On-chain voting is broken because gas fees on Ethereum mainnet create a prohibitive tax on participation. A single vote can cost more than the value of a user's holdings, turning governance into a plutocracy of whales and delegated professionals.
public-goods-funding-and-quadratic-voting
Blog
Why Layer 2 Solutions Will Democratize On-Chain Voting
The high cost of on-chain voting has created a governance plutocracy. This analysis argues that sub-cent transaction fees on rollups like Arbitrum and Optimism are the critical infrastructure shift needed to enable mass participation, unlock quadratic voting models, and sustainably fund public goods.
introduction
THE COST BARRIER
Introduction
High on-chain transaction fees have made direct governance participation economically irrational for most token holders.
Layer 2 scaling solutions fix this by reducing transaction costs by 10-100x. Protocols like Arbitrum and Optimism shift governance execution to their low-fee environments, making frequent, granular voting economically viable for the first time.
The shift enables new governance primitives. Projects like Snapshot with L2 execution and StarkNet's native account abstraction allow for complex, gas-optimized voting strategies and batching that are impossible on mainnet.
Evidence: Voting on Arbitrum One costs under $0.01, compared to $50+ on Ethereum during congestion. This 1000x cost reduction is the prerequisite for mass-scale, direct democracy in DAOs.
thesis-statement
THE ECONOMIC BARRIER
The Core Argument: Fees Are the Friction, L2s Are the Fix
High Ethereum mainnet fees create a plutocratic voting system, which Layer 2 scaling solutions directly dismantle.
On-chain voting is currently plutocratic. A single proposal vote on Ethereum L1 costs $10-$50, pricing out all but whales and treasuries.
Layer 2s reduce cost by 10-100x. Voting on Arbitrum, Optimism, or zkSync costs cents, not dollars, enabling participation from smaller token holders.
This shifts governance from capital to consensus. Low fees allow for frequent, granular voting on proposals, airdrops, and protocol parameters previously deemed too expensive.
Evidence: Snapshot off-chain signaling sees 10x higher participation than on-chain execution. L2s make that on-chain execution economically trivial, merging high participation with finality.
key-trends
WHY L2S WILL UNLOCK MASS VOTING
The Three Trends Converging
On-chain governance has been a niche activity for whales and degens. Three infrastructural shifts are about to change that.
01
The Problem: $100 Votes on Ethereum
Submitting a single vote on mainnet can cost $50-$200 during network congestion. This prices out the long-tail of token holders and centralizes power.
- Result: <1% of token holders typically participate in major DAO votes.
- Consequence: Governance is captured by large, often passive, capital.
$50-$200
Vote Cost
<1%
Participation
02
The Solution: Sub-Cent Voting on L2s
Layer 2s like Arbitrum, Optimism, and zkSync reduce transaction costs by 100-1000x. Voting becomes a negligible expense.
- Enables: Frequent, granular votes on proposals, grants, and parameters.
- Unlocks: Quadratic voting and other sophisticated mechanisms previously too expensive to run.
~$0.01
L2 Vote Cost
100-1000x
Cheaper
03
The Enabler: Account Abstraction & Gas Sponsorship
ERC-4337 and native L2 account abstraction allow protocols to sponsor gas fees for voters. This removes the final UX friction.
- Mechanism: DAO treasury pays for voting transactions via Paymasters.
- Impact: Voter experience mirrors Web2—one-click, zero-cost participation.
$0
User Cost
ERC-4337
Standard
04
The Catalyst: Cross-Chain Governance Aggregation
Tools like Snapshot X, Hyperlane, and LayerZero enable votes to be cast on an L2 but executed across multiple chains. This solves fragmentation.
- Solves: Voter fatigue from managing votes across Ethereum, Arbitrum, Polygon.
- Enables: A single, cheap vote on an L2 to govern a multi-chain treasury.
Multi-Chain
Execution
1 Vote
To Rule All
GAS COST BREAKDOWN
The Cost of a Vote: L1 vs. L2
A direct comparison of the financial and technical barriers to on-chain voting, demonstrating how Layer 2s like Optimism and Arbitrum reduce costs by >99%.
| Metric | Ethereum L1 (Mainnet) | Optimistic Rollup (e.g., Optimism) | ZK-Rollup (e.g., zkSync Era) |
|---|---|---|---|
Average Vote Cost (Gas) | $40 - $120 | $0.02 - $0.10 | $0.01 - $0.05 |
Finality Time (to L1) | ~12 minutes | ~1 week (Challenge Period) | < 1 hour |
Throughput (Votes/sec) | ~15 | ~2,000 | ~3,000 |
Sybil Attack Resistance | ✅ (Cost-Prohibitive) | ✅ (Inherited from L1) | ✅ (Inherited from L1) |
Native Smart Contract Support | ✅ | ✅ (EVM-Equivalent) | ✅ (EVM-Compatible) |
Voter UX (Wallet Pop-ups) | ❌ (Multiple Required) | ✅ (Single, Batched) | ✅ (Single, Batched) |
Protocol Examples | Compound, Uniswap | Aave, Velodrome | zkSync native DAOs |
deep-dive
THE GOVERNANCE SHIFT
From Plutocracy to Quadratic Democracy
Layer 2 scaling transforms on-chain voting from a capital contest into a mechanism for measuring authentic community preference.
Plutocracy is a gas fee problem. On-chain voting's high cost on Ethereum mainnet creates a participation tax, favoring large token holders who can absorb transaction fees and disenfranchising smaller stakeholders.
Cheap L2 transactions enable micro-governance. Networks like Arbitrum and Optimism reduce voting transaction costs from dollars to fractions of a cent, making frequent, granular polls economically viable for all token holders.
Quadratic voting becomes practical. Previously a theoretical ideal, systems where voting power increases with the square root of tokens committed require many low-cost transactions. L2s like zkSync and Starknet provide the throughput and low fees to implement this at scale, diluting whale dominance.
Evidence: Snapshot x L2 integration. Governance platforms like Snapshot are integrating with L2s, enabling off-chain signaling with on-chain execution via bridges like Hop or Across, creating a seamless, low-cost governance stack that didn't exist before scaling solutions.
protocol-spotlight
WHY L2S WIN ON-CHAIN VOTING
Protocols Building the L2 Governance Stack
Mainnet governance is a luxury good. L2s are building the infrastructure to make it a public utility.
01
The Problem: $100 Votes on Mainnet
On-chain voting on Ethereum mainnet is economically impossible for most token holders. A single proposal can cost $50k+ in gas for the DAO treasury, disenfranchising smaller participants.
- Cost Barrier: Gas fees exceed the value of small holdings.
- Low Turnout: Creates governance by whales and delegates.
- Slow Cycles: Days to finalize, killing momentum.
$50k+
Proposal Cost
<5%
Avg. Voter Turnout
02
The Solution: Hyperstructure Governance (e.g., Optimism, Arbitrum)
L2s like Optimism and Arbitrum provide a permanent, free-to-use settlement layer for governance actions. They turn voting into a public good.
- Sub-Cent Transactions: Vote with any token balance.
- Sovereign Security: Inherits Ethereum's finality, not a committee's.
- Composability: Enables novel primitives like Snapshot X and real-time governance integrations.
<$0.01
Vote Cost
~3.2s
Block Time
03
The Enabler: Specialized Voting Rollups (e.g., Aragon, Vocdoni)
Protocols are building application-specific rollups solely for governance. Aragon's zkRollup and Vocdoni decouple voting from financial settlement for maximal scalability and privacy.
- Gasless UX: Sponsors pay fees, voters sign free messages.
- ZK-Proofs: Enable private voting and Sybil resistance.
- Modular Design: Plug into any L1 or L2 for settlement.
~500ms
Vote Latency
Zero-Knowledge
Privacy
04
The Future: Cross-Chain Governance Aggregation
L2s are the logical hub for managing multi-chain DAOs. Platforms like Hyperlane and Axelar enable secure messaging, letting an L2-based DAO execute votes across Ethereum, Arbitrum, and Polygon.
- Single Voting Interface: Manage all treasury actions from one chain.
- Atomic Execution: Vote triggers cross-chain transfers via LayerZero or CCIP.
- Risk Isolation: Governance compromise on L2 doesn't drain mainnet assets.
10+
Chains Managed
-90%
Ops Overhead
counter-argument
THE COST OF ACCESS
The Devil's Advocate: Cheap Votes, New Problems
Layer 2 scaling reduces voting costs by 100x, but this creates new attack vectors and governance complexity.
Cheap transactions enable cheap attacks. The primary security model for on-chain governance is economic finality. When voting costs drop from $50 on Ethereum to $0.05 on Arbitrum or Optimism, the capital required for a Sybil or 51% attack plummets proportionally.
Governance becomes a speed game. Fast, cheap L2s like Base or zkSync Era shift the attack surface from capital to latency. Flash loan governance attacks, where an attacker borrows voting power, execute a malicious proposal, and repay within a single block, become trivial to attempt.
Cross-chain delegation fragments sovereignty. Tools like LayerZero and Axelar enable vote delegation across chains, but they create meta-governance problems. A voter on Arbitrum delegating to a Snapshot space on Ethereum must trust the bridging oracle's security, not just the destination chain.
Evidence: The cost to cast 10,000 votes on Ethereum mainnet is ~$500,000 at 50 gwei. On Arbitrum, it is ~$5,000. This 100x cost reduction is the attack vector.
risk-analysis
THE CENTRALIZATION TRAP
The Bear Case: What Could Still Go Wrong?
Layer 2s promise cheap, fast voting, but they introduce new failure modes that could undermine the very governance they aim to empower.
01
Sequencer Censorship & Finality Delays
L2 sequencers control transaction ordering and can censor votes or extract MEV. While users can force transactions to L1 via escape hatches, this process takes ~7 days on Optimism or requires costly proofs on zkRollups, rendering time-sensitive governance proposals useless.
- Single Point of Failure: A malicious or compromised sequencer can halt all voting.
- Finality Lag: True on-chain finality is delayed, creating vote uncertainty.
~7 Days
Escape Hatch Delay
1 Entity
Active Sequencer
02
The Multi-Chain Fragmentation Problem
Proposals and voting power become siloed across dozens of L2s and app-chains. A token holder on Arbitrum cannot natively vote on a Polygon zkEVM proposal without managing multiple wallets and bridging assets, fracturing community cohesion.
- Voter Dilution: Engagement plummets as complexity rises.
- Security Balkanization: Smaller L2s with lower validator counts are easier to attack.
50+
Active L2s/L3s
-70%
Cross-Chain Participation
03
Upgrade Keys & Governance Capture
Most L2s, including Arbitrum, Optimism, and zkSync, retain privileged upgrade mechanisms controlled by multi-sigs or foundations. This creates a meta-governance risk where L2 operators can theoretically alter the voting rules or censor results on-chain.
- Protocol Risk: The L2's security depends on a handful of entities.
- Regulatory Vector: A single jurisdiction can target the upgrade key holders.
5/8
Typical Multi-Sig
High
Centralization Risk
04
Cost Illusion & Data Availability Crises
While voting is cheap during normal operations, surges in L1 gas prices or data availability (DA) layer outages can make L2 transactions prohibitively expensive or impossible. Reliance on EigenDA, Celestia, or other external DA layers adds systemic risk.
- Usage Spikes: Network congestion removes the cost advantage.
- DA Failure: If the DA layer halts, the L2 and its votes freeze.
100x
Cost Volatility
External
DA Dependency
05
Voter Apathy & Delegation Pitfalls
Lower transaction costs don't solve voter apathy; they can exacerbate it by enabling low-cost, low-effort voting that degrades signal quality. Automated delegation to platforms like Lido or Coinbase further centralizes decision-making power into a few liquid staking entities.
- Shallow Participation: Votes lack informed deliberation.
- Power Concentration: ~3 entities could control majority stake in key protocols.
<5%
Avg. Voter Turnout
~3 Entities
Delegation Concentration
06
The Interoperability Illusion
Cross-chain messaging layers like LayerZero, Axelar, and Wormhole are required for unified governance across L2s, but each adds trust assumptions, latency, and cost. A governance attack could exploit a vulnerability in the bridge to mint infinite voting power or lock votes permanently.
- Bridge Risk: Adds another hackable layer (see Nomad, Wormhole exploits).
- Complexity Burden: Voters must trust multiple foreign protocols.
$2B+
Bridge Hack Value
High
Added Trust Layers
future-outlook
THE GOVERNANCE SHIFT
The 2024-2025 Outlook: Mainnet as the Court, L2s as the Town Hall
Layer 2 networks will become the primary venue for on-chain governance by solving the cost and latency problems of mainnet voting.
Governance migrates to L2s because mainnet transaction costs are prohibitive for mass participation. Arbitrum and Optimism already host major DAO treasuries, making their native chains the logical venue for voting.
L2s enable real-time governance by processing votes in seconds for pennies. This contrasts with mainnet's role as a final settlement court, which is too slow and expensive for daily governance.
Forking becomes a credible threat when voting is cheap and fast. This forces DAOs to be more responsive, as disgruntled factions can credibly fork and exit on an L2 with minimal cost.
Evidence: Arbitrum DAO executes over 100,000 votes monthly at a fraction of Ethereum's cost, demonstrating the scalability of on-chain governance when gas fees are removed as a barrier.
takeaways
WHY L2S WIN VOTING
TL;DR for Time-Poor Architects
On-chain governance is broken by mainnet gas costs and latency. Layer 2s fix the economics and user experience.
01
The Gas Tax Disenfranchises Users
A $50 vote on Ethereum mainnet is a non-starter for any meaningful, frequent governance. This creates plutocracy by default.
- Cost Barrier: Voting on proposals can cost $10-$100+ in gas, pricing out small holders.
- Low Turnout: Projects like Compound and Uniswap often see <10% participation from token holders.
- Solution Vector: L2s like Arbitrum, Optimism, and zkSync reduce costs to <$0.01, making every vote economically rational.
<$0.01
Vote Cost
>90%
Cost Saved
02
Real-Time Feedback Loops Are Impossible on L1
7-day voting periods on Ethereum are a governance anti-pattern, preventing agile protocol updates and community sentiment polling.
- Speed Limit: Finality on L1 takes ~15 minutes, forcing long, rigid voting windows.
- Agility Deficit: Cannot run rapid, non-binding temperature checks or snapshot-style votes.
- Solution Vector: L2s with ~1-5 second block times enable live governance and iterative proposal refinement, akin to Aragon on Polygon.
~2s
Block Time
100x
Faster Cycles
03
Modular Security & Custom Voting Primitives
L1 is a one-size-fits-all environment. L2s allow governance architects to deploy custom voting mechanisms with enforceable execution.
- Design Space: Implement quadratic voting, conviction voting, or futarchy without prohibitive L1 gas overhead.
- Enforceable Execution: Votes can directly trigger smart contract upgrades on the L2 via Safe{Wallet} modules, removing manual multi-sig steps.
- Ecosystem Play: Optimism's Citizen House and Arbitrum DAO demonstrate L2s as the native layer for complex, high-frequency governance.
Custom
Mechanisms
On-Chain
Execution
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