DAOs have the potential to make meaningful contributions to society by aligning a community to strive towards a common goal. How well the community is aligned and organized is completely dependent on the capabilities of the DAO’s governance platform — if you're new to DAOs (Decentralized Autonomous Organizations), check out our intro blog post on the topic here. DAO governance is constantly being innovated and developed further making it difficult to figure out what functionalities work best for any given individual DAO. In this article we will discuss what functionalities that a DAO’s governance platform needs in 2021 to properly facilitate growth and innovation within its community.
The functionality that the governance platform provides it’s community is one of the most important aspects of a DAO. Giving a DAO’s community as much governance capabilities as possible will facilitate more innovative ideas and growth opportunities from that community. The functionality of a DAO’s governance platform can either facilitate growth opportunities by having full governance capabilities or stunt growth by limiting the community with an incomplete or fragmented platform.
Offering a complete governance platform to its community should be one of a DAO’s top priorities from the very beginning of its inception. Below are the qualities that make a DAO governance platform complete in 2021.
One of the necessities that a DAO needs to have is providing its community with the ability to make proposals. The structure and process of how community members publish proposals is dependent on the makeup of the DAO that they are a part of. If a DAO has a large and active governance community, the best practice is to restrict proposal publishing privileges to members with a certain amount of governance token owned. If the DAO has a relatively small number of active community members it is best to allow anyone to publish a proposal so as to not restrict the little activity that is occurring.
Compound DAO takes a somewhat hybrid approach with their innovative proposal structure that combines the positives from both of the aforementioned options. A community member is required to have a significant amount of the Compound governance token, COMP before the member is able to publish a proposal. The DAO also offers a Compound Autonomous Proposals (CAPs) which allows for community members that don’t own a large amount of COMP to have a meaningful presence too. CAPs are mini proposals that only need to be voted on by a smaller number of members to pass. If the proposal passes it then becomes a normal proposal with the possibility of being executed if enough of the community votes for it. Implementing innovative governance structures such as this is key in facilitating growth of a DAO.
The other essential function that a DAO governance platform needs to have is voting. Voting structure can be up to the DAO team’s discretion using the strategies that they think will facilitate the most engagement. Some DAO’s only allow token holders to vote and others allow anyone to vote. There are obvious pros and cons to both approaches therefore whatever option that suits any given DAO is dependent on the core mission and values of that DAO.
The options and data that voters have at their disposal should stay consistent no matter who gets to vote. More options and available data for voters empowers them to make more informed decisions in different ways. An option to give voters along with the ‘for’ and ‘against’ vote is the abstain to vote option. This expands the voting possibilities given to community members which will inevitably lead to increased voter turnout. Increased voter turnout is especially important for DAOs that have a voting threshold that needs to be passed in order for a proposal to be executed. For each vote, an optional discussion string for the community member to give their reasoning behind the vote can be a powerful tool both for engagement KPIs and empowering other members to make informed voting decisions.
Full transparency on all of the voting activities along with analytics describing these activities are needed to provide further information to community members in order to allow them to make informed decisions. Here’s a non-exhaustive list of what to present to community members:
- Document every member that voted
- Display the amount of members that voted
- A live feed on how close the proposal is to being executed
- How many community members voted for each voting option
- A link to the profile of each voter
A governance platform should have a bounty option for general maintenance (i.e.: bug fixes) and minor project requests. This mechanism is the most efficient way for a community to request general upkeep tasks and minor improvements.
DAO governance platforms with full functionality have the ability to facilitate hiring using features specific to that use case and not just using a normal discussion thread. A hiring thread can be organized in a way that easily gives voters access to the candidate's credentials, scope of work, past experience, and other important information that’s presented with a UI tailored to hiring.
Grants & Collectives
DAOs have increasingly been creating programs to facilitate the growth of their surrounding ecosystem. This often means providing funding in various ways to promising projects that are based on the DAO. Programs like this have almost become essential in growing a DAO. Large protocols like Uniswap, Compound, and Aave have recently set up large grant programs to grow the ecosystem surrounding them and to incentivize more bug fixes. Requests for proposals or RFPs allow DAO teams to encourage grant proposals outlining ideas that the team or community deems important for the DAO.
Collectives are similar to grant programs but give the community control to use the allocated resources to fund whatever they want. This shift in power to the community allows for more use cases. Collective use cases include creating a power pool where interest from the tokens in the pool goes toward funding projects, creating funds for social tokens, and creating investment clubs where members can vote on where to allocate capital. Collectives like this can be the biggest program driving growth within a DAO.
Giving community members capabilities to discuss all of the above activities within the same thread that they are occurring in is crucial in organizing and facilitating community engagement. Allowing discussion in a governance platform has been essential for a while. Now its becoming essential that discussion be organized and able to occur anywhere on the forum.
Every governance forum should also enable discussion threads on them for the sake of easy communication on the platform. Having discussions like this in the same place as governance activities are taking place may inform voters and allow them to discuss topics before acting on them.
It can be a huge undertaking developing a governance platform with all the above capabilities and consistently staying up to date with governance developments. Commonwealth is a governance platform for decentralized communities that has all the capabilities mentioned in this blog (and more).
The mentioned characteristics of DAO governance are by no means the only features that a DAO community needs to govern in a way that facilitates growth and innovation. DAO governance is still very much a largely undiscovered field with new governance capabilities being developed and ideated on regularly.