Decentralized Governance Structures

In order to make creating DAOs seamless, a suite of governance templates that supports different objectives and structures needs to be in place to smooth the adoption curve and solve for mechanics design-project fit. Making the building blocks of token issuance and minting, incentive design, coordination, treasury, and community engagement more ato... See more

Decentralized governance is at the heart of the ideological foundation of crypto: equal participation for all actors. The playbook of progressive decentralization is being followed by more decentralized finance (DeFi) projects. Users and tokenholders can now have more control over protocol parameters, treasury spending, and, in general, the industr... See more

---------SIGNAL VS NOISE Social governance in DeFi applications is usually coordinated through online forums and Discord channels. Snapshot applications conduct "off-chain" voting before protocol changes are encoded on the blockchain. DeFi governance evolved organically but created a lot of noise because proposals, discussions, and votes spread acr... See more

Decentralized governance in some contexts is both necessary and dangerous, for reasons that I will get into in this post. How can we get the benefits of DeGov while minimizing the risks? I will argue for one key part of the answer: we need to move beyond coin voting as it exists in its present form.

At the moment, the usual structure of a DAO is an organization whose on-chain protocol involves using a token that allows the holder to vote on governance decisions. Usually, 1 token = 1 vote. This token-centric method of governance bundles ownership and governance rights in that one asset, in a bid to align power and responsibility.

Tarun Chitra provided an excellent description of when governance is needed within DAOs in his recent piece for a16z,

DAOs work best when the governance burden related to curation, security, and risk can be reduced faster than the natural increase in coordination costs that accompanies the need to have members involved in voting on every decision made.