What is a DAO? Voting and governance
THE SHORT ANSWER
A DAO coordinates some decisions through blockchain rules and tools. Members may propose and vote, but rights and execution vary. Token-weighted voting can concentrate power among a small number of holders.
What is a DAO?
A DAO uses blockchain tools to coordinate members and some decisions. Its operation depends on governance rules, code and the people who hold permissions.
What is a DAO?
- Rules accessible according to the project
- Voting rights defined by governance
- Automated or delegated execution
- Participation subject to the DAO’s conditions
Governance Process
Proposal and voting rights vary by DAO. Token-weighted votes can concentrate power.
Governance Process
- •
Proposal under the project’s rules
- •
Discussion and possible amendments
- •
Vote under defined rights and quorum
- •
Automatic execution or execution by designated operators
Real-World Examples
These examples illustrate coordination models; inclusion is not a recommendation.
Sky, evolved from MakerDAO
Governance of a stablecoin ecosystem including USDS, evolved from the project historically associated with DAI.
Uniswap
Proposals concerning Uniswap ecosystem governance; exact powers depend on contracts and procedures.
Aave
Governance of Aave lending-protocol parameters and decisions, including risk parameters.
Security and Risks
A public vote does not by itself prove distributed governance. Check who can propose, vote, veto or execute a decision.
Security and Risks
- •
Concentrated tokens or delegation, low participation or unsuitable quorum.
- •
Flaws in voting contracts, treasury or upgrade mechanisms.
- •
Multisignature execution: voting and the actual action can be separate stages.
- •
Legal rights, liability and treasury access vary by organization and country.
Examine governance
Before participating, check voting rights, treasury control and how rules can be changed.
Sources and further reading
- Ethereum.org — Decentralized autonomous organizations · in English
- Sky — USDS and the evolution of MakerDAO · in English
Page updated on
Documentation checked on · WhyTheBlockchain · Editorial approach