DeFi governance games: Compound and its Governor Alpha

In recent research, The Block Research described the governance process in one of the longest-lived DAOs: MakerDAO. The analysis found that participation in MakerDAO’s governance is relatively centralized and passive. MakerDAO’s governance framework is unpopular due to its complexity, the need to lock tokens, and the lack of a delegation function.

The ability to transfer voting rights without transferring ownership of the token increases engagement in governance. Firstly, it improves security as the cold wallet will not need to sign transactions for every proposal. Secondly, the need to regularly monitor the protocol governance disappears as it is enough to entrust participation in governance to an active community member.