Danny Chong is the co-founder of Tranchess, a decentralized yield-enhancing asset tracker.
Taking a page out of the political book could put DAOs, or decentralized autonomous organizations, on the path to achieving the sweet spot between efficiency and decentralization. In particular, DAOs can learn from the way in which political parties elect representatives, run campaigns and meet long-term goals all while sustaining continuous support from a community that is not always aligned.
This may sound counterintuitive, given that DAOs are supposed to be new ways of building organizations. And why would anyone want to take a page out of political operations, known for being dysfunctional?
While DAOs offer significant advantages over traditional organizations, most DAOs are still trying to overcome the same fundamental roadblocks: achieving efficiency and consensus within the community. These issues are often a result of poor governance structures and poor communication.
In particular, most token holders can typically draft proposals today. This may enable something like direct democracy (or what some may even consider "decentralized" governance), but it lends itself to inefficiency. When anyone can propose anything, long-term goals become too diffused.
Additionally, DAOs have had long-standing communication problems. Poor communication often causes backlash, delays important roadmap checkpoints from being decided or executed and reveals a lack of genuine consensus within the community.
These issues are clearly issues with the community rather than the code that comprises a DAO. Which is why they might be addressed by looking at some key practices of political parties.
Lack of expertise and foresight
As mentioned, allowing all token holders to make proposals diffuses the organization's objectives and often creates a conflict between the short-term interests of the token holder and the long-term goals of the project itself. This problem comes in all shapes and sizes.
Firstly, this can result in too many proposals. When proposals come flooding in, many of which are low-quality or are written by someone with their head in the clouds, it can make it difficult for the DAO to prioritize what's important and make decisions in a timely manner. This can be made worse by poor filtration systems meaning that many proposals will be overlooked or missed altogether.
Another problem is that many token holders lack expertise. Not all token holders have the same level of knowledge in the areas that are relevant to the DAO. Therefore proposals are often neither well-thought-out nor in the best interests of the DAO.
Lastly, a lower turnout in voting by token holders can allow proposals to be pushed through by relatively small groups leading to decisions that are not properly aligned with the majority view of the DAO and its roadmap.
Formalizing goals and plans
Political parties elect representatives who draft laws for constituencies. They are elected by the people, and can be removed from office should they cease to represent the will of the people. This creates a context for policies to be made in the electorate's best interests.
DAOs should work in a similar way, whereby the community votes for individuals who are responsible for creating proposals that guide the projects’ future. Elected individuals would have a strong track record contributing to the DAO, and should demonstrably be aligned with the project’s goals.
And should protocol politicians become unaligned, the community can vote for someone else. This kind of structure would also limit or disincentive bad actors from taking control and causing mischief. It may even limit the number of people who rage quit from DAOs.
Read the full article here.
– Danny Chong
@focaballena
