Lagrange State Proofs Case Study #3: Cross-Chain Voting

Lagrange State Proofs are a new cryptographic primitive that enables trustless, non-interactive and aggregatable verifications of cross-chain states. In this multi-part series, we‘ll explore how Lagrange State Proofs can unlock new use cases for cross-chain DApps with improved functionalities, user experience and security.

In our previous articles, we introduced Lagrange State Proofs, a novel method of verifying the states of contracts on other chains without requiring messaging protocols, bridges, oracles or intermediary protocols. Lagrange State Proofs are cryptographically secure and tamper proof representations of state that can be used to enable existing single chain DApps to operate across multiple chains, without requiring protocol changes. Our first article demonstrated how Lagrange State Proofs allow Decentralized Identification (DID) on a single chain to be used on other chains at will without requiring constant cross-chain state relays using messaging protocols, bridges, or oracles. Our second article showed how a lending protocol on a chain can provide more personalized loans to a customer, including undercollateralized loans, by aggregating Lagrange State Proofs of the user’s credit scores and DIDs across multiple chains.

Each cross-chain use case can be accomplished with a single Lagrange State Proof submitted by the end user to the destination chain. Neither the protocols nor the end users are required to use a complex and unsecure series of messaging protocols, bridging, oracles, or intermediaries to relay information between chains.

This article focuses on another problem: cross-chain governance voting. We will show how DeFi protocols and DAOs that operate on multiple chains with wrapped or bridged tokens can allow their token holders to vote on cross-chain proposals without ever needing to unwrap their tokens. Existing DAOs can rely on widely used single chain governance voting protocols, such as Governor Bravo, to conduct cross-chain votes natively on each chain with Lagrange State Proofs as the glue that tallies the multi-chain voting results.

Lagrange State Proofs don’t require modification of existing governance protocols to use and are cryptographically secure and tamper-proof. As such, multi-chain voting using Lagrange State Proofs inherits the same security and user-experience as the existing single chain governance protocols.

Wrapped or Bridged Tokens and Voting

To understand the current state of governance voting, it is important to understand what wrapped or bridged tokens are. A wrapped token or a bridged token is a token issued on one chain in accordance with the standards of that chain (e.g. ERC-20) in exchange for another token that is deposited with and held by a custodian on another chain. The process of bridging tokens between chains involves paying gas fees on both the origin and destination chains.

Wrapped tokens have provided essential cross-chain liquidity to financial markets and have powered the growth of many cross-chain DeFi markets. Wrapped or bridged tokens also enable DeFi protocols, such as AAVE, or DAOs, such as DXDAO, to operate across multiple chains.

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However, one of the least talked about aspects of wrapping and bridging tokens is the loss of the ability to exercise the voting rights belonging to those tokens. For example, despite AAVE operating with bridged tokens across seven chains, AAVE only allows token holders on Ethereum to participate in its governance.

In other words, by wrapping or bridging their tokens, token holders give up the right to participate in governance decisions that may significantly affect the value of their tokens.

Consider an example where an AAVE token holder owns a bridged token on Avalanche and wants to vote on a governance proposal on Ethereum. In order to vote, the token holder must:

1. Transact on Avalanche to deposit the wrapped AAVE token into a bridge.
2. Transact on Ethereum to withdraw the unwrapped AAVE token from the bridge.
3. Vote on the AAVE governance proposal and hold the token in an Ethereum wallet until the voting period ends.
4. Transact on Ethereum to deposit the unwrapped AAVE token into a bridge.
5. Transact on Avalanche to withdraw the wrapped AAVE token from a bridge.

This process is not only complex but expensive. Apart from the four transactions and two separate bridge fees, the token holder has to forgo the financial opportunities that they could have pursued on Avalanche with their bridged asset. This financial cost, let alone the complexity of the process, dissuades most if not all bridged token holders from voting. This is not a tenable situation for multi-chain DeFi protocols and DAOs that want to encourage their token holders to participate in governing the protocol.

Cross-Chain Voting with Lagrange State Proofs

Lagrange State Proofs solve this problem by allowing users to vote using wrapped tokens on the chains that the wrapped tokens are stored on, without needing to bridge the token back to a main chain. By using Lagrange State Proofs, a multi-chain protocol or DAO can enforce accepted single chain governance paradigms across multiple chains without burdening token holders with gas fees, bridge fees or messaging protocol fees.

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The above diagram shows how cross-chain voting is accomplished easily using Lagrange State Proofs. The above diagram uses AAVE as an example, although it can be generalized to any cross-chain DAO that uses any form of governance.

As a preliminary to setting up cross-chain voting, the DAO sets up instances of its preferred governance protocol (in the above diagram, a Governor Bravo style vote) on each chain it operates on. Each chain’s governance protocol deployment should allow token holders on that chain to vote using their wrapped tokens.

When a proposal is to be voted on, cross-chain token holders can vote with their bridged tokens on that chain’s independent Governor Bravo instance. When the voting period is over, an aggregated Lagrange State Proof can be used to prove the sum of the votes across all of the chains that the DAO operates on to any one of the individual chains.

This design enables trustless cross-chain vote tallying and proposal executions across all chains, without requiring tokens to be centralized onto a single chain for voting.

Using Lagrange State Proofs for cross-chain voting has three unique advantages over using any other method:

1. Voting on each chain can occur independently based on accepted governance paradigms, without requiring every cross-chain user to bridge their tokens back.
2. Votes can be tallied trustlessly across any number of independent chains, without requiring an intermediary to sum up the results.
3. The sum of votes across all the chains can be proven in a single transaction to contracts on any single chain.

In the next article, we’ll explore how Lagrange State Proofs will unlock new functionalities for Soulbound Tokens (SBTs) by enabling cross-chain proofs of token and wallet ownership.