Things have moved considerably since the original DAO, remember that company which created the “Slock”, one of Ethereum’s flag-ship projects which was instantly hacked ? Yea, Fun times.
That was 2017, fast-forward to 2024 and there are many successful DAOs with different purposes, governance, incentive structures & origin stories. I find the prospect of DAOs extremely interesting; they bring many opportunities and solve lots of problems we’ve seen plague crypto projects over the years. I’ll list a handful here :
Upsides :
- Allows new members & new ideas to move into the community and keep things fresh & current. This can help combat the stagnation & apathy of more traditional project structures, which are more insular and less fluid in nature.
- Development Team and token holders have better aligned incentives - Some DAO’s (ex. QiDAO) allow the DAO to ultimately decide if the development team is living up to the expectations they created for themselves.
- More attractive prospects for those looking to join the community, it’s not just about buying a token and hoping for the best, a community member can buy in and immediately participate in governance / contributing to the project.
- Transparency - decisions and funding are not deployed behind closed doors as the result of back-channel chats. Decisions are democratic and transparent.
Cons
- Designing & implementing a DAO is a non-trivial undertaking.
- Security - While a DAO brings many upsides, it comes with the risk that there can be flaws in the design which can lead to bad outcomes - eg. It’s possible the DAO can be taken over and drained of funds.
- Bigger organisation, more ideas, less agility. - There’s something to be said for keeping certain types of decisions to a small “core-group” while having the DAO oversee things in a more general sense, otherwise there can be too much red-tape to overcome to accomplish relatively simple things.
I’m interested to hear others thoughts on governance structures that have worked well for other projects, as well as ideas on how we can design a DAO for Xian which works for everyone.