Similar to the ramp up that led to the dot-com bubble, we are seeing an untenable increase in new protocol launches every day as builders (and bad actors) are trying everything under the sun. Fueled by low capital hurdle thanks to the power of software, the barrier of entry is even lower in crypto with its ethos being open source. From forking source code to blatant copy pasta of someone else’s gitbook, I’m left questioning the pace of capital inflow as the music starts to slow. So what could be next?

As TVL continues to balloon in successful protocols, it is evident that governance will start to play a larger role in the ecosystem. We are already seeing a dispersion of different DAOs (web3) and institutional funds (web2) being created to push their own agendas. Because time is the only asset we all own that diminishes as the clock ticks, the rise in prominence of bribes and buying influence as it relates to voting is a matter of when not if.

To understand why there is a market for bribes, we can extrapolate by looking at the stock market. According to the SEC, publicly traded companies are required to host an annual meeting to allow shareholders the opportunity to elect directors and meet with management to discuss company affairs. Meeting agenda typically includes voting on board retention and management compensation. By conventional wisdom, retail investors are dispersed and rationally apathetic so voting participation has and will continue to be lackluster. There is simply no incentive to vote as most assets are managed by large funds who are hired to act in your best interests. Now “buying” votes is illegal and the next closest thing is speaking behind close doors hoping to convince someone to vote for your agenda. There is zero guarantee or accountability in this method and you are at the mercy of funds that control votes.

Crypto is inherently the same as the stock market. Instead of buying shares, the act of buying the native governance token introduces a voting mechanism. Similarly, crypto investors are dispersed and rationally apathetic about their tokens. Most stake or provide liquidity to generate additional yield, which is already one step further than just holding stocks. The end result is sToken and Token LP as receipt but one thing to recognize is the voting right is still intact with value. Now imagine a marketplace that aggregates different token receipts across blockchains and packages the pool of votes for sale. Not only is yield created for a non interest bearing asset receipt for bribees but the arrangement introduces bribing as a service for bribers who are willing and able to pay for votes (non-custody) to influence change. Comparable to Opensea and LooksRare, it could have buy it now or auction to determine the winner. This race to the top to the highest bidder is difficult to ignore.

To dig one layer deeper, influence as a service may emerge as a category where researchers analyze proposals put forth by the bribers and offer a recommendation. According to CoinMarketCap, there are 17,047 tokens as of January 22. Assuming all things equal (i.e., investor sophistication, available resource, access to research), opportunity cost is what prevents us from being an expert at everything. The obvious solution here is to delegate to experts in each respective blockchain to supplement your own worldview and vote accordingly. Now Messari already exists but what I have in mind is a proposal aggregator that draws insight from trusted sources using oracles, provides sensitivity model on margin of victory, and reminds token holders any additional yield that is available from bribers.

Conclusion:

While bribery has a negative connotation, we have yet to see how indifferent token holders behave when offered a yield in exchange for their votes. Concentrated collusion and bribery already exist in the curve war but I do wonder if those two words are too harsh. Opportunities create arbitrage and that often leads to novel ways of extracting value from a protocol. Whether bribery/influence as a service is corruption or collaboration only time will tell. There is data that currently suggests most proposals are passed unanimously anyway. However, as the asset class becomes more sophisticated the demand for guidance and advisory will drive services that currently do not exist today.