Gauntlet, a financial modelling platform focused on managing risks in the crypto market, has received a grant from Uniswap Foundation to enhance the incentive mechanisms of DAOs.
To achieve the goal, Gauntlet will establish a new unit called Gauntlet Applied Research, dedicated to addressing challenges arising from the rapid expansion of DAOs. The company employs economic models to optimise fees and rewards for DeFi protocols.
Gauntlet announced that it will offer UniswapDAO three research outputs. Firstly, it will create a quantitative framework that the DAO can use to assess the effectiveness of the Uniswap protocol. Secondly, it will analyse the behaviour of traders and liquidity providers. Thirdly, it will offer at least three proposals for incentive mechanisms to enable the DAO to reach its objectives. The company aims to finish all these deliverables by June.
Devin Walsh, the executive director of Uniswap Foundation, has high expectations for Gauntlet's research. He hopes that it will not only enhance the Uniswap protocol but also benefit the entire crypto industry.
Walsh added that the Uniswap Foundation aims to establish enduring partnerships with the most skilled and ethical teams in the field and collaborate with them on resolving the most challenging and intriguing problems related to the Uniswap Protocol.
In recent years, DAOs have emerged as a fundamental aspect of the crypto market, and there are now over 2,300 DAOs according to DeepDAO, a DAO analytics provider. Typically, tokenholders govern DAOs and are authorised to vote directly on the blockchain to approve or reject proposals regarding a protocol.
Nonetheless, some industry professionals, such as Ethereum founder Vitalik Buterin, have criticised token-based DAO governance. Buterin warned that this system could result in "vote-buying" and "outright attacks."
In recent months, several DAOs have endeavoured to enhance their incentive mechanisms to avoid potential vote-buying attacks.
As an instance, MakerDAO adopted a constitution on March 27 that established formal governance procedures and implemented safeguards to prevent the consolidation of power. The goal of such measures is to improve the governance of DAOs and promote a fair decision-making process.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash