Explained: How does SnapShot, the decentralised voting system work?

Traditionally, DeFi projects went about vote signalling in two ways: on-chain and off-chain. On-chain signalling refers to a voting mechanism embedded into the blockchain code. It needs to be developed and, in some cases, also requires users to dish out cash on transaction fees.

Off-chain signalling refers to a traditional voting setup that occurs outside the 'coded' domain. The power of authority generally lies with a select few – usually large stakeholders, such as whales or mining companies. It is more centralised and takes away from the essence of blockchain tech.

While both these methods have their pros and cons, SnapShot, in a way, combines only the good. It is a platform where projects can ask for the opinions of their users. It is off-chain, so it requires no development and can be used across all blockchains. At the same time, it uses the IPFS network to record user votes. The IPFS network is a "protocol and peer-to-peer network for storing and sharing data in a distributed file system." This gives SnapShot decentralised properties that traditional off-chain vote signalling systems lack.

While there are many third-party voting systems in the DAO space, SnapShot is unique because it uses the Interplanetary File System (IPFS) which allows data to be stored in multiple locations. This lets SnapShot use a blockchain to register how people voted on a proposal without incurring any transactional fee. Moreover, even though it is an off-chain vote signalling system, it still offers the transparency of a blockchain-based system.

Decentralised organisations who want to use SnapShot first need to register an Ethereal Naming Service (ENS) domain. ENS is similar to what the Domain Naming Service (DNS) does. It allows for the management of website domains in a decentralised and secure way. Using ENS, the wallet or IP address of a DeFi project can be linked to a human-readable name.

After linking the ENS to SnapShot, the project can create a space and customise its settings (admins, voting power distributions, etc.) per requirement. Once that's done, all that's left is to add the proposal for users to poll. Meanwhile, users only need to connect their wallets to SnapShot's website. As long as they have the relevant cryptocurrency for the project, they can vote on the proposals listed there.

The project creating the poll will be provided with an interface where real-time updates from the poll will be available.

Many organisations in the emerging decentralised finance space have used SnapShot's polling feature to assess their projects. Exchanges, metaverses, blockchain projects and publishing houses like Uniswap, Aave, SushiSwap, Decentraland, GitCoin, Yearn, Bancor, and Decrypt have spaces on SnapShot and have created polling proposals in the past.

SnapShot can accommodate any polls that a project needs to take. Projects can ask users to vote on the new features or ask whether or not a fund should be allocated for a legal defence pool if the project comes under scrutiny from any regulatory government agency. It essentially can be anything that will change how the project will work.