Voter Collusion

Voter collusion occurs when a group of token holders coordinates their voting power to pass proposals that benefit them at the expense of the broader community. This is not a technical hack but a coordination attack on the governance process. It often involves vote buying, where proposers bribe voters, or the formation of voting cartels that consistently vote as a bloc.

The most direct form of collusion is a 51% attack on governance, where a single entity or cartel acquires a majority of voting tokens. This allows them to:

• Pass any proposal, including malicious upgrades.
• Drain the protocol treasury.
• Censor other voters or proposals.
• Alter core protocol parameters for personal gain. This risk is inherent in token-weighted voting systems where 'one token equals one vote'.

Collusion can be financially incentivized through on-chain bribery markets. Platforms exist where proposers can post bounties, paying voters to support their proposal. This turns governance into a pay-to-win system, where the outcome is determined by financial might rather than merit. It exploits the vote delegation model, as delegates may be bribed to vote against their delegators' interests.

Attackers create many wallets (Sybil identities) to accumulate governance tokens from airdrops or low-cost distributions. By controlling thousands of seemingly independent addresses, they can form a collusive bloc without a large capital outlay. This attacks systems relying on one-person-one-vote or proof-of-personhood models, as seen in some DAOs.

Protocols implement several defenses against collusion:

• Time-locked votes: Increase coordination costs by requiring votes to be committed long before the result is known.
• Conviction voting: Voting power increases the longer tokens are locked on a proposal.
• Quorum requirements: Mandate a minimum participation threshold for a vote to be valid.
• Futarchy: Using prediction markets instead of direct votes to decide outcomes.
• Multisig with time delays: A fallback council can veto malicious proposals after a delay.

A practical example of governance risk occurred in Mango Markets (Oct 2022). An exploiter manipulated the MNGO token price, used the inflated collateral to borrow funds, and then proposed a governance vote to forgive the debt in exchange for returning a portion of the funds. Voters, motivated by the prospect of recovering some assets, approved the proposal, demonstrating how economic pressure can lead to collusive outcomes post-facto.

A voting mechanism designed to reduce the power of large, coordinated capital blocs. A voter's voting power increases with the square root of the tokens they commit, not linearly. This makes it exponentially more expensive for a single entity or colluding group to dominate a vote.

• Example: 1 token = 1 vote, but 4 tokens = 2 votes, and 100 tokens = 10 votes.
• Purpose: Protects against whale dominance and promotes a more pluralistic outcome by favoring a broader distribution of preferences.

A time-based voting model that mitigates flash loan attacks and impulsive collusion. Voters stake tokens on a proposal, and their voting power accumulates gradually over time. To suddenly change a vote or collude on a new proposal, stakeholders must withdraw their conviction, creating a time-locked economic disincentive.

• Key Feature: Introduces a cost of attention and switching cost for voters.
• Effect: Makes short-term, coordinated vote manipulation economically impractical, as building sufficient conviction takes time.

A governance paradigm that separates decision-making from direct voting to mitigate opinion-based collusion. The community votes on a goal (e.g., "increase protocol revenue"), not on specific proposals. Market participants then trade in prediction markets on which proposed action will best achieve that goal. The proposal with the most favorable market price is implemented.

• Mechanism: Leverages the wisdom of crowds and financial incentives in markets to discover the best outcome.
• Defense: Makes collusion on opinions less effective, as it must instead manipulate a liquid prediction market, which is typically more costly.

Cryptographic systems like Minimal Anti-Collusion Infrastructure (MACI) prevent vote buying and coercion. They use zero-knowledge proofs and a central coordinator to ensure votes are secret and final, making it impossible for a briber to verify if a bribed voter actually complied.

• Core Principle: Receipt-freeness – a voter cannot prove how they voted to a third party.
• Application: Essential for preventing off-chain collusion and bribery in critical governance votes, such as funding decisions or parameter changes.

In Delegated Proof of Stake systems, token holders elect a limited set of validators or delegates. Collusion among these delegates can be penalized through slashing, where a portion of their staked tokens is burned for malicious behavior.

• Mitigation: Relies on delegate reputation and the threat of economic loss.
• Challenge: Requires robust, on-chain governance surveillance to detect and prove collusion for slashing to be enacted.

A meta-governance strategy where the ultimate defense against entrenched collusion is the ability to fork the protocol. If a governing coalition becomes extractive, the community can execute a social consensus fork, moving to a new chain with different token distributions or rules.

• Example: The Ethereum and Ethereum Classic fork.
• Role: Acts as a nuclear deterrent, ensuring the cost of collusion includes the risk of network fragmentation and loss of community legitimacy.