Multisig Governance
Summary:
Proposals are typically submitted and voted on off chain
Proposals passed via off chain votes are executed via a multisig wallet
Signers can either be unelected team members or elected community members
Used by protocols like Synthetix, Yearn, and Sushiswap
What is a multisig?:
A multisig (also known as a multi-signature wallet) is a smart contract that offers greater security for funds or admin controls. Control over the wallet is split between several individual "signers", and X approvals out of N signers are required to approve any transactions from the multisig.
Gnosis Safe is the most prominent multisig.
Governance Process:
Multisig governance is typically paired with a signal voting mechanism to maintain legitimacy. As an example, Yearn, Synthetix, and Sushiswap all use the Snapshot voting tool to let token holders make key decisions and delegate authority.
After considering a proposal in the community's discussion venue, a signal vote will be held to assess support. While this typically involves voting with Snapshot, in some cases communities may use on chain signal voting (eg. early Yearn ygov.finance voting tool) or off chain voting which is weighted by user accounts instead of token holdings (eg. polls in Discourse forums or Discord).
Regardless of voting system used (on or off chain, weighted by users or token holdings), the vote itself doesn't trigger execution of the proposal's effects. Instead, the vote serves as an order for the multisig signers to execute the proposal using their admin privileges.
Benefits of multisig governance
Lower gas fees than on-chain governance
Increased security vs. individual or core-team controlled contracts
Drawbacks of multisig governance
Can be manipulated by the signers voting against the will of the community
Multisigs managed by core team members are more susceptible to misalignment with the community
May become a target of government regulation or legal action, as they have a small set of identifiable signers
Resources:
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