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By
MIDAO
In the rapidly evolving world of Decentralized Autonomous Organizations (DAOs), governance has emerged as both a cornerstone and a challenge. While DAOs promise a new era of decentralized decision-making, many are grappling with an unexpected issue: governance overload. This phenomenon, characterized by an overwhelming number of votes, proposals, and constant community input, is straining the very democratic processes DAOs aim to embody.
To understand the scale of this challenge, let's consider the case of Arbitrum DAO, as highlighted in a recent episode of the "Just DAO It" podcast. Host Adam Miller, co-founder of MIDAO, brings attention to a revealing post by Entropy Advisors:
"DAOs are chaotic. Since its inception, Arbitrum DAO has voted on over 280 snapshots and 30 tally votes. Add that on top of a constant flow of new ideas, programs, and conversations, and things quickly become overwhelming for a delegate."
This staggering number of votes – nearly one per day – paints a picture of a governance structure that, while active, risks overwhelming its participants.
To fully grasp the implications, it's worth dissecting these figures:
As Miller points out:
"280 snapshots means you're voting almost every day. When they say 'tally votes,' for people who don't know, Tally is a DAO governance platform you can use for on-chain governance."
This frequency of voting raises a crucial question: Is this level of participation sustainable, or does it risk burning out the very community it aims to empower?
The sheer volume of decisions delegates are expected to make presents a significant challenge. As Al Mithani (known as "Links" in the DAO space) explains:
"When you say 30 proposals a year isn't that much, it's like, okay, sure, but then you open it up and realize the proposal could be five to ten pages long. Some people, especially when they write their first proposal, will include tons of rules and details."
This complexity means that for each vote, delegates must:
Multiply this process by hundreds of votes per year, and the burden on delegates becomes clear.
One of the dangers of governance overload is the potential for uninformed voting. In the early days of DAOs, as Mithani recalls, there was an idealistic view of direct democracy:
"BanklessDAO started with the idea that DAOs are direct democracy, right? And, honestly, that doesn't work for pretty obvious reasons. But at the time, it was just like, 'Oh, I'm going to give my opinion on all these things I know nothing about.'"
This approach can lead to decisions being made without proper understanding or consideration, potentially harming the DAO's long-term interests.
Recognizing these challenges, many DAOs are implementing strategies to streamline their governance processes. Here are some best practices emerging in the space:
One simple yet effective approach is to set a regular schedule for votes. As suggested by Entropy Advisors:
"Votes will start and end on Thursdays, implementing a holiday break from December 20th to January 6th."
This predictable cadence allows delegates to better manage their time and attention, reducing the constant pressure of impromptu voting.
Acknowledging that even decentralized organizations need downtime, many DAOs are incorporating holiday breaks into their governance calendars. This practice not only prevents delegate burnout but also aligns the DAO's operations with real-world patterns, enhancing overall sustainability.
To prevent an overflow of premature or poorly conceived proposals, some DAOs are implementing approval processes. Entropy Advisors suggests:
"A delegate approval process to prevent premature proposals from moving to a vote, optional as a social agreement between delegates, with no cost or overhead."
This step can help filter out proposals that aren't ready for a full community vote, saving time and resources.
Mithani observes that successful DAOs often limit the scope of what's put to a vote:
"The DAOs that have persisted over the last three years are the ones that tightly scoped their governance. For example, you vote on these three parameters in the protocol—that's it."
By focusing governance on specific, crucial decisions, DAOs can avoid decision fatigue and ensure that votes are meaningful and impactful.
BanklessDAO's journey offers valuable insights into how DAOs can adapt their governance structures over time. Mithani, who played a key role in BanklessDAO's governance overhauls, shares:
"We did almost the exact same thing in BanklessDAO after we realized we had similar issues. We started adding a cadence, holiday breaks, and approval processes before stuff went up for votes."
This evolution demonstrates that governance structures in DAOs are not set in stone but can and should adapt based on the community's needs and experiences.
These changes helped BanklessDAO manage its governance more effectively, reducing overwhelm and improving the quality of decisions made.
As DAOs continue to evolve, finding the right balance between decentralized decision-making and operational efficiency remains a key challenge. Miller reflects on this balance:
"I think part of what a lot of DAOs have run into is that we're really excited about these new mechanisms for governance. But a lot of us came from the side of building the tech for it, rather than the governance side of organizations."
This observation highlights a crucial point: while the technology enabling DAOs is revolutionary, effective governance requires more than just technological solutions. It demands a deep understanding of organizational dynamics, human behavior, and the specific needs of each community.
It's important to keep governance in perspective. As Miller notes:
"If you ask a traditional organization, or one of its leaders or members, even someone familiar with the organization, 'What percentage of your success is thanks to your governance?' I don't think they'd ever say more than 10 or 20%."
This insight suggests that while governance is crucial, it's just one component of a successful organization. DAOs must balance their focus on governance with other critical aspects of their operations and mission.
As the DAO space matures, we're seeing a shift away from the initial "everyone votes on everything" model towards more nuanced approaches. Mithani observes:
"I think it's not about giving people as many decisions as possible. It's about giving people a path to change things and not entrenching things that are obviously wrong. That's the big difference with DAOs—or at least the potential."
This evolution points towards governance models that prioritize meaningful participation over the sheer volume of decisions. Some emerging trends include:
Implementing different levels of decision-making, with broad community input reserved for major decisions and day-to-day operations handled by smaller, specialized groups.
Allowing community members to delegate their voting power to trusted representatives, similar to liquid democracy models.
Using quadratic voting mechanisms to balance influence and prevent domination by large token holders.
Implementing time delays between vote passage and execution to allow for community review and potential veto.
As DAOs continue to experiment with governance models, the goal is to find a balance between broad participation and operational efficiency. Miller summarizes this challenge:
"I do think the optimal model is going to be somewhere in between. Somewhere between traditional corporate structures and direct democracy. It depends on the context, right?"
This perspective acknowledges that there's no one-size-fits-all solution for DAO governance. Instead, each organization must find its own balance based on its specific goals, community, and operational needs.
The challenge of governance overload in DAOs presents both a hurdle and an opportunity for the decentralized organization movement. By recognizing the limitations of constant voting and implementing thoughtful strategies to streamline decision-making processes, DAOs can create more sustainable and effective governance models.
Key takeaways for improving DAO governance include:
As the DAO ecosystem continues to evolve, the lessons learned from early experiments in decentralized governance will pave the way for more robust, efficient, and truly democratic organizational structures. By addressing the challenge of governance overload, DAOs can unlock their full potential as revolutionary forms of human coordination and collaboration.
The future of DAO governance lies not in maximizing the number of decisions made by the community but in optimizing the impact and quality of those decisions. As Miller aptly puts it:
"We're really just seeing the early stages of experimentation with these new models. I don't think we've seen a lot of conclusive results yet."
This ongoing experimentation and willingness to adapt will be key to solving the governance overload problem and realizing the full potential of decentralized autonomous organizations.
