How Do University Blockchain Societies Gain So Many Votes?

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University blockchain societies have emerged as significant contributors to DAO governance. These societies, supported by reputable university brands, offer immediate credibility, making them ideal candidates for delegation.

Let's take FranklinDAO as an example. Formerly known as PennBlockchain, it is an organization for students at the University of Pennsylvania who are interested in blockchain and cryptocurrency. However, they are more than just a student club. Since the DeFi summer, they have collaborated with several prominent DAOs and have cast some of the most influential votes.

Another notable entity is Michigan Blockchain. It is another university society that has made a significant impact in the field of DAO governance. They actively participate in DAO governance, including platforms like Uniswap and Compound.

Considering their substantial influence in on-chain governance, we believe it is worthwhile to delve deeper into these organizations to learn more about their rise to power and voting practices.

The Journey to Big Delegations

When we talk about student societies, it's often easy to have certain preconceived notions. You might picture students who are actively involved in their community, working on campaigns to raise awareness, and closely collaborating with DAO members to address specific concerns. Eventually, these efforts gain the support of a small but dedicated group of voters.

However, on-chain analytics revealed a different story. It was discovered that these societies received a significant number of delegates between May and June 2021.

Diving into the chain and taking a looking at transactions, it appears that a whale split 17.5M UNI among six university societies like Penn, Michigan, Columbia, UCLA. A likely assumption here suggests these tokens are delegated by the founding team who, restricted from direct participation in governance, uses university societies as credible-neutral proxies.

However, this assumption is challenged when considering that the whale delegated not just UNI but COMP tokens as well in the same timeframe. Below you can see how delegations for each society grew overtime.

For example, Michigan Blockchain received 50,000 COMP tokens from a newly created wallet funded by Coinbase and 2,500,000 UNI tokens from a similarly set up wallet. Both delegations occurred on the same day in June 2021, indicating a targeted delegation strategy from one or more entities.

Although Michigan Blockchain initially received support from big token holders, they continued to attract new delegates. On September 13, 2022, they received 999,999 votes from a delegate (previously delegated to Andre Cronje), and on June 25, 2023, they received 350,000 votes from a newly created wallet. This indicates that Michigan Blockchain has gradually gained more influence in protocol governance over time.

In the case of Aave governance, MichiganBlockchain initially received only 1303 votes through delegation. However, there was a significant increase in delegated votes later on, reaching 60k from the same address. The wallet of the top delegator showed extensive interactions with the Aave team's wallet, indicating a connection with one of the team members or early investors.

Who Is This Big Delegatee?

It would be interesting to discover the individuals or organizations behind these extensive delegations. However, a deeper look at the data reveals that the entities responsible for these large-scale delegations create distinct proxies or contract accounts solely for the purpose of delegation. They frequently distribute significant amounts of governance tokens to blockchain societies affiliated with universities. The transactions and interactions associated with these wallets indicate a strong connection with the founding teams or early investors of these protocols.

For example, an entity with the address 0xa81cF4389f493Fee9FC0fA69510b48D3E2Bfd3ce plays a significant role in delegations to both PennBlockchain and Michigan Blockchain. This entity shows connections with the Aave Genesis Team Wallet and receives large Ethereum inflows from centralized exchanges like Binance and Kraken. It appears that both Michigan and PennBlockchain each had a whale that was responsible for their large delegations. Based on on-chain activity, there seems to be a whale who created 2 proxies to delegate a large chunk of AAVE to Michigan and Penn respectively, and then another whale entity who created 2 proxies to give a large chunk of COMP and UNI to PennBlockchain.

These patterns and connections provide a new perspective on DAO governance. University blockchain societies are already bridging the gap between academic institutions and DAO governance. Their active participation, the timing of delegations, and the close connections between wallets suggest carefully coordinated strategies to effectively distribute voting power. These findings raise interesting questions about the roles and influences of whales and university societies in DAO governance.

How Do They Vote?

Analyzing the voting records of Michigan Blockchain and FranklinDAO gives us some insight into their operational ethos and priorities when participating in decentralized governance. Let's take each DeFi protocol in turn and examine how the two entities engaged with the various proposals that were on the table.

Uniswap

When it comes to Uniswap proposals, FranklinDAO has shown for support infrastructural growth and expansion. This support is seen in their votes for deploying Uniswap V3 on various chains and upgrades in the protocol's underlying technology. FranklinDAO's attendance in governance is highlighted by strategic participation, choosing not to vote in certain instances perhaps to signify neutrality or to defer to the wider community consensus on less strategic initiatives.

Michigan Blockchain's participation aligns with this constructive approach. They have proposed and voted for key upgrades and fundings like the deployment on the Filecoin Virtual Machine and the establishment of the Uniswap Foundation. Additionally, there is a synergy in their support for ecosystem strengthening proposals, like the UNI-ARB Grant Program and Celo Uniswap V3 Factory Contract migration. However, Michigan Blockchain has demonstrated more proactive engagement, serving as the proposer for several significant initiatives such as Create a UNI-ARB Grant Program, the Deployment of UniswapV3 on Moonbeam and Avalanche, etc…

Compound

In Compound's governance, both Michigan Blockchain and FranklinDAO have shown support for proposals that enhance the platform's risk management protocols. Their participation suggests a shared understanding of the importance of security which is fundamental to Compound's success and credibility in the DeFi space.

Michigan Blockchain's clear backing of risk-recommendation initiatives and structural refinements proposed by reputable entities such as Gauntlet is noteworthy. Similarly, their votes depict a responsible stewardship within Compound's dynamic governance system. Specifically, both societies backed the "Interest Rate Curve Updates for Compound" and the "Risk Parameter Updates for Polygon", showcasing their dedication to security within the lending framework.

Aave

When it comes to Aave's decision-making, Michigan Blockchain has demonstrated discernment similar to FranklinDAO, where there is a universal emphasis on proposals that bolster protocol safety and governance refinement. Michigan Blockchain is both an active voting actor within Aave's governance, supporting actions that streamline the DAO's operations and secure its liquidity strategies.

Their collective voting history includes support for the "Reserve Factor Update October 2023" and the “Enhancing AaveDAO’s Liquidity Incentive Strategy”, outlining their priorities for ensuring the economic stability and governance coherence of the protocol.

Conclusion

FranklinDAO and MichiganBlockchain exemplify the increasing influence of academic-linked societies in the DeFi space. Through delegation strategies, these organizations have expanded their impact beyond college campuses and into the realm of decentralized governance.

The significant surge in delegated votes between May and June 2021 marks a transitional period, as blockchain societies affiliated with universities utilize their institutional credibility to gain significant influence in governance matters. This pivotal moment, possibly facilitated by founding teams or insightful investors, positions universities as key players in the DeFi landscape.