Off-Chain Proposal

Some protocols employ optimistic governance, where certain parameter changes can be executed directly after a successful off-chain vote, without a subsequent on-chain vote. A guardian or multisig has a short timelock to veto the action if it's malicious. This model:

• Increases Agility: Allows for faster operational updates.
• Reduces Gas Costs: Eliminates redundant on-chain voting for low-risk changes.
• Maintains Security: Keeps a safety mechanism for emergencies.

Off-chain proposals face key challenges that the ecosystem actively addresses:

• Sybil Attacks: Without transaction costs, vote manipulation is cheaper. Mitigated by proof-of-personhood (e.g., BrightID) or token-weighted voting.
• Non-Binding Nature: Results are only signals; they require honest on-chain execution by delegates.
• Voter Apathy: Lower barriers can still result in low participation, leading to plutocratic outcomes where large token holders dominate.

The security of an off-chain proposal depends on the availability and integrity of the voting data. This is typically ensured by a decentralized network of oracles or a committee of signers who attest to the proposal's content and final tally. If this data is not reliably available for on-chain verification, the proposal's legitimacy can be challenged. Common solutions include using IPFS for storage and cryptographic signatures for verification.

Finalizing an off-chain vote requires a trusted entity, often called an executor or multisig, to submit the result on-chain. This creates a trust assumption that the executor will act honestly. To mitigate this, executors are frequently implemented as decentralized multisignature wallets requiring a threshold of signatures from reputable entities. Failure modes include executor censorship (refusing to execute a valid result) or malicious execution of an invalid result.

Since voting occurs off-chain, the system must implement its own Sybil resistance mechanisms, distinct from the underlying blockchain's token-weighted model. Common approaches include:

• Proof-of-stake snapshots: Using a historic on-chain token balance.
• Delegated reputation: Relying on a curated list of addresses.
• Participant whitelisting. Without robust Sybil resistance, off-chain votes are vulnerable to collusion and vote buying.

Off-chain proposals involve a fundamental trade-off between liveness (the ability to reach a decision) and safety (ensuring only correct decisions are executed). A system optimized for liveness might use a small, fast committee, increasing centralization risk. A system optimized for safety might require broad participation, risking delays or failure to reach quorum. The chosen governance framework (e.g., Snapshot with a specific execution strategy) defines this balance.

A critical security feature is the timelock delay between a vote passing off-chain and its on-chain execution. This delay allows token holders to review the action and, if malicious, take defensive measures (e.g., exiting a liquidity pool). The absence of a timelock creates execution risk, where a malicious proposal could be enacted before the community can react. Timelocks are a standard security practice for high-value actions like treasury transfers or protocol upgrades.

For an off-chain proposal to be trustworthy, the entire process must be cryptographically verifiable. This includes:

• Immutable proposal text (content hash).
• Signed voter attestations.
• Transparent tallying logic.
• On-chain proof of the final result. Platforms like Snapshot provide a public audit trail, but users must verify the verification strategies and execution methods are correctly configured. A lack of verifiability makes the process opaque and insecure.

A formal transaction executed on the blockchain to modify protocol parameters, treasury funds, or smart contract code. It is the final, binding step that follows successful off-chain signaling.

• Contrasts with Off-Chain: Requires gas fees and is immutable once executed.
• Typical Flow: Snapshot vote → Temperature Check → Consensus Check → On-Chain Execution.
• Examples: Updating a Compound interest rate model, transferring DAO treasury funds via a multisig.

An initial, informal polling phase in a governance process, often conducted off-chain, to gauge community sentiment before dedicating resources to a formal proposal.

• Purpose: Filters out ideas with little support and refines those with potential.
• Common Platform: Typically done on forums (Discourse, Commonwealth) or via simple Snapshot votes.
• Outcome: Determines if a proposal should proceed to a more formal consensus check or direct on-chain vote.

A smart contract wallet that requires multiple private keys to authorize a transaction. In governance, it often serves as the executive that enacts passed on-chain proposals.

• Role in Proposals: A successful off-chain vote typically instructs a multisig (e.g., a DAO's Timelock Controller) to execute the final transaction.
• Security Model: Prevents unilateral action; requires a threshold of trusted signers (e.g., 4 of 7).
• Example: Uniswap's governance process delegates execution to a Governor Bravo contract with a timelock delay.

The informal agreement reached by a community through discussion and off-chain signaling, which establishes the legitimacy and expected outcome of a formal on-chain vote.

• Foundation for Execution: An on-chain vote with a contrary result to a strong social consensus is often considered a failure or attack.
• Mechanisms: Built through governance forums, community calls, and off-chain voting platforms.
• Importance: Protects against vote buying or manipulation by ensuring decisions reflect the community's deliberated will, not just capital weight.