As the world of decentralized autonomous organizations (DAOs) continues to grow and evolve, the need for improved privacy and scalability becomes more apparent. Enter zero-knowledge proofs (ZKPs), a groundbreaking technology that offers the perfect solution for these challenges. In this blog post, we’ll explore how ZKPs are already being used in the crypto and web3 space and dive into some exciting use cases for DAOs, including shielded treasuries, anonymous voting, gasless voting, and proof of reputation.
Every day, the average crypto and web user interacts with simple ZKP systems. For instance, ZK proofs are used when signing an on-chain transaction, as you prove you possess the private key to your wallet without revealing it.
But how can we apply ZKPs to the world of DAOs?
Several innovative use cases have emerged, such as:
Shielded treasuries for DAOs
DAOs can keep their treasuries hidden, allowing them to participate in sealed bid auctions without revealing their total assets. An excellent example is the 2001 ConstitutionDAO bid, where a DAO aimed to purchase a physical copy of the US Constitution. The public nature of their treasury allowed a rival bidder to outbid them by a small margin, illustrating the need for shielded treasuries.
Griffin Dunaif and Dan Boneh have proposed Private Treasuries, which can be built using Tornado Cash Nova. This enables a DAO management platform similar to Juicebox, where only the person managing the DAO can see the funds.
Anonymous voting for DAOs
DAO members can cast their votes without revealing their identities, ensuring a private and secure voting process. In 2015, Zhao and Chan proposed a zkSNARK-based protocol for private Bitcoin voting. The commitments are broadcast publicly, while the underlying values and opening keys remain secret. On-chain results need to be revealed by participants themselves.
ZK for scaling, gasless voting for DAOs
Aragon has developed SNARV, a general framework for e-voting protocols, with two implementations: OVOTE, a Layer 2 design for Ethereum voting similar to zkRollup, and BatRaVot, a lightweight voting protocol that supports delegate voting. BatRaVot is currently a proof of concept aimed at reducing gas costs, but Aragon plans to add privacy functions in the future.
By aggregating votes off-chain and using zkSNARK proofs, gas costs are significantly reduced. Aragon’s OVOTE is a prime example. When users want to vote, they create a ballot with wallet information, their choice, and a small proof. An aggregator then collects all the votes, sending them to a smart contract, thus reducing gas fees.
Snapshot X is another fascinating project, developed by Snapshot in collaboration with StarkWare. This voting framework, built on StarkNet (a Layer 2 ZK-Rollup), enables any DAO to run their governance on-chain on Layer 2 and execute transactions on Ethereum. Snapshot X also supports shielded voting through the Shutter Network, where results are only revealed after the voting period ends (btw no ZKPs are used for this semi-private feature though).
Proof of reputation for DAOs
Users can prove their reputation in a DAO without exposing their identity. UniRep and Interep are two projects that focus on this use case. UniRep is a private, non-repudiable reputation system based on ZKPs. It gives users true anonymity using short lived psuedonyms. A single user has a number of valid identifiers at any given time. Interep allows DApps or services to verify users’ reputation without revealing their identities. This is possible thanks to the use of zkSNARKs and Semaphore.
The world of ZKPs is vast, and projects like the Ethereum Privacy and Scaling Exploration, Aragon and Snapshot are all exploring the potential use cases of ZKPs for DAOs. A lot of these are right now at an early development stage, but as we move forward, we can expect more exciting developments bringing enhanced privacy tooling to the DAO landscape.