Anchorage Digital enables users to participate in crypto governance

Anchorage Digital, a crypto custodian, is expanding its services to include crypto governance, allowing customers to participate in off-chain voting via the Snapshot platform.

The initiative will provide access to the off-chain voting platform, Snapshot, through Anchorage Digital’s custody solution, supporting more than 60 ERC-20 tokens.

The company’s president, Diogo Mónica, highlighted the intent behind this new offering in an interview. He underscored the rapid expansion of various protocols and the proliferation of different tokens, emphasizing the importance of staying in tune with these developments.

Snapshot’s platform, adopted by protocols such as Aave, Lido, and BitDAO, will be important in facilitating the interaction.

Anchorage Digital aims to streamline the communication process for decentralized digital asset owners, including DAO participants, who have traditionally relied on online communication channels such as Discord, Twitter, and governance forums of protocols.

The company’s goal is to create an in-house ecosystem of governance tokens, sidestepping the complications of setting up individual solutions for each protocol.

Looking back at the early days of DeFi, Mónica acknowledged that protocols often developed their unique standards for governance, resulting in a lack of interoperability. This posed significant challenges for custodians like Anchorage Digital.

However, the company now plans to support all future applicable ERC-20 tokens by default.

Anchorage Digital, a parent company of Anchorage Digital Bank, is one of the largest crypto custodians in the regulated U.S. market. Despite staff layoffs earlier this year, its banking unit remains unaffected.

The integration with Snapshot allows Anchorage Digital’s clients, both institutional and retail, to participate in governance votes without incurring gas fees, as the process is off-chain. Participation does not require any transfer of client assets from Anchorage’s custody.

Mónica likens this to traditional equity governance but highlights key differences. Crypto governance tends to be more frequent, with many votes per week, which is different from the traditional equity markets.

Snapshot votes, in particular, are not automatically executable. Instead, they serve as a straw poll, signaling potential changes which can be implemented by protocol developers who maintain control of upgradeable components.

The decentralized protocols, however, utilize on-chain voting to authorize changes explicitly to blockchain code, which, when approved, are automatically executed after a time lock delay period. Snapshot’s gasless voting feature has made it a popular choice among token holders, aiding in the democratization of crypto governance.

This move by Anchorage Digital points towards the growing recognition of the role of token holders in crypto governance. It also demonstrates how crypto custodians can broaden service offerings.