April 5th, 2022

Summary: As larger, sophisticated players and institutions enter the space, the frequency of DAO takeovers will increase. We walk through a few recent examples and a hypothetical (and implausible) scenario of a hostile takeover of Lido DAO (LDO) and a subsequent vampire attack on the Lido liquid staking pools.

Recent Hostile Takeovers

The rise in DeFi-centric DAOs with massive treasuries will likely lead to more frequent attempts at hostile governance takeovers. Abysmal participation rates in governance (largely driven by speculative investors) have forced DAOs to accept low thresholds for proposal approval. The greater distribution of DAO tokens and the higher circulation of liquid supply relative to corporate equity stakes means takeovers are easier to pull off in the DAO space…without the right defense mechanisms in place.

DAO treasuries have reached nearly $13B in early April, a $4B increase m-o-m. While we have not yet seen a proliferation of takeovers, two examples from the past few months are harbingers of attempts to come as the amount of value in the DAO space reaches unprecedented levels.

April 5th, 2022

Overview: Following my previous article — Scaling Layer 1: ZK-rollups and Sharding — I wanted to provide additional clarity on the importance of data availability and the nuances of ensuring data availability in a rollup-centric blockchain.

Understanding Data Availability

The key to understanding data availability is to start with the basics of block verification and security in a blockchain. Validators must follow a set of rules when producing a block. Blocks must only include valid transactions (i.e. transactions that lead to valid state changes) and include two pieces of data that allow the network to verify that this rule has been followed:

  • Block header — Includes all the metadata of the block, e.g. previous block hash, merkle root of transactions, new state root, nonce, gas limit, gas used, etc.
  • Block body — Includes all the transactions in a block and accounts for the majority of the block size
April 5th, 2022

Overview: Below is an overview of the problem with scaling L1s and how the combination of ZK-rollups and sharding will lead to massive improvements in scaling.

Fundamental Problem with Scaling Layer 1

Blockchains are responsible for three primary tasks: execution, security (or consensus), and data availability.

  • Execution — Processing transactions, which involves computational work (given State N and State transition -> State N+1)
  • Security (or Consensus) — Defining how a block is added to the chain and how participants agree that a block is the correct one
  • Data Availability — Data is stored on each blockchain node. This data should be available to anyone and everyone who uses the blockchain