Financial modeling platform Gauntlet has received a grant from the Uniswap Foundation to improve DAO incentive mechanisms, according to an announcement by Gauntlet.
So excited to announce our engagement with @employee and their new applied research group!
Gauntlet will focus on designing and defining incentive programs for Uniswap. https://t.co/RjzV02hFhf
– Uniswap Foundation (UniswapFND) April 11, 2023
Gauntlet describes itself as “the original cryptocurrency financial risk management solutions provider”. It uses economic models to optimize fees and rewards for decentralized finance (DeFi) protocols, according to the announcement. The company is creating a new division, Gauntlet Applied Research, that will focus specifically on problems related to the growing ecosystem of decentralized autonomous organizations (DAOs).
In its announcement, Gauntlet said it will be providing three pieces of the research to UniswapDAO. The first will be a quantitative framework that DAO can use to evaluate the success or failure of the Uniswap protocol. The second is an analysis of trader and liquidity provider behavior, and the third will be at least three proposals for incentive mechanisms to allow the DAO to achieve its goals.
Gauntlet said it expects these three deliveries to be completed by June 2023.
Devin Walsh, CEO of the Uniswap Foundation, expressed his hope that Gauntlet’s research will help improve not only the Uniswap protocol, but the crypto ecosystem as a whole, saying:
One of our goals at the Uniswap Foundation is to build long-term relationships with the most talented and value-aligned teams in the space, working with them on the most complex and interesting questions facing the Uniswap protocol.
DAOs have become a staple of the crypto economy over the past few years, with DAO analytics provider DeepDAO currently listing over 2,300 current DAOs. Most DAOs are governed by token holders, who are allowed to vote directly on the blockchain to support or reject proposals for changes to the protocol.
However, DAO’s token-based governance has been criticized by some industry experts, including Ethereum founder Vitalik Buterin, who has stated that such a system can lead to “vote buying” and “outright attacks.”
Over the past few months, some DAOs have tried to provide better incentive mechanisms in hopes of preventing vote-buying attacks. MakerDAO, for example, passed a constitution on March 27 to formalize governance processes and provide checks and balances to prevent concentration of power.