In line with Ethfinex’s ethos of returning control to the user, the Ethfinex Token Vote gives the community the power to decide which tokens are listed.
The Ethfinex Token Vote was originally launched in May 2018 as part of the Nectar Community Initiative (Nectar is the native token of Ethfinex) that distributes governance to the users of Ethfinex.
The first system of its kind, the Ethfinex Token Vote was designed to enable those who regularly trade on Ethfinex to decide which tokens are available for trading. Once a month Ethfinex Voting Tokens (EVT) were distributed to traders in direct proportion to their Nectar (NEC) holdings, themselves distributed in proportion to maker volume.
Rather than a centralised team at Ethfinex trying to decide which tokens were most suitable for our customers using only limited information, EVT were used by the community to vote on the tokens they wished to trade.
After thirteen rounds - which at its peak saw 126 million voting tokens cast - Ethfinex paused the Token Vote to digest learnings from the process and redesign to improve on common barriers identified. These included:
In an industry that is inundated with unfounded hype, there was no easy way for the community to separate empty shells from tokens of substance.
Lack of Education
With so many tokens in existence, there was no motivation, or time, to research each token to assess its worthiness of a vote. In many cases this lead to short-termist behaviour, with tokens with the potential of long term success being bypassed in voting.
Ethfinex is now proud to relaunch the Ethfinex Token Vote with upgrades that directly address the pain points of the first iteration, and bring a more transparent and fair process for both traders and projects seeking listing on the exchange:
Quality Control → Decentralised Curated List with Kleros Integration
Ethfinex has collaborated with Kleros to integrate a curated registry ‘badge’ process. In line with Ethfinex’s ethos of decentralised governance, control of the token screening process has been handed over to the community via the Kleros dispute resolution layer.
Anyone can propose a token to enter the voting system, including NEC holders, Token Issuers, and Ethfinex themselves.
Through the Kleros token curated registry ‘badge’ process, the token proposer adds a ‘Community Approved’ badge (CA), signalling to the community that the badge meets the Listing Criteria (published here).
Just as anyone can propose a token, anyone can dispute the token and CA badge with reasonable evidence showing a failure to meet the Listing Criteria. This results in the removal of the token from the voting process. To incentivise participation within this system, challenging tokens and policing are financially rewarded.
Will Harborne, Lead at Ethfinex, adds:
“We invite every expert within the blockchain industry to join us in this industry-first experiment, by entering as a jury member - whether you are a lawyer, a smart-contract developer, an economist or a curious and analytical community member. By participating in the first large scale blockchain dispute resolution process, you can start earning bounties for contributing your expertise and unique knowledge, and show the world how a decentralised community curation process works"
For further information about how to participate, head to our Nectar Community page.
Lack of Education → Incentivised Crowd Research
To ensure the best tokens make it onto the platform, the Community Vote requires crowdsourced information by those who know it best. In recognition that this research necessitates effort, Ethfinex has reduced the number of tokens in each voting round, and provided a financial incentive.
To overcome choice paralysis and provide a reasonable amount of tokens for the community to research, the maximum number of tokens in each voting round will be limited to 12. These tokens will be randomly drawn from the eligible tokens (with the Community Approved badge) in the general pool on a monthly basis. In exceptional circumstances Ethfinex may choose up to three tokens to enter a certain round of voting to ensure the community does not miss a timely opportunity.
On top of a reduced list to research, traders are financially motivated to choose the token that will perform well on the platform in the long term. Traders that vote for a winning token receive 10% of the corresponding Ethfinex trading fees for 12 months from the end of the voting round.
Will Harborne, Lead at Ethfinex adds:
“This approach to decentralisation harnesses free markets to efficiently crowdsource information and research. Rather than a large centralised team at Ethfinex trying to decide which tokens are most suitable for our customers using only limited information, we create a market incentive for those with the most information to contribute it.”
For further information on the relaunched Ethfinex Token Vote head to the Nectar Community page.
Subscribe to our newsletter here.