Voting Strategies

In decentralized autonomous organizations (DAOs) and on-chain governance platforms, a voting strategy is the core logic that maps a user's assets or credentials to a specific amount of voting power. This is not a simple one-token-one-vote system by default; instead, strategies are smart contracts that query on-chain or off-chain data to compute a user's influence. Common inputs include token balances (e.g., ERC-20, ERC-721), delegated stakes, membership status, or even historical contributions. The strategy's output is a numerical weight used in proposals, enabling complex governance models like quadratic voting, conviction voting, or reputation-based systems.

The flexibility of voting strategies allows DAOs to tailor governance to their specific needs. A DeFi protocol might use a strategy that counts governance token balances held in a vault, while an NFT project could grant voting power based on which specific tokens are held in a wallet. More advanced strategies can implement time-weighted voting, where power decays over time to encourage ongoing participation, or multisig-based strategies that require signatures from designated keyholders. These strategies are typically defined and deployed when a governance framework like Snapshot, Tally, or DAOstack is configured, separating the vote calculation logic from the proposal and execution engine.

Implementing a custom voting strategy requires careful smart contract development to ensure security and correct state queries. Strategies must be gas-efficient for on-chain voting or rely on oracles and indexers for off-chain data. A critical consideration is strategy manipulation; for instance, a strategy based on a simple token balance snapshot could be gamed by borrowing tokens just before a vote. To mitigate this, strategies may use time-averaged balances or check holdings at multiple block heights. The choice of strategy fundamentally shapes a DAO's political economy, influencing voter turnout, delegation patterns, and resistance to hostile takeovers.

A voting strategy is a smart contract or algorithm that calculates a user's voting power for a specific proposal based on predefined on-chain data. Instead of a direct token count, strategies can source power from various assets—such as staked tokens, liquidity provider (LP) positions, or delegated authority—and apply transformations like time-weighting or quadratic formulas. These strategies are defined in a governance framework (e.g., Snapshot, Tally) and are executed off-chain for gasless voting or on-chain for binding execution.

Common strategy types include the token-weighted strategy, which uses a simple balance check; the delegation strategy, which aggregates votes from followers; and the erc20-balance-of strategy, a foundational method that reads an address's token balance from a specified contract. More complex strategies implement quadratic voting to diminish the power of large holders or time-weighted voting to reward long-term commitment. Strategies can also be composed, allowing voting power to be drawn from multiple sources, such as a user's owned tokens plus tokens delegated to them.

The technical implementation involves the strategy contract returning a numerical weight for a given voter address and block number. Governance platforms use this to tally votes. For example, a strategy might query the balanceOf function for a veToken (vote-escrowed token) contract, where power decays linearly over a lock period. This modularity allows DAOs to tailor governance to their specific needs, incentivizing desired behaviors like long-term staking or active participation in protocol liquidity pools.

The evolution of voting strategies in decentralized governance tracks the progression from basic token-weighted voting, where one token equals one vote, to complex, modular systems that incorporate delegation, time-locking, and reputation. Early models, exemplified by platforms like MakerDAO, established the foundational principle of on-chain governance but were criticized for enabling whale dominance and low voter participation. This led to the development of delegated voting, as seen in Compound and Uniswap, which allows token holders to delegate their voting power to knowledgeable community members, creating a more efficient and informed decision-making layer.

Subsequent innovations introduced mechanisms to align voter incentives with long-term protocol health. Conviction voting, pioneered by 1Hive, replaces snapshot voting with a system where voting power accrues over time a token is staked on a proposal, favoring persistent community support over sudden, speculative swings. Similarly, vote-escrow models (ve-tokens), most notably implemented by Curve Finance, grant amplified voting power to users who lock their tokens for longer durations, directly tying governance influence to demonstrated long-term commitment. These strategies aim to mitigate the voter apathy and short-termism prevalent in simpler models.

The frontier of voting strategy evolution now focuses on modularity and specialization. Modern governance platforms like Snapshot with its strategies framework, and Tally with governor contracts, allow DAOs to compose custom voting systems. A single proposal's outcome can now be determined by a combination of factors including token balance, NFT ownership, delegated reputation, and even proof-of-personhood credentials. This enables quadratic voting, weighted by expertise, and futarchy (decision markets) to be implemented as plug-in modules, moving governance toward optimized, context-specific mechanisms for different types of decisions, from treasury management to technical upgrades.