What Are the Risks of Using Off-Chain Voting Mechanisms for On-Chain Execution?
Off-chain voting is cheaper and faster, but the main risk is the "execution bridge" – the mechanism that translates the off-chain vote result into an on-chain action. This bridge can be a single point of failure if it is controlled by a small set of trusted entities or a multisig wallet.
A compromise of this bridge allows an attacker to execute malicious actions on-chain despite an honest off-chain vote.
Glossar
On-Chain
Ledger ⎊ The term "on-chain" fundamentally denotes data and activity recorded directly onto a blockchain, a distributed, immutable ledger.
Single Point of Failure
Concentration ⎊ In crypto derivatives, this risk materializes when excessive collateral or governance control resides with a small number of entities, such as a few large liquidity providers or key developers.
Off-Chain Voting Mechanisms
Process ⎊ Off-chain voting mechanisms enable token holders to signal their preference on governance proposals without submitting a costly, full transaction to the underlying blockchain.