Snapshot is a protocol for crypto projects that allows decentralized voting – Snapshot runs on the blockchain. At first glance, the Snapshot protocol is nothing new. For a long time, crypto projects let their community vote on proposals by utilizing their governance tokens.
In order to vote, users can send these governance tokens to a specific wallet address, which corresponds with a voting choice (EG. Yes/No). The address that ends up with the most governance tokens is the one that comes out as the ‘winner’. However, there is a fairly big disadvantage to this way of voting.
The disadvantage of voting with governance tokens #
Depending on the type of blockchain, sending governance tokens can incur a lot of costs. On the Ethereum (ETH) blockchain, transaction costs can sometimes amount to hundreds of dollars. It is, without a doubt, not good for the works of such crypto projects.
Crypto projects make it possible to vote because they like to put the direction of the project in the hands of the community. This system is best compared with the functioning of a democracy, in which the people decide which course a country should take.
However, high transaction costs can deter people from voting. Instead, only people who have a budget can vote for this, so that the support for a particular choice is largely made up of the ‘rich’.
Why Snapshot is better #
The Snapshot protocol can be used by any project. Projects can easily integrate it after which users can vote on new proposals. Even better, users do not pay any fees for moving cryptocurrencies. This is because Snapshot uses IPFS (InterPlanetary File System).
IPFS is a decentralized data storage network that runs alongside the mainchain. Because the data is not processed on-chain, there are no costs associated with creating and moving data.
Moving processes to a chain that runs next to the main chain is increasingly used. Blockchains have to process more and more traffic, which increases costs and processing time. By executing processes outside the blockchain, the network of the mainchain is less burdened.
What Snapshot can be used for #
Snapshot can be used by any project within the crypto and blockchain space. It is a very popular tool for DAOs (Decentralized Autonomous Organizations) in particular. Developers can easily integrate the protocol within their projects. This comes with the advantage that developers do not have to invest time, money and energy in developing their own system for processing votes.
Popular Snapshot’s users #
Snapshot launched in August 2020. Since then, many projects have decided to use Snapshot, of which the following projects are the most famous and important:
- Uni-swap (UNI);
- Balancer (BAL);
- Yearn.Finance (YFI);
- Bancor (BNT);
- The Graph (GRT);
- Aragon (ANT).