Ethfinex Token Vote Analysis

On March 7 2019, after 4 months of downtime, we took all the learnings from previous rounds and brought back a new and improved #EthfinexTokenVote. The Ethfinex Token Vote puts the power in the hands of our community of NEC holders, and subsequent EVT owners, to decide which tokens should become tradable on Ethfinex.

In this post, we outline the key differences from the last round of voting and take a detailed look at how the new process worked in practice.

It’s a fascinating read, but if you’re short on time here are the key take outs:

  • Saw overwhelmingly positive increases in key metrics across the board
  • Voter turnout of 68% (up 3.8 times higher)
  • Price of EVT up by 89%
  • Trade volume by 103%
  • The use of Kleros proved to be a resounding success
  • Token Education week as a vital preliminary

Read on to learn more 👇

The Why & What of the Ethfinex Token Vote

At Ethfinex our innovation and development is always tightly anchored to achieving our mission:  

Empowering you to lead the financial evolution

One standout example of this is how we list tokens on the exchange. We devised a unique voting system whereby our community of NEC holders are able to vote on a selection of candidate tokens. Every period, we airdrop purpose-built Ethfinex Voting Tokens (EVTs) in a 1:1 ratio to both off and on-chain wallets containing NEC. NEC holders are then able to use these temporary EVTs to vote, without needing to spend their NEC. Alternatively, they have the freedom to sell these tokens on the open market.

Whilst giving our NEC holders more power to choose what becomes tradable on Ethfinex, the ability to trade EVT also gives the engaged communities behind candidate projects the opportunity to support their favourite token. This makes listing an enjoyable, engaging and collective process, one where Ethfinex makes no direct financial profit whatsoever and has minimal involvement. With the new use of the Kleros resolution layer, that involvement has been further reduced with our old role of token vetting being ultimately replaced by the distributed blockchain community.

*NEC is the Ethfinex token and can also be used to vote on proposals submitted by other users, redeemed for ETH or sold on the market. Learn more today.

What Made Round 14 Different?

Round 14 was the first in an updated and fine-tuned process. Whilst rounds 1-13 saw significant engagement and great tokens win the listing, we ultimately spent that time observing, taking notes and finding ways to make it better. Round 14 was the fruit of that labour and future rounds will be a continual improvement cycle. For a full run-down of the why behind the update head here.

The New System Brought:

  • Heightened Quality Control by incentivising independent user research with a 10% fee share from winning tokens they voted on
  • The quality of tokens further enhanced by distributed curation with the use of Kleros’ dispute resolution protocol
  • The addition of Kleros further empowered the Blockchain community to self-submit tokens, challenge submissions and have a direct say in what is considered for the vote. As well as enhancing engagement, this also made for a fair and transparent process that captures the true spirit and potential of Blockchain technology and distributed governance.
  • Greater exposure through video interviews and project information packs. We sat down with every willing candidate for a (virtual) face to face Q&A asking uncovering information traders would want to know
  • Random Draw Mechanism deciding which of the eligible tokens end up in the subsequent round. Whilst the new system will in future bring this extra layer to ensure randomness, the last round did not include a draw mechanism due to exactly 12 tokens being eligible through the new Kleros system.
  • New EVT decay structure, discouraging last minute, eBay bid-style voting. EVT begins at  x2 in value and decays down to x1 toward the end, encouraging early voting. Like the point above, this was deactivated in the last round in order to simplify the first in a new process.

Some Key Metrics

Key Learnings

Token Education as a Vital Preliminary

This was the first time we dedicated a full week to token education. As spotlighted in the data above, this went some way in not only enhancing engagement but gave voters useful information, helping them arrive at an informed decision. Whilst we cannot force projects to get involved, with the last round seeing 8 of the 12 projects participate, we will endeavour, each time, to have each candidate involved. We had positive user feedback on this new part of the process, so will also continue to deliver an information pack containing one-pagers on each token one day before the vote starts.

Kleros Token Registry and Dispute Resolution Layer

This was the most integral upgrade compared to previous rounds and served as the gateway, and filter, for tokens seeking to enter the vote. As intended, this successfully ensured that only high-quality tokens became eligible through community screening. There was an incredible level of activity from the Blockchain community in not only submitting tokens (both for the registry and the Ethfinex Badge) but also challenges disputing the eligibility of tokens with many being rejected and an array of jurors adjudicating individual cases. This made round 14 an experiment in measuring not only our aforementioned metrics but also decentralised, democratic and distributed decision making and dispute resolution.

Wrapping up

In the run-up to the upcoming #EthfinexTokenVote15 we will incorporate key learnings to further refine the process. Here are some specific areas that will be different next time:

  1. EVT will start at x2 in value (1EVT = 2 votes) and decay throughout the voting period. This will encourage users to vote early on in the period and discourage last minute, eBay-bid style voting.
  2. Due to the popularity of the Kleros token registry, we will have significantly more tokens in the eligible pool. This means we will deploy a random draw mechanism to determine which of those tokens will become candidates in the current round. This random draw will occur one day prior to the beginning of the Token Education week (one week prior to the opening of the vote).

We always love to hear your feedback, so please reach out to us on Telegram, Twitter, or send us a message at [email protected] on your experience of the Ethfinex Token Vote.

Trading is now live on Ethfinex — get started here.

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