In researching decentralized autonomous organizations (DAOs), it’s hard to escape the question—how on earth does a self-organizing group of pseudonymous individuals spread across the globe actually make good decisions? Voting, of course, is the most oft-cited answer to this question.
It’s logical enough—DAOs are, at their core, about dispersing power out to the edges of communities; so by definition voting will play a more critical role in DAOs than it would in a traditional company. But one also needn’t have a lot of experience with consensus-driven decision-making in the workplace to know what a grueling mess it can be. It is slow, can lead to factionalism, and if not structured carefully often results in really poor decisions by really well-intentioned people. Lethargic, low-quality decision-making hardly sounds like a goal worth striving for, especially for DAOs that pride themselves on being modern and digitally native.
In researching this fundamental dilemma between the desire to democratize and the need for fast, high-quality decision-making, I came across Colony.io—a DAO infrastructure company that believes less voting, not more, is what’s needed for DAOs.
In their white paper, the Colony team lays out a compelling framework for striking this critical balance they refer to as “lazy consensus”, or more prosaically, “motions and disputes.” In short, contrary to the popular narrative about the importance of voting, Colony encourages DAO builders to avoid voting wherever possible.
Whenever a member of a colony (the term they use to describe DAOs built on their protocol) feels that something needs to change, they can file a motion. In order to dissuade the frivolous filing of motions, users must meet certain reputation thresholds and must also stake colony tokens. Motions automatically pass unless someone raises an objection by staking tokens of their own. Only in this case does the motion escalate to a dispute, which requires a vote to settle.
To further discourage the spurious use of motions, those on the losing side of a vote will lose some of the tokens they staked. The amount of tokens they lose is proportional to the margin of the vote. For example, in a close vote, the losing side may forfeit 10% of their tokens whereas a landslide vote could result in up to 90% of the tokens being lost.
Colony’s white paper goes into much more detail about how this consensus framework is implemented (side note: The paper as a whole is an excellent read if you’re looking to learn more about the DAO design space). It is refreshing to see such thoughtful, creative solutions to the decision-making dilemma of DAOs are already out there. Surely, many more such solutions will be needed as an increasing number of DAOs form to tackle the world’s biggest, most complex problems.
DAOs as a whole are on a righteous mission to correct for the inherent weaknesses in top-down hierarchies—namely information siloing and the tyranny of the Peter principle. But the effort to replace these structures with a more fluid, meritocratic, bottom-up model is going to need to be approached thoughtfully. Unchecked rule by consensus, after all, will likely result in simply replacing one set of problems with another.