It’s Time to Return Value

We’re entering a new phase of protocol governance where token utility is not only possible, but necessary. As we begin seeing an uptick in forum proposals calling to share value with token holders, protocols should lean into this opportunity and take intentional steps towards returning value in exchange for the work of governance. Tally is building an open source standard that enables protocols to return value that we call Governance Staking.

Governance Staking

Governance staking is the web3-native answer to aligning protocols with token holders. Protocols generate value, whether through revenue sharing or controlled inflation, and share it with token holders who are actively contributing to long-term governance. Rewards are distributed to token holders based on governance participation parameters set by the protocol. Operators, foundations, investors, and the wider community become aligned with long-term success as the protocol becomes more secure through long-term aligned governance.

Governance Staking Progress

Governance staking is starting to emerge across the ecosystem. Uniswap DAO deployed Unistaker: infrastructure developed to facilitate the collection and distribution of protocol fees to $UNI token holders who actively participate in governance. Unistaker is currently live, although rewards are not yet activated. Users can stake on Tally and follow the progress of reward activation in the Uniswap forum.

The Arbitrum DAO voted to fund the implementation of staking to unlock $ARB utility and align governance with the long-term success of Arbitrum. Tally is currently developing the infrastructure for the Arbitrum DAO to activate staking, read the full proposal to learn more.

The Ethena Protocol community is currently exploring activating a fee switch to begin value creation for token holders. Recently, Wintermute governance submitted a fee switch proposal to the Ethena Governance forum: “The Ethena Protocol has and continues to generate substantial amounts of real revenue, indicating a clear level of PMF for USDe. Unfortunately, sENA does not directly benefit from this revenue, resulting in an explicit disconnect between sENA holders and the growth of the protocol. It’s time to acknowledge this and look towards establishing clear alignment between ENA holders and the underlying fundamentals of the protocol.”

The Tally Protocol

The Tally Protocol enables DAOs to create revenue streams that not only reward token holders but bring the entire protocol into alignment. Fees are shared among active governance participants so token holders have a financial incentive to hold delegates accountable for high quality governance.

Additionally, governance tokens staked in the Protocol are issued a Liquid Staked Token (LST). LSTs unlock the economic utility of governance tokens, allowing token holders to participate in DeFi while ensuring the token’s voting power remains active in the DAO. Read more about LSTs in The Tally Protocol Whitepaper.

Looking Forward

As we enter this new phase of protocol governance, Tally is excited to help create lasting, secure, & aligned infrastructure for returning value to token holders.

Tally builds staking for protocols. Interested in setting up governance staking? Reach out at biz@tally.xyz.