Shadow Vote

• From this blog (16-1-2020) by bZx, which at the time of writing is transitioning towards a DAO model for governance:

"A shadow vote is a vote cast by a token holder with no economic stake in the protocol. This can be accomplished by borrowing a governance token, voting with it, then returning it to the lender. In the worst case, a shadow vote can be virtually free. The attacker executes a flash loan, votes, and returns the loan within a single atomic transaction, incurring no capital carrying costs or interest payments. In more ideal cases, the attacker is forced to bear capital carrying costs, to pay interest for an extended period, or to expose their collateral to margin calls and penalties."

They also propose their own solution:

"It is not possible to stop lending protocols from listing the BZRX token, nor is it possible to prevent attackers from staking BZRX tokens that have been borrowed from lending protocols. The only recourse against shadow voters is to force exposure to collateral, margin calls, and interest payments. This can be accomplished by requiring an extended minimum staking period. We propose an initial staking period of one year. This imposes, as much as is feasible, significant costs on shadow voters. This also has the dual purpose of both aligning the incentives of current token holders with the long term health of the protocol and also selecting for holders with a longer time horizon."