Clear Directions to Strengthen Democratic Integrity in DAOs

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Though it’s actually thrilling and a part of the brand new and trendy motion of know-how, the fast improvement of Decentralized Autonomous Organizations (DAOs) additionally raises a vital governance drawback: the risk of a small variety of key stakeholders with sizable token holdings gaining management.
It’s important that we take note of this oligarchic risk, additionally referred to as the “plutocracy” drawback. This text goals to make clear easy methods to deal with this problem whereas preserving the democratic integrity of DAOs.

1. Proportional illustration utilizing quadratic voting.

Quadratic Voting (QV) is a ground-breaking technique to get round this drawback. With QV, there is an incremental value for every further vote, in distinction to conventional linear voting. In different phrases, a disproportionately increased variety of tokens are wanted to forged every subsequent vote.
By discouraging the hoarding of voting rights and inspiring selective voting, which focuses on the problems that basically matter to a selected voter, this mechanism ranges the taking part in discipline.

2. taking a deliberative democracy method.
One other solution to defend DAOs from extreme energy focus is thru delegated or liquid democracy. Token holders have the choice to assign their voting rights to trusted representatives, making certain that their voice continues to be heard with out having to actively take part in each vote. This mannequin enhances variety and inclusivity in decision-making by fusing facets of direct and consultant democracy.

3. Electoral privileges primarily based on longevity.
By tying voting energy to the size of token holdings, long-term dedication to the DAO may very well be rewarded and inspired. With the assist of this method, which discourages the fast accumulation of tokens for the aim of influencing choices, members are inspired to be loyal and accountable.

4. By utilizing Distinctive Identification Verification, one particular person, one vote is assured.
The inspiration of any democratic system is the thought of “one particular person, one vote.” This concept may very well be upheld by the DAO by putting in a particular id verification system that may give every participant an equal quantity of votes. Decentralization and anonymity upkeep, nonetheless, current a fragile problem that should be managed. The answer to this stability might lie in cutting-edge technological improvements like decentralized id platforms or zero-knowledge proofs.

5. Implementing multilayered governance buildings.
DAOs may create a multilayered governance construction with a number of voting thresholds the place explicit choices should cross with a purpose to forestall token-based dominance. In an effort to additional be sure that no single entity can sway a vote’s final result, every layer might have a distinct distribution of voting energy.

6. limiting every particular person’s means to vote.
By imposing a cap on the full variety of votes that may be forged from a single deal with, you may keep away from anybody participant changing into the dominant power. This democratic verify ensures that energy is distributed pretty inside the DAO.

7. Hybrid governance frameworks.
One-person-one-vote and token-weighted voting techniques may be balanced by utilizing hybrid governance fashions. These fashions can provide twin governance mechanisms, the place some choices are made utilizing token-weighted voting and others utilizing a system of one particular person, one vote. By sustaining this stability, it’s assured that each main and minor token holders are concerned in decision-making.

8. Committees that conduct random voting.
The creation of randomized voting committees for explicit choices is an alternate technique. All token holders may very well be randomly chosen to serve on the committee, and choices may very well be made primarily based on a majority vote inside the committee. This ensures impartiality and prevents one group from controlling the DAO’s choices.

9. Voting rights particular to sure stakeholders.
Relying on their involvement and place inside the DAO, assigning totally different stakeholders totally different voting rights may also be a good technique.

Creator: Pooyan Ghamari, Swiss Economist and Specialist in Blockchain Know-how