DAO governance models: A beginner’s guide in 2023 - Celsius Network Roni

Wiki Article

A DAO (Decentralized Autonomous Organization) is a digital organization that is run by a set of rules encoded into smart contracts on a blockchain. These rules dictate how the organization operates and how decisions are made.

DAOs have a governance model, which is the system that is used to make decisions and manage the organization. There are a few different governance models that are commonly used in DAOs.

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Token-weighted voting: In this model, each token holder has a vote proportional to the number of tokens they hold. The more tokens a holder has, the more weight their vote carries. This model is commonly used in DAOs that have a large number of token holders and where the token has value beyond just being used to vote.

One token, one vote: This is a simpler model in which each token holder gets one vote regardless of how many tokens they hold. This model is commonly used in DAOs that have a smaller number of token holders.

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Delegative voting: This model allows token holders to delegate their voting power to another holder. This allows token holders who do not have the time or expertise to make informed decisions to entrust their vote to someone else.

Liquid democracy: This model is a combination of direct and delegative voting. Token holders can vote directly on proposals or delegate their voting power to another holder. This allows for a more flexible approach to governance.

Futarchy: This model uses prediction markets to make decisions, where token holders can place bets on the outcome of a proposal, and the outcome that is most heavily bet on is chosen.

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It's worth noting that, these governance models are not mutually exclusive, and a DAO can have a hybrid governance model that combines features of different models. Also, the success of a DAO governance model depends on its implementation, the structure of the organization, and the alignment of interests among the stakeholders.

What is DAO governance?
DAO governance refers to the system used to make decisions and manage a Decentralized Autonomous Organization (DAO). A DAO is a digital organization that is run by a set of rules encoded into smart contracts on a blockchain, and the governance model is the system that is used to manage these rules and make decisions about how the organization operates.

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In a DAO, governance is typically done through a decentralized voting process, where token holders can vote on proposals to make changes to the organization's rules or direction. The governance process is usually transparent and recorded on the blockchain, allowing for a high degree of accountability and openness.

DAO governance models vary and can range from simple token-weighted voting, where each token holder has a vote proportional to the number of tokens they hold, to more complex models such as liquid democracy, which allows token holders to delegate their voting power to another holder.

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It's worth noting that, the success of a DAO governance model depends on its implementation, the structure of the organization, and the alignment of interests among the stakeholders. Additionally, the governance model of a DAO can evolve over time as the organization and its community grows.

How does a DAO work?
A DAO (Decentralized Autonomous Organization) is a digital organization that is run by a set of rules encoded into smart contracts on a blockchain. These smart contracts are self-executing and allow the organization to operate without the need for a central authority or intermediary.

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Here's a general overview of how a DAO works:

Token issuance: A DAO typically issues its own token, which is used to govern the organization and give token holders a say in how the organization is run.

Proposal and voting: Token holders can propose changes to the organization's rules or direction and vote on these proposals. The outcome of the vote is determined by the DAO's governance model (e.g. token-weighted voting, one token one vote, liquid democracy).

Smart contract execution: Once a proposal is approved, the corresponding smart contract is executed automatically on the blockchain. This allows for a high degree of transparency and accountability, as all actions taken by the DAO are recorded on the blockchain.

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Decentralized management: The organization is run by its token holders, who make decisions through the voting process. There is no central authority or intermediary controlling the organization.

Transparency: All the transaction and decision making process is transparent and recorded on the blockchain, which can be accessed by anyone with an internet connection.

It's worth noting that, the specific structure, rules, and processes of a DAO can vary depending on the organization's goals and the governance model it uses. Additionally, the success of a DAO depends on the alignment of interests among its stakeholders and its ability to attract and retain a strong community of token holders.

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DAO governance models
DAO governance models are the systems used to make decisions and manage a Decentralized Autonomous Organization (DAO). Different governance models can be used depending on the goals and structure of the DAO, and the interests of its stakeholders. Here are a few commonly used governance models:

Token-weighted voting: In this model, each token holder has a vote proportional to the number of tokens they hold. The more tokens a holder has, the more weight their vote carries. This model is commonly used in DAOs that have a large number of token holders and where the token has value beyond just being used to vote.

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One token, one vote: This is a simpler model in which each token holder gets one vote regardless of how many tokens they hold. This model is commonly used in DAOs that have a smaller number of token holders.

Delegative voting: This model allows token holders to delegate their voting power to another holder. This allows token holders who do not have the time or expertise to make informed decisions to entrust their vote to someone else.

Liquid democracy: This model is a combination of direct and delegative voting. Token holders can vote directly on proposals or delegate their voting power to another holder. This allows for a more flexible approach to governance.

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Futarchy: This model uses prediction markets to make decisions, where token holders can place bets on the outcome of a proposal, and the outcome that is most heavily bet on is chosen.

Multi-Signature: This model is based on the collective approval of a set of predefined signers, before a contract can be executed.

Council or Board based: This model is based on a council or board of predefined members, who are responsible for decision making and execution of contracts.

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It's worth noting that, these governance models are not mutually exclusive, and a DAO can have a hybrid governance model that combines features of different models. Additionally, the success of a DAO governance model depends on its implementation, the structure of the organization, and the alignment of interests among the stakeholders.

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