Anchorage Digital, a cryptocurrency custody firm serving institutional clients, is set to make waves by integrating the off-chain, gasless multi-governance client Snapshot. This integration will allow its token-holding community users to participate in governance proposals without incurring hefty gas fees. A process that aims to bring greater convenience and accessibility to users, the integration of Snapshot is a move that becomes increasingly important as cryptocurrencies continue to grow in popularity.
Snapshot has already been embraced by decentralized protocols such as AAVE, Lido, and BitDAO. It operates by recording votes off-chain, meaning that transactions are not publicly recorded on the blockchain. This approach’s key advantage is convenience. Anchorage observed that this convenience comes at the cost of on-chain guarantees; however, they believe the free Snapshot voting system justifies this tradeoff.
Currently, Anchorage is supporting over 60 ERC-20 tokens, with plans to expand to all applicable future ERC-20 tokens. The company first stepped into the Asian market in October 2022, partnering with institutions such as Bitkub, DreamTrade, and FBG Capital. As Asia’s consumers have consistently shown enthusiasm for crypto adoption, the move highlights Anchorage’s commitment to global expansion and holistic support in the cryptocurrency market.
Snapshot has been employed by token holders for decisions regarding upgrades and governance proposals, such as the recent vote on AAVE and LDO tokens. The off-chain voting platform has also proven beneficial to users who have mistakenly sent tokens to the wrong address. An example of this occurred in July 2022, when LidoDAO conducted a Snapshot vote on sending 1% of LDO’s token supply to DragonFly Capital for $14.5 million. The proposal, however, was rejected by token holders.
On the other side of the coin, using an off-chain governance system like Snapshot raises concerns around centralization and potential security risks. Anchorage acknowledges that decisions are typically enforced by a multisig operated by the protocol team. As a result, there is a certain level of trust that must be given to the protocol team in order to maintain the system’s integrity.
This decision highlights a larger debate in the cryptocurrency world, pitting DeFi (decentralized finance) against CeFi (centralized finance). Snapshot’s adoption by Anchorage can be seen as a push towards more accessible and convenient voting methods, though it could come at the expense of decentralization. While this move by Anchorage may be well-received by many users, the debate over DeFi vs CeFi will likely continue.
In conclusion, Anchorage Digital is making a bold move by integrating Snapshot voting into their platform, allowing institutional clients to make governance decisions without the burden of gas fees. However, this decision sparks an ongoing debate in the realm of cryptocurrency, as the desire for convenience and accessibility must be balanced against the inherent philosophy and security guarantees of decentralization.
Source: Cointelegraph
