There are over 12K known DAOs and a detailed studied on some of these DAOs highlights key prevailing challenges. As a DAO builder myself, a couple of issues that have stood out for me. Let's go:
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Lack of better voting power distribution logic: Most DAOs follow a Plutocratic system, "One Token One Vote," drawing parallels to traditional businesses that follow a "one share one vote" method. However, in our space, only a handful of token holders control the DAO. For example, Uniswap has 368,000 holders, yet only about 30 wallets control the voting power.🤯 I plan to write a follow-up post detailing other DAOs too. But it's concerning because we're essentially a CAO (Lol)pretending to be a DAO. How can we ensure a more democratic level playing field for all?
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Lack ways to better manage member conflicts: DAOs have been plagued with the challenge of reaching consensus. We have examples from NounsDAO and Arbitrum. Personally, I see this issue as connected to #1. Given that only a handful of whales with vested interests control the voting power, nobody will prioritize the greater good but themselves. So, this problem will persist unless we increase genuine community participation and make it truly democratic.
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Rise of the garbage proposals: In most DAOs, there is an increasing number of unwanted or irrelevant proposals being created, accounting for up to 17.5%. While it's important to make platforms easier for the community to participate in governance, we must control against abuse. Having a better process to submit proposals helps.
If you are into DAOs, I would love to hear what challenges keeps you excited to solve. If you need the report, leave a comment and I shall share.
Image Courtesy: Abstracted from the report "An Empirical Study on Snapshot DAOs"
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