Steps to Empowering Democratic Integrity in DAOs
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Though exciting, the rapid development of Decentralized Autonomous Organizations (DAOs) also presents a crucial governance problem – the potential for dominance by a few stakeholders with large token holdings. This oligarchic possibility, commonly referred to as the “plutocracy problem,” is a matter that requires our attention. The purpose of this article is to show how to meet this challenge while strengthening democratic integrity within DAOs.
1. Square Voting for Proportional Representation
A revolutionary method to get around this problem is quadratic voting (QV). Unlike traditional linear tuning, QV has an additional cost associated with additional votes. In other words, each additional vote requires a disproportionate number of tokens. This mechanism levels the playing field by preventing voting rights hoarding and encouraging selective voting, focusing on issues that really matter to the individual voter.
2. Introduction of a model of delegative democracy
Delegated or fluid democracy is another way to protect DAOs from undue concentration of power. Token holders have the ability to delegate their voting rights to representatives they trust, ensuring that their voice continues to be heard without having to actively participate in every vote. This model combines elements of direct and representative democracy, promoting diversity and inclusiveness in decision-making.
3. Elections based on longevity
A long-term commitment to the DAO could be encouraged and rewarded by tying voting rights to token holding time. This system prevents the rapid accumulation of tokens to manipulate decisions and fosters a sense of loyalty and responsibility among members.
4. Ensure one person and one voice with clear identity verification
The concept of “one person, one vote” is at the heart of any democratic system. To enforce this principle, the DAO could implement a unique identity verification system that would guarantee equal voting rights for all participants. However, the challenge of maintaining decentralization and anonymity must be carefully managed. New technological solutions such as decentralized identity platforms or zero-knowledge proof could be the key to this balance.
5. Integration of multilevel governance structures
To combat token-based dominance, DAOs could establish a tiered governance structure where specific decisions must cross multiple voting thresholds. Each level can have a different distribution of voting rights, further ensuring that no entity can dictate the outcome of a vote.
6. Limit individual voting power
Another approach to avoiding the dominance of a single participant is to place a limit on the maximum voting power that a single address can have. This democratic guarantee ensures that influence is distributed evenly within the DAO.
7. Hybrid governance models
Hybrid governance models can help balance token-weighted voting and one-person-one-vote systems. These models can provide dual governance mechanisms, where some decisions are made by symbolic weighted vote, while others are made through a one-person, one-vote system. This balance ensures the participation of large token holders and small token holders in decision-making.
8. Random Voting Committees
Another approach could be to set up random voting committees for certain decisions. Committee members could be randomly selected from all token holders, and decisions could be made based on a majority vote within the committee. This ensures fairness and prevents a single entity from dominating DAO decisions.
9. Stakeholder specific voting rights
Creating separate voting rights for different stakeholders based on their involvement and role in the DAO can also be a sensible approach.
