Designing for Participation: Practical Lessons from DAO Governance

Transcript

Hi everybody. Uh, thank you for the nice intro. Dows might not be the hottest topic right now, but I believe it's actually currently an interesting period for Dows. I've been a delegate and DAO contributor for a while and I want to share a bit of a timeline and my current thoughts on Dows. So Dows have been around for a while but they became increasingly a phenomenon in 2021 and 22 with many protocols launching and airdrops happening. So there was a clear need for decentralized

governance and Dows kind of became the default model for these organizations. We saw constitution DAO which was a very popular uh phenomenon back then. They were scaling very quickly to a couple thousand contributors and then there were many other Dows popping up. uh this kind of a group chat with a shared bank account sort of things and the tooling got much better. So it was very easy to set up a DAO. On the right is a an old screenshot from deep dowo mentioning nearly 20,000 organizations. Uh while the majority

probably was just snapshot spaces still uh it was a lot and they were also sitting on major treasuries. On top of that, there were many types of different Dows emerging. Some governing a product like protocol Dows, others just vibes based uh like social Dows. Then we had service Dows who were even selling services to other orcs or collector Dows for NFTTS. But fast forward to today, uh the majority of these of the DAO in the slides is probably not very active anymore. Some are still doing good, but generally there's a phase of

consolidation. It's often similar problems uh the result of tokenbased voting in general. So there's power concentration or plutoaucracy in many dows and just generally people on the internet trying to organize themselves often there's not much incentive to participate or operations are messy or unclear and also the administration in the USA recently became less strict with Dows meaning there's actually less pressure to decentralize and less regulatory arbitrage through Dows if you want to say so.

So we've seen a couple examples of Dows actually going back to a corporate model and closing down the DAO. A recent example is a cross DAO and they promised better business opportunities as a centralized company and actually the token holders and voters took this rather positively. So it was almost a 100% vote for uh abandoning the DAO in the end. And also telly uh one of the most used or probably the most used uh voting front end uh announced the end of their company as well. The product will be

maintained but uh they made the case that there's simply not uh a sufficient market for DAO tooling at the moment. Then we also have governance conflicts happening. This is not new but with the current sentiment many protocols are struggling to allocate their resources and the underlying conflicts become more evident. Avida was an example where um the relationship between team and DAO was struggling around revenues of the protocol and it was even called like kind of a civil war.

On top of that, um, if a DAO is not properly maintained or if we have more inactive or paused Dows, there can also be a risk uh, for security. The screenshot on the left is a recent example where uh an attacker bought just about $2,000 of a token and thus got over 50% voting power in a DAO who still held about 1 million in user funds. uh in the end the vote could be um cancelled by the team again centralized activity but yeah we see unfortunately more of these cases

so what now there's consolidation and a lot of frustration around Dow which I uh can resonate as a delegate but it's also a good time to think about how to design better governance Because if we want to have decentralized protocols in the future, decentralized governance will be an integral part of that. And we have been experimenting with DOS for the past more or less 10 years. So we have a better understanding of what works and what we can do in practice.

An example is the governance accelerator research program. It's a project from Metagago um where they've been mapping out problems and solutions for governance. Uh we don't have the time to go through that in detail, but I can really recommend to check out the website and maybe even contribute to the research. And then there's a couple other ideas and experiments. uh Agora has recently launched a request for proposals where you can submit uh your own DAO idea and uh yeah let that review by others and generally we see more thinking about

Dows in a structural way not just changing the UI of a proposal or the voting process but thinking about coordination more generally and also learning from other organizations. s since governance is really not a web 3 specific problem. Yeah. So these are nice initiatives and I hope we'll see more of that. Thank you for listening. If there's questions I'll be around. Uh feel free to contact me. >> Perfect. Thank you very much.