Signal voting is when token holders sign their votes with the public-private key pair. That way, anyone with a list of signed votes can check the signature, see that they have tokens on the blockchain, and add up the vote counts. Usually, signal voting is token-weighted by giving voters one vote per token.

Signal voting is off-chain, which means that it’s free! Users don’t have to pay gas. That also means that the vote cannot, by itself, affect the blockchain.

Signal voting depends on a server like Snapshot (tk) or a peer-to-peer broadcast network like libp2p to broadcast votes.

Token holders can create and vote on proposals in proportion to their token balance. The votes go on-chain, so that a governance smart contract can total up the votes and determine what proposals pass.

Compound launched Governor Alpha last year, we’ve seen other projects adopt it as a de-facto standard.

On chain voting does cost gas, but paying to put votes on-chain does make the system more secure and decentralized

Governance does not depend on a third party to broadcast the votes, because it just inherits the data availability from the blockchain itself.

multisig is when a fixed number of addresses share administrative power. A subset of them — e.g. 3 out of 5, all 4 out of 4, or even any 1 out of 2 — have the power to execute admin commands.

Gnosis team built Safe, a widely-used and battle-tested smart contract that implements arbitrary size multisigs on Ethereum. This contract is widely-used for administering protocol contracts and on-chain treasuries.

Signal voting + Admin multisig = Snapshot

You may be familiar with Snapshot, a popular tool for projects to run their governance. Because the tool is built on signal voting, any token holder can vote for free on Snapshot

signal voting does not execute anything on chain.

Usually, Snapshot votes depend on an admin multisig to accurately and promptly execute the will of the voters on-chain. Recently, Snapshot announced that they’re going to use the reality.eth oracle to execute the proposals on-chain.

Signal voting + On-chain voting = Idea-to-proposal lifecycle

lifecycle uses the free step — signal voting — to make it easy to raise new ideas and uses the expensive-but-secure step — on-chain voting — to keep the contract and treasury safe.

On-chain voting + Admin multisig = Delegating authority to a committee

Both Uniswap and Compound have recently passed on-chain votes to delegate spending authority to the multisigs. Uniswap proposed the Uniswap Grants Program, and Compound followed soon after with the Compounds Grants Program