we’re already seeing pods reorganize around them - for example the Liquidity Pod intends on using the Wise Owls as our legitimacy anchor rather than having to go back to IIPs all the time. Furthermore, the Metagovernance Committee was formed precisely to deal with the lack of quorum and interest in metagovernance votes.

This is great. We should keep doing this, and continue to experiment with delegating authority to accountable groups of contributors. There’s a risk we might overdelegate, but we can deal with that when that happens.

Recommendation 2 - Create a board for activist whales

This specific idea I haven’t seen floating around anywhere, so I’m interested in seeing what other people think about it. Essentially, my thought process is, if everyone knows we’re already counting on 1kx to push proposals through, and whenever they vote, they decide the result, why don’t we make that decision-making position transparent and official? They seem to have the willingness and the interest to consistently pay attention to our governing process, so I think we should actively cultivate a dialogue with them.

What I want to avoid is having backchannel relationships with 1kx, where specific individuals have a privileged relationship with the 1kx representatives. If 1kx is going to be a core part of our voting system, their thought process should be public, in exchange for prioritizing their perspectives. This would be a real benefit for the legitimacy of IIP proposal outcomes. Furthermore, for crucial proposals such as a compensation proposal, we could be explicit about gathering feedback and buy-in from the board.

The board should not simply be whales. It should have activist whales who have the interest to be active in our governing system. Right now, it seems like that’s just 1kx. But if other investors start to show more interest, I think it makes sense to start including them in the board as well.

Not recommended - an INDEX airdrop does not fix the IIP process

To be clear, I am fully in support of Pepperoni Joe’s super detailed and workshopped Community Ownership & Compensation plan here: Community Ownership & Compensation | V2 Proposal

Not only is it a staggering work of incredible cat herding, I think it’s a broadly good idea, because it enables additional compensation for additional labor and rewards the contributors properly for the work that they’ve been doing building the Coop. If the question is, “should we pay contributors more to incentivize more high quality labor,” the answer is a resounding yes.

However, “paying contributors more” is emphatically not a solution to concentrated voting power in a 1t1v system. I would go so far as to say that plutocratic vote concentration in a 1t1v system is capitalistically inevitable.

In any decision making system, what we want to ideally do is to gather power with people that we trust to do a good job, and provide mechanisms to control the damage if we end up trusting the wrong people. Providing more voting power to people that we trust does make intuitive sense, but raises a whole bunch of other hairy questions. Who gets the airdrop? How much? How do we make sure they’re not incentivized to just dump their tokens as soon as they get it? PJ has put a ton of work into building the mechanisms in the above proposal to tackle these questions fairly, and that’s purely from just a contribution reward perspective. He’s not considering at all whether or not the amount being distributed is enough to solve our governance deadlock and centralization problems.

Final thoughts

Overall, the IIP system has been working mostly okay and we have not yet seen any governance failures that are threatening to the legitimacy of the system. When we look at the voting patterns, we see consistent weaknesses, like consistent failure to reach quorum and centralized decision making from specific large activist whales. This points to a potential vulnerability in our governance, but doesn’t delegitimize any of the decisions we’ve made so far - we’ve been really lucky that the whales involved have been generally constructive and helpful for us. We have time to put into place structures that can help us grow as a DAO.

Would love to hear your thoughts on this below. Also, if anyone has connections to other DAOs that could use this kind of analysis, it turns out that the code is pretty reusable and I’d be happy to re-run this analysis or help other people fork the analysis for their own governing systems.


This is a great initiative, Jack.
While there’s work being done around Recommendation 1, Recommendation 2 needs special attention.
Instead of backchannel relationships with our whales(who may change as we grow), they need be given an active role in the community channels. This would help align goals in terms of Products, Growth, and the business as a whole.


This is (unsurprisingly) another superb analysis out of the Analytics WG. Great job. The conclusions match what many in the community have suspected regarding participation and the sensitivity of single whale voters to the ultimate outcome.

With respect to the two proposed recommendations, though, there are live initiatives in both cases, so I was personally left wondering what actual actionable next steps there would be after reading this.

As you’ve said, this is already happening. Index Council and the Metagovernance Council are each a response to the governance issues you’ve observed in your analysis.

This is also happening. There has been an active investor relations effort run by @bax86 where he coordinates calls with these entities: 1kx, Sequoia, Galaxy, etc. Community members have had an open invitation to join these public calls since late summer. Typically, only 2-5 community members end up attending from what I’ve observed. A takeaway here could simply be to remind the community that these calls have been happening regularly, are open to community members, and to connect with Luke if you’re interested to learn more.

Joe and I presented the evolving proposal on those recurring investor calls over the last two months and made reference to gathering that investor feedback in the recent compensation post and on weekly Leadership Forum calls. This was part of a broad effort to gather feedback on the proposal from across the entire Index Coop community - not just from the participants from the Treasury diversification - but the VCs were a key consideration in part because they are such active voters.

A bit of a strawman here. “Should we pay contributors more?” wasn’t the question we posed. Rather, we asked:

  • How do we attract and retain top talent? and
  • How do we put more ownership in the hands of the community, particularly those that are the highest value contributors?

The latest Community Ownership & Compensation post lays out an aim to distribute a total of 22.5% of the overall Index token supply over a multi-year period, using the combined airdrop and dynamic staking model as the tools to do so. The dynamic staking model is purposefully structured to reward continued ownership to disincentivize selling. The proposed construct will admittedly (but also purposefully, for sustainability reasons) take years to achieve its 22.5% target. While it may still not singularly solve the governance problems you’ve laid out, community ownership is a primary motivation, and (I’d argue) it moves us meaningfully in the right direction.


Great to hear that it’s all being acted upon! I personally am not in the room for a lot of those other discussions - I provided as much context as I knew about. Given that we’re already working on a lot of these initiatives, I think the analysis provides two things:

  1. a concrete sense of urgency as to the problems we’re trying to address
  2. a concrete metric of what to measure as we evaluate how well we’re doing in addressing those problems

As we move forward, we can continue monitoring the degree to which we struggle to reach quorum or the degree to which proposals are dominated by non-board activist voters.

Re: the airdrop, I definitely agree that I laid out a false dichotomy and that everything is a matter of degree - I probably overstated my case to simplify my point. Clearly if we distribute more voting power to active contributors then we’re moving in the right direction. I simply didn’t want to use token distribution as an excuse to not move beyond 1t1v decision systems. Obviously we’re not in that situation - we’re building everything out all at once, which is awesome to see.

Thanks for all the context!


Absolutely, Jack. And I agree that objective metrics like what you’ve laid out in this analysis will serve as the guidepost for whether or not the community ownership initiative is truly moving in the right direction. Looking forward to a future iteration of this analysis to see how we do to improve.

We could use the Gini Coefficient which is what most universities use to perform analysis on governance token distributions. But your analysis fails to capture the most important voters who are not participating or are less active due to optics.

All roads lead to a 28% captured INDEX governance token. It is further gamed if you think of early farmers having allegiance to a particular founder. The typical rational witnessed across the industry is that employees of companies underneath a DAO structure, ie: entity before the DAO was formed, or in INDEX instance founders goes as follows:

The founder is a start up and start ups normally offer employees vested equity which is a common practice in web2 and web3. Those employees would have had the inside word on DPI and INDEX’s launch. The very aggressive bootstrapping of DPI was by design, and if we all new about it at the time, we sure as anything would have farmed everything we could. After all, the DeFi farmer strategy was well know by then.

When employees vote in line with the other investment (capital in the start up they work for), we end up with a lot of proxy voters. So we have early farmers who are affiliated with an employer, who benefit by driving value to the entity whereby they have the most equity. In this instance, thats the founder which still operates within the sub structure under the DAO, pre-token. The question then becomes more philosophical as to why they vote and which way they vote. Do they conspire, vote as a block or do they each person look at everything on its own merits in isolation to everything happening around them. Who knows.

Furthermore, if we want to be super cynical, any overlapping major investors are in a unique position. Voting on Index Coop knowing the direct impact it could have on their other investment. A pure profit driven actor will favour wealth accumulation in their largest holding. Most are not pure profit driven, so do keep that in mind. Some of those early investors in our founders were also amongst the largest DPI farmers and later VC investors in IC and also very active in Index Coop’s governance. Btw if I had pockets that deep, I would have done the same thing.

Remember all the concentrated staking contract analysis and huge push from a certain individual to maintain LM rewards despite it be an absolutely horrid economic outcome for Index Coop.

Both founders don’t vote with their vested tokens, but early farmers do and not all have the same morals or value driven conclusion.

Unless the plan is to redistribute the token, effort applied here won’t lead to any meaningful change. We can drop a huge amount of tokens to contributors and they’ll get dumped. Tax liabilities and things like holding a lot of personal wealth in a high vol governance token, probably isn’t the most rational, financial prudent life decision. Retention of the airdrop is going to be heavily reflective of someones desire to hold a minimum balance and then it’ll be heavily reliant on how much disposable income / other investments that person has. The person in their early 20s, no house, a desire to travel and likes new cars etc… that person is not holding much of the airdrop and neither is the the average household with a tonne of debt (mortgage). I firmly believe the airdop won’t move the dial on this topic and neither will the DSM. Owning a decent portion of a quorum vote is worth too much money for the vast overwhelming majority of retail to hold, thus it will be sold more so than the monthly contributor rewards.

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So I’ve looked at it a bunch of ways, and I basically find the Gini Coefficient to not really be helpful for what we want to measure, whereas I feel like the metrics that I lay out in this post (proposals not reaching quorum, proposals being dominated by a single voter) are directly measuring outcomes that we do not want. Vitalik breaks down the Gini Coefficient in one of his posts, and I broadly agree with him. One of the things he says is that the Nakamoto Coefficient is a reasonable and simple way to measure concentration. The reason why I ended up doing this whole detailed analysis is because, in my opinion, even the Nakamoto Coefficient is not good enough - the voters that HAVE a lot of tokens are not actually USING them to vote in our actual proposals.

I’m afraid I don’t fully follow the logic of the super-cynical situation you’re describing. I’m writing about voting power concentration in our actual proposals, which by design doesn’t capture the activity of important “voters” who are not actually voting, because if they are not voting, they cannot influence the result of a particular proposal. Certainly there’s some power in optionality that’s not being captured here - perhaps there’s some shadowy super-voter that looks at the outcomes of the votes and only puts its finger on the scale when it’s not going the way that they want. But my measurement would capture every time the shadowy super-voter puts their finger on the scale, and then they would show up among the 9 addresses that decide proposal outcomes.

We can figure out who those 9 people are and make a board out of them, if we want to. If we see single individuals dominating our voting processes, we can try to create a structure that incentivizes transparency and accountability from them. And if the shadowy super-voter never actually dominates a single vote, well, are they really manipulating anything then?

De facto political parties is also something that my analysis did not look into - given the lack of quorum and then general low participation in proposals, I don’t think we have enough data to create a robust defensible quantitative estimation of this. If anyone has any ideas on how best to tease out political parties from the data, happy to hear if anyone has any ideas on this front.

I will say this though - if objectively we’re not reaching quorum like 1/3 of the time, and 1/2 of the time we DO reach quorum it’s basically 1kx granting enough votes to make a particular vote pass, it sure doesn’t seem like we have some influential cabal of voters pulling the strings behind the scenes. If you measure the outcomes of our voting process objectively, what it LOOKS like is broad apathy from token holders except a select few and a general difficulty for most active voters to reach quorum.

Based purely off of token ownership, your point is accurate. However, I will reiterate that this is why my analysis focused on the votes that actually happened in the past - if we have early farmers dominating the voting process, we should see it in my measurements. I don’t think we really see evidence of early farmers being active in governance. If you disagree, all the data I used for the analysis is public, and we can go look for some suspicious addresses.

I understand this concern, and I think I broadly agree (even if i’m a bit less pessimistic on the dumping behavior). I don’t think an airdrop is a core solution to our governance problem. Insofar as I think it would help a bit, it should tilt the scales a little bit to make it easier for contributors (who are active voters) to reach that pitiful 5% quorum. But the general point on the inevitability of inequality and the inevitability of voting capture I think i broadly agree with, which is why I want to make a structure that provides some checks on the people who dominate our proposals.

Overall, I think the analysis is objectively measuring what’s actually happening in our governance, and showing that the biggest governance problems on our plate are legislative deadlock due to apathy and a correspondingly high level of voting power concentration in the few whales who are not apathetic. Any other large governance problem should be observable in our voting patterns, and I’m happy to take feedback on how we can find and measure them.


We should open to the possibility of a vote delegation structure, ENS style. Not every holder has the time to read the forum and the proposals, but would happily delegate its voting power to a member of the Coop with aligned views. I voted to several proposals but missed as many due to lack of time, and I would personally delegate my votes (2k~INDEX) to Matthew.


Interesting. We have delegation functionality in snapshot already, so if you wanted to delegate to Matthew you already can. Do you know if there’s anything different about the ENS delegation structure from what we already have?

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@jackiepoo Love this, elegant analysis of where our governance strengths and weaknesses lie

33 deciding votes suggest you have identified at least one not so shadowy super voter @jackiepoo. And I’d love to see these people recognised as KEY members of our community but (and this is just me guessing) I suspect they might fall on the wrong side of the decentralization argument, and I’m all for decentralization, but not at the cost of isolating ourselves from our key stakeholders (founders/investors/supporters).

Keen to see how the council executes sans board level. But from a communications perspective identifying and engaging with stakeholders is a proven, effective means to build shared understanding and alignment on issues that matter. Even with the generous move of 1kx to delegate voting power back to the community, I feel we can continue to enhance stakeholder communication, to build context and awareness for us all.

Just off the top of my head the communication process could look like developing a feedback loop > One forum post: meeting agenda, share via newsletter/Scoop, Discord & Telegram, Socials? > meeting > forum update: meeting summary, gather community questions for next session, advise next meeting date > forum update: Meeting agenda…

Thanks for the heads up on this @Metfanmike this is the first I’ve heard of the meetings with active investors as ongoing (think I’d seen one and thought it was a one-off) perhaps because of my timezone, missing messages in discord? Agree there’s an opportunity to raise awareness of these meetings.

@Deronte big fan of liquid democracy, I looked at delegating too, gas fees = reject


Disclaimer that this is a post for the Bronze Owl Quest.

Given that I have only spent about a month in index, I do not have full grasp of the state of the project.
Having witnessed low voter turnout in other protocols, I am not surprised by how low the participation is, but it is nice to see the data.

It is frankly quite sad to see that so many proposals cannot make it past quorum, and strengthens my conviction that governance is, contrary to prevalent narrative, more of a liability rather than right. But these are discussions beyond index and pertains to all forms of governance with the token model.

Since delegation is already available, I will only comment on the second recommendation. Given that sufficient participation is something that is not on the horizon, it is fair that we are focusing on reaching the quorum first, despite that there very possibly can be incentive misalignment between the whale and the project.

I have not read up on the latest initiatives to increase voter turnout, but I do hope to be able to contribute on that front, as it will be the best solution to this conundrum.


Love the suggestions above, but I’m worried that this is essentially going to remove the possibility for grass roots decisions in favour of large stakeholders.

While it’s evident that most people don’t care enough most of the time to vote, there always remains the possibility that they might. That feels like an important “checks and balances” type of mechanism …

Would that be lost in your proposals?

If even the potential of a grass roots action from the broader token holder community gets lost, I wonder what the effects of that on token valuation in the secondary market would be?

Just for the record, the power triplet of

  • Incentivised vote delegation
  • quadratic voting
  • proof of humanity

still seems like a best of both worlds path forward! (vitalik: [1] [2])



I just want to clarify, since this particular post is very much a part 2 of my “on token governance at Index Coop” series - the problem is not that contributors are not voting. it is that token holders are not voting, and contributors are not large enough token holders to consistently reach quorum independently. This dynamic is somewhat built into the genesis distribution and the way that we have been distributing tokens to contributors as payment for labor, whereas most of the token holders got their tokens by straight up buying the INDEX token. So when I say “voters are not turning up”, what I actually mean is “token holders are not turning up”, and I genuinely think a lot of token holders have very good and very rational reasons to be completely disengaged from the voting process, trusting more informed voters to take the reins. It takes a lot of work to be as educated and engaged as 1kx has been, and I cannot expect that out of all of our investors.

As for governance being more of a liability, I actually somewhat disagree. Considering that fundamentally what we’re trying to solve is a coordination problem, token voting has been exceptional at building legitimate consensus without there needing to be a strict hierarchy. I come from the startup world, which is “flat” but still highly hierarchical, and you need a founder/CEO to build consensus. The fact that we can build consensus without someone playing that role at Index Coop is incredible. Starting from that baseline, Index Coop is doing great.


Totally get the concern, and it’s a reasonable one. I’m essentially proposing to shift more power away from the directly democratic (plutocratic?) IIP process.

My proposals so far essentially boil down to:

  • “give power to those who have context” (delegate power to contributors)
  • “Create context for those who have power” (formal transparent board for activist whales)

while basically leaving the IIP system otherwise untouched. In that sphere, if there was a broad based token holder revolt or re-prioritization that occurred, the IIP system would still work, and would still be the final word. It’s worth noting that 0x8627 is the deciding voter most of the time, but they by no means have a majority of the circulating INDEX - they have 188k out of more than 2M circulating INDEX. So if other voters were extra motivated and wanted to overrule 0x8627 on a vote, they totally could, even if 0x8627 had a position “on the board”.

As for cutting edge voting mechanisms, I think they’re broadly good ideas, but they bump up against the inherently social nature of voting as consensus-building. The more complicated a voting scheme is, the harder it is to defend it against legitimacy challenges. For example, let’s say we implemented a proof of humanity & quadratic voting system, and then after a heated proposal, the losing group accuses the winning group of sybil attacking the voting system. How would we adjudicate this? What sort of institutions would we need to support it? What’s nice about the current token voting system is that, as flawed as it is, it is unassailable, and we don’t need institutions to defend the election integrity.

I’m not saying it can’t be done, but I think there’s a really good reason why none of the major DAOs today are using proof of humanity & quadratic voting (is gitcoinDAO doing quadratic voting? if even they’re not doing quadratic voting then it’s REALLY not ready), and it’s still primarily in experiment mode. It’s not clear yet what the best practices are in terms of building institutions that can defend the integrity of these more sophisticated elections. I also think quadratic voting mitigates, but does not solve, the problem of capital inequality leading to voting power inequality.

Incentivizing vote delegation is interesting - I haven’t thought deeply enough about it to say if I like the idea or not.