Vote Delegation in DeFi Governance

Abstract

We investigate the drivers of vote delegation in Decentralized Autonomous Organizations (DAOs), using the Uniswap governance DAO as a laboratory. We show that parties with fewer self-owned votes and those affiliated with the controlling venture capital firm, Andreesen Horowitz (a16z), receive more vote delegations. These patterns suggest that while the Uniswap ecosystem values decentralization, a16z may engage in window-dressing around it. Moreover, we find that an active and successful track record in submitting improvement proposals, especially in the final stage, leads to more vote delegations, indicating that delegation in DAOs is at least partly reputation- or merit-based. Combined, our findings provide new insights into how governance and decentralization operate in DeFi.