The Governance Rabbithole

Yesterday, in our internal sessions at StatesDAO, Bobby (Delegate at Optimism) shared his experiences in DAOs. It is interesting to note how Governance is evolving in 2022 within the DAOs.

In DAOs, the governance structure is democratic, and everyone has a chance to influence a protocol. As decisions are made by the community (or token holders), everyone has an opportunity to have some form of influence on a decision. I have participated in the governance lifecycle of a few DAOs and I forsee some changes coming in.

Informal discussions - Off-chain Informal discussions are usually happening within Discord and telegram.

These are “planting the seed or testing the waters.” As new community members join the DAO, they share their ideas, opinions, gaps in the DAO and the solutions to bridge those gaps. People have biases based on their worldviews. They sometimes engage more with community members with whom they have prior associations (via virtue signalling) or sense mutual benefits. Old members discount the power of ideas shared by new anon-community members who are good actors but don’t have clout in a new DAO. Hence the engagements are imbalanced and sometimes feel like an echo chamber.

The new members feel discouraged and disappointed with the response they get in a DAO and switch to a DAO where they have their friends. And this cycle continues. So DAOs are getting centralised as opposed to their foundational ethos of decentralisation.

Opportunity for change -

  • On-chain credential-linked accounts will communicate with each other via new-age tools.

  • Identifying the persona of a particular DAO member based on their on-chain transactions will help the DAO. DAO onboarding platforms will have new data analytics use cases.

Formal Discussions - Formal discussions happen on a forum where a community member reviews and updates the proposal based on community feedback. Not all community members invest time into each proposal. If you send a new proposal, you will get a response based on the following metrics:

  • Is the proposal adding value to the community, protocol or the token price?

  • Is the proposal beneficial to any of the individual community members?

  • DAOs incentivise some stewards/ambassadors/advocates to comment on proposals and accelerate the signalling. Did you personally connect and build a rapport with a few community members at Step 1?

    Opportunity for change:

  • Creating a persona dashboard for the DAO will neutralise the bias in the responses and increase the proposal-to-response ratio among the community members. Initially, we want a doctor to comment on medical innovation and a lawyer to look into the legal proposal and not the other way around.

  • Automation tools for response collection should map the DAO community members correctly based on their on-chain reputation. These tools should track the community engagement metrics too.

    Signaling: Forum voting is a signal to showcase the support of a proposal. This is a good way to identify if there is enough support within a DAO but it has its own share of challenges. Although it helps to filter random proposals, it is also vulnerable to Sybil attacks.

    Opportunity for change:

  • Sybil-proof (BrightID, POH, GP) accounts to participate in this stage.

  • On-chain credentials to take precedence and integrated with Forum.

    Off-chain Voting:

  • Snapshot is an example of off-chain voting.

Opportunity for change -

  • Sybil Proof Voting mechanisms. Masking of Wallet addresses and voter details.

  • Onboard Digital credential and reputation protocols. Zero Knowledge proof Pseudonyms & SoulBounds NFTs used for voting.

On-Chain Voting: or Governor Bravo are good examples of On Chain Voting.

Opportunity for change -

  • Gasless voting

  • Mechanisms to incentivise voters. e.g. Retroactive funding of transaction fees from the Ops treasury.

  • Agility (error-proof) in automatic funding of proposals.

    To be continued…

Subscribe to Saswat
Receive the latest updates directly to your inbox.
Mint this entry as an NFT to add it to your collection.
This entry has been permanently stored onchain and signed by its creator.