State of the Centrifuge DAO
By @Kate_Bee
This report provides an overview of key activity in the Centrifuge DAO and in the DAO landscape more broadly as of March 2024
Key Insights: Centrifuge
Participation
- The CFG token is held by 50,396 holders, but only 17k token holders hold >1 CFG.
- 0.149 percent of token holders engage on average in governance processes.
Value and Treasury
- The 500M Total Assets Financed (TAF) and more than $277,069,132 Total Value Locked (TVL) on the protocol have not led to a flood of governance proposals in our DAO, however, increasing Treasury holdings (currently 9.53M CFG) are likely to see more proposals.
Token Utility
- Token holders have voiced the need for more mechanisms in order to engage (i.e. staking for pools), more work on this is forthcoming
Direction
The evolution of treasury governance is a key focus for Quarter 2, measures that may support this are:
- The rollout of OpenGov which means that the treasury will be managed by ALL token holders, and not the council and which will drive participation, given that council members with substantial token holdings can now participate in voting
- An amendment to the Treasury Spending Agreement of July 2023 (which was effectively a freeze on spending)
- A Resource and Treasury expert working for the DAO
- A delegates programme that provides targeted expertise in treasury and resource allocation
aave ghost throwing retroactive coin
The DAO landscape
There are 19,839 established DAOs, over 10 million token holders that engage in governance, and total DAO treasuries surpass $30.3 billion (DeepDAO).
What is the purpose of governance of these DAOs? To have stable bodies composed of decision makers who are accountable for the protocol and for the specific decisions that make up the direction.
The majority of DAOs utilize a decentralized governance process where the stable body is composed of token holders who propose and make decisions about direction and key activities.
Major themes from 2023
- A recurring major challenge has been âexpertise gapsâ where stakeholders do not have the requisite knowledge to make informed decisions on complex proposals.
- Public power struggles increase as the stakes (including Treasury value) get higher
- Over time, delegates stop engaging
power struggles
DAO landscape: Trends
- Experiments separating governance into different parts (for example, Optimism)
- New governance infrastructure which seeks to prevent centralization (OpenGov, Polkadot, one other example)
- Retroactive funding (Aave, Optimism, Kusama). Retroactive funding is the major way that protocol teams are being funded by their DAOs.
Centrifuge Governance - overview
Over the last 3 years Centrifuge has progressively decentralized its governance and become known for the strength of its governance process. Token holders can propose any change to the protocol. Leading examples of governance are:
- Updating Transaction fees for Pools
- Pool onboarding proposals including
Centrifuge
Average: 6.98M CFG tokens or 1.32% of the total supply used in on-chain voting
~74.75 voters or 0.149% of total token holders.
A considerable amount of debate happens in the well-tested governance process (i.e. RFC, governance calls, integration, vote).
Turnout in Centrifuge proposals from the last 6 months
| Proposal | Summary | Dated passed | Voting turnout |
|---|---|---|---|
| CP76: Extend Parachain Lease | Centrifuge secured 8 new parachain leases | 05/11/2023 | 0.39% / 2.03M CFG |
| CP78: Runtime Upgrade 1024 | Upgraded Centrifuge Chain to runtime version 1024 | 15/12/2023 | 1.45% / 7.55M CFG |
| CP80: Registering Frax token and allowing trading Frax <> USDC | Added the Frax token to the asset registry and trading pairs for FRAX <> USDC | 31/12/2023 | 1.04% / 5.45M CFG |
| CP81: Unclaimed Tinlake Rewards | Gave Tinlake investors 30 days notice to claim their CFG rewards and transfer any unclaimed rewards to the treasury after this date. | 30/12/2023 | 1.09% / 5.7M CFG |
- 525 M CFG total supply, 50,396 token holders
Governance Participation
Voting participation is just one metric out of many. It should be taken with a grain of salt, as high participation does not necessarily mean quality participation and thus, good governance. Our goal has always been to prioritize quality (iâŚe better discussion, better proposals) over quantity but we still need to look at the stats on participation in regard to the DAO landscape.
RWA Projects:
Some controversial proposals were discussed on the forum (such as listing and the start of token unlock), however, generally, there is very little engagement and activity.
- Ondo Finance has launched a large incentive governance program for those who delegate tokens - Ondo Points: The First Wave.
- On-chain: The average number of addresses that participated in on-chain Governance 1.608% of token holders (~ 236.5 wallets, 14.7k token holders), with an average of 0.211% of tokens used (10B Total Supply).
- Off-chain governance of Goldfinch is well designed structured and discussed.
- On-chain governance: On average 0.39% of token holders participate in governance (35.2 votes) and 0.3319% of tokens used (~ 379.4k)
There are a few comments on the governance forum in MIP. They have had one on-chain vote which saw 0.223% of token holders participate (19 votes with 8497 token holders) and 5.83% (583K MPL, 10M Total supply). Before using the snapshot, the project used Discord and emojis for Yes, No and Abstain to decide the result of the governance proposal, where non-token holders could participate in voting.
Ethereum Projects:
Average: 72,811.25 MKR tokens or 7.44% of total supply, average participation in Polls ~ 40 ( 0.04% total holders). Maker DAO is well known for how it builds its governance process. On average 72,811 MRK tokens ( 7.44% of total supply) and 40 voters on average ( Recognized delegates). The result of tokens used in governance should not be a surprise due to the incentivised governance system and robust work of the GovAlpha and Delegates program.
Aave:
Average: 478k AAVE tokens ( 3.23% of total supply (478k tokens), 29.25 voters ~0.0175 total supply). On average the total amount of tokens used in governance is 3.23% of the total supply with 29 voters ( 0.0175% of the number of total token holders).
Average: 25,512.25 voters or ~2.72% of total token holders, 148,975M ARB tokens used in governance or 11.68% of total supply. Arbitruum DAO shows exemplary results in terms of participation and delegates system.
On average 11.68% (~149M ARB) tokens are used in governance and well 25,512 token holders( 2.72% of total token holders) participate and decide the direction of development of Arbitrum DAO.
Polkadot Projects:
Polkadot: On average, only 0.029% of token holders are actively participating in governance through Polkadotâs on-chain voting. This translates to approximately 375 token holders, including delegates, who have an average voter turnout of around 1.1% tokens.
HydraDX achieved impressive results by introducing additional rewards for participating in governance through staking.
Boosting Rewards:
- Blue line - without using tokens in governance.
- Yellow line -with using 6x conviction voting+active staking
Thanks to this staking program, the number of token holders, as well as the number of tokens used in governance, has received a significant increase.
On average 664 token holders participate in governance ( 2.53% of the total token holders) with a turnout of 6.7%. This is one of the highest results in the Polkadot ecosystem.
As a top three parachain, Moonbeam does not have the best result in the ecosystem. On average 0.029% of token holders participate in on-chain voting ( ~193) with an average turnout of 0.386%
Groups
Groups are a key innovation at Centrifuge which puts expertise at the forefront. The following is a commentary on their performance.
Governance and Coordination Group (GCG)
The first Centrifuge Group to really get going, the GCG provide consistently high-quality service to the DAO regarding governance process, facilitation and community engagement. They are supported by the Gov Squad - an advisory group of experienced governance nerds from leading DAOs. Check out their monthly update here.
Credit Group (GC)
This group has the mandate to score Pool Onboarding Processes (POPs). The slow start of the Credit Group has been due to a low precedence of POPs, lack of clear value proposition, and an unclear mandate.
Protocol and Engineering Group (PEG)
The PEG is composed of k/f protocol developers including CTO Jeroen Offerjins. Their focus areas are to assess technical proposals made to the Centrifuge DAO and propose a roadmap for the technical direction of the Centrifuge protocol. They recently passed the first roadmap proposal for the Centrifuge DAO on OpenSquare, for all CFG token holders to vote on.
Resource and Treasury Group
This group unofficially kicked off in Q4 2024 but has yet to request a mandate or produce much visible outputs. There is currently a search to recruit an experienced group lead. The work of this group will be paramount in Q2,3,4 of 2024.
OpenGov Technical Committee (TC)
This group consists of people with technical knowledge about the Centrifuge chain and can whitelist proposals (to âfast-trackâ them), using the Whitelisted Caller track on OpenGov (once migrated). They will also review referenda to ensure they are submitted correctly and are not malicious/harmful to our protocol. The OpenSquare snapshot for their mandate proposal is still being voted on until 29th February.
DAO Membership
Centrifuge has a key membership group, called Active Contributors (ACs) who are holders and high-value-add users who have access to communication channels and calls. This group has the same decision making rights as all token holders, but plays a special role in the stewardship of the protocol. If youâre a CFG token holder and want to become an AC, DM @LuisG. If youâre already an AC you can suggest new ACs by joining the #wgactivecontributors in slack. One of @LuisGâs first tasks is to map the AC community and show how different members are connected.
AC Channel Engagement
Channel engagement is down from 2023, with most Active Contributors âinactiveâ or âquietâ. It is highly typical to have âlurkersâ in any group chat, however, the Active Contributor segment needs to prove that they are actively contributing; key is not just participating in slack, but in making proposals, commenting on other proposals, voting, and posting on the Governance Forum.
Open DAO Roles
Ambassador Programme
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The third iteration of the programme will launch in March 2024
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Part of this involves the development of an introduction course for âAmbassadors and Active Contributorsâ containing the basic and necessary knowledge about the Protocol and the DAO to facilitate onboarding.
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Reactivation of Community Calls through Ambassadors
Thatâs it, the State of the Centrifuge DAO, March 2024 
