[1RC] Shielded Voting Implementation

[Baer.eth_DAOplomats]

Title: [1RC] Shielded Voting Implementation
Simple Summary
This proposal aims to upgrade 1inch DAO voting process to use shielded voting. Shielded voting is a shutter implementation on Snapshot to combat front-running and malicious Maximal Extractable Value (MEV).

Abstract
This Proposal would address the front running and MEV problem in DAO governance and Snapshot voting. The shielded voting offered by Snapshot is a voting mechanism deployed on the Shutter network, which uses cryptographic thresholds to hide the voting choice until the vote is over. Once voting has concluded, the lock would automatically be removed, displaying the detailed results, including who voted for what outcome of the proposal. This will prevent the voting process from altering voting outcomes.

Motivation

The aim of snapshot voting in 1inch DAO is to express the sentiments of the contributors and delegates effectively.
Contrary to traditional voting in democracies, voting in DAOs is 100% transparent and visible throughout the entirety of the vote. This opens the voting process to MEV and influences the voting results.
This proposal falls under A2. Gather feedback from the community and iteratively develop the governance process on the delegate statementand our grant vision of ‘Developing Fluid Democracy in DAOs’ thesis.
Specification
If this proposal is passed, Shielded voting should be turned on in the 1inch DAO main snapshot space. And the governance documentation will be updated to reflect this implementation.

Specifications on shielded voting works under the hood can be found here.
But here is the tl;dr

• Voters vote on the snapshot with their tokens encrypted with a proposal key.
• The encrypted votes can only be decrypted by the Keyholders who sent the decryption key to the snapshot hub.
• As soon as the voting ends, the snapshot hub decrypts the votes, counts them and submits and stores them on a distributed system.

This implementation will be limited to the main 1inch space and not be implemented on fast-track proposals.

Rationale
Introducing partial transparency to voting will resolve many misalignments in DAO voting. Using the native implementation of the shielded voting feature from Snapshot will be the first step in reducing malicious voter behaviour in DAO governance.

The rationale for limiting the implementation to general proposals.
The fast-track proposal space allows the DAO to react quickly to emergencies. Voting strategies in such spaces should be as simple as possible.
A strategy misconfiguration on the primary snapshot could always be ratified without worrying about time.

Benefits

1. Reduce voter front running
2. Introduces partial privacy in voting
3. Reduces voter apathy

Drawbacks

1. Shutter-shielded voting is a relatively new implementation, introduced on 27.January 2022.
2. The first proposal, which used Shutter in 1inch DAO [1IP-10], had technical difficulties where smart contract accounts couldn’t cast votes. But it was quickly resolved before the voting ended.

Considerations
This Proposal has no tokenomics changes or changes to the voting strategy. Still, it introduces a shielded voting feature from Snapshot, which encrypts user voting options till the voting period ends.

[RoundElephant]

Like you say in the Drawbacks section, the initial bug we saw with non-EOA’s not being able to vote was quickly addressed by the team. However, there was another issue regarding quorum counts that I do not believe has been addressed.

When Shutter is enabled, no one can see if a vote has hit quorum until after the voting period has concluded. We asked the Snapshot team about it and they said it was a feature, not a bug, because some spaces do not count Abstain votes towards the quorum — per 1inch DAO’s policies, our Snapshot space does count abstain votes towards the quorum so the inability to see the quorum tally is very frustrating. This is largely the reason why the second 1IP-10 vote failed, we looked in the vote tally CSV and saw that there were over 12M votes, however, that tally double-counted votes by wallets who had delegated to another voter.

In the past, the inability to reach quorum has gridlocked 1inch governance for weeks at a time, and I believe that Shutter works against us on this front.