Anchorage Digital Launches DeFi Snapshot Voting For Custody Customers

Anchorage Digital, a crypto custody firm, now allows its institutional clients to participate in crypto governance. The platform announced that its customers would be able to take part in decentralized voting, known as Snapshot.

According to the May 16 statement, Anchorage Digital will give access to the off-chain voting platform Snapshot, which will now support more than 60 ERC-20 tokens without incurring gas fees. Nonetheless, the Anchorage Digital President, Diogo Monica, noted that the idea behind the platform’s new product is to key in on the proliferation of these different protocols emerging alongside these different tokens.

Anchorage Digital is pleased to announce that clients can now participate in Snapshot voting using their Anchorage Digital address. Our WalletConnect integration enables:

+ Voting from within qualified custody with no movement of funds
+ Secure off-chain governance for… pic.twitter.com/VYZ5pIwyl1

— Anchorage Digital (@Anchorage) May 16, 2023

Further, all voting will occur within Anchorage’s custody without the movement of funds. Notably, Snapshot is used by various prominent protocols, including Aave (AAVE), Lido (LDO), and BitDAO.

However, according to Anchorage, the advantage of this approach is ”convenience”. It noted:

The tradeoff for such convenience comes in the form of on-chain guarantees. Snapshot voting is free because votes are counted off-chain and thus do not require gas payments. The responsibility to enforce the decision is typically entrusted to a multi-sig that the protocol team operates

Laying Token Governance Groundwork

The initiatives to equip token holders across crypto platforms have been met with mixed results. Equipping decentralized digital asset owners, including DAO participants, is an overstatement that has historically relied on online word of mouth, including Twitter, and momentum pushes on Discord—additionally, the debates on the governance forums of protocols themselves.

However, Monica noted that Anchorage Digital’s goal is piercing through the online noise. Further, she asserted that the platform aims to develop an in-house crypto ecosystem of governance tokens that can avoid the pitfalls of setting up one-off solutions that must interact with individual protocols.

Anchorage Digital is one of the largest crypto custodians maintaining a regulated U.S. presence. According to the platform president, in the early beginnings of the DeFi summer, back three years ago, all protocols essentially reinvented the wheel, at least in theory. They all built their different protocol standards for governance, making them non-interoperable.

How Snapshot Via Anchorage Works

The governance votes on Snapshot are not publicly recorded, meaning voting is off-chain. It’s somehow a similar setup to proxy voting outfits pushing for votes on Wall Street equities — albeit with substantial crypto-native shifts, according to Mónica. Additionally, the client assets are not shifted from Anchorage’s custodial oversight due to participation in protocol governance.

The platform president further noted:

At a high level, this can be compared to traditional equity governance. However, it is significantly different because the types of things you’re voting on and deciding are much more tactical when you’re an equity holder in the company. Notably, in the traditional crypto world, you have many votes per week. That is fundamentally different.

However, Snapshot votes are not automatically executable. They are more akin to a straw poll. These signaling votes can be executed by protocol developers who maintain control of upgradeable components, typically through a multi-signature wallet with varying degrees of decentralization.

Anchorage Digitals  Operations

In October, Anchorage revealed that it had extended its operations to Asia with five new institutional partners, including Bitkub, DreamTrade, and FBG Capital. The announcement noted that Asia’s consumers had adopted crypto with enthusiasm.

Recently, Snapshot got an opportunity to collect votes from AAVE and LDO token holders concerning each of the protocol’s latest governance proposals.

☕️gm, #NoDAO Update 2023.05.02: We have voted 'No' (NAE, NAY, AGAINST) 6 proposals today using delegated tokens: pic.twitter.com/6Ram73QIaj

— mel.??? (@emjicy) May 2, 2023

On the other hand, like various crypto companies over the last 12 months, Anchorage Digital laid off its staff earlier this year. However, the bank unit was not affected at that time.

In April, Anchorage Digital cited external research finding noting that over 5,500 “unique proposals were written” throughout the Ethereum ecosystem. These included EVM-compatible chains — including over 600 governance proposals with “more than 100 distinct votes. However, the company noted that the latter signaled a very active community across the ecosystem.

It is worth noting that Snapshot has gained popularity thanks to its gasless voting feature, making it a viable option for a much more comprehensive range of token holders.

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