Author: CloudY, Shawn
Editor: Vincero, YL
Review: Crystal
DAO: Decentralized Autonomous Organization, is now a hot topic. It has been nearly 6 years since the first project that called itself a DAO, The DAO, appeared in 2016. During this period, various DAOs have emerged one after another, and many people have classified DAOs by their functions, such as investment DAOs, guild DAOs, project governance DAOs, DAO tools, and so on. In such a long evolution process, everyone has different definitions of DAO. In a narrow sense, DAO should be a decentralized and autonomously governed organization, which especially emphasizes that the organization can still operate independently without anyone managing it, and emphasizes the "A" part of DAO; in a broad sense, DAO encompasses all community governance organizations today, and does not force the organization to pursue autonomous governance. As long as the organization is managed by consensus by the community, it can be identified as a DAO, even if it is completely human-governed rather than "autonomous."
There are countless discussions and studies on DAO in the market, but most of them are about the historical development, definition and role of DAO. There is no relevant content on the classification of the degree of autonomy of DAO "A". Therefore, this article will classify the degree of autonomy of DAOs that are currently representative in the market, and provide relevant cases and introductions.
Observation Dimension:
1. Proposal
2. Voting
3. Execution
The classification mechanism is:
The benchmark is A: All actions are conducted off-chain, decisions are made by fair voting, and fund security is guaranteed by multi-signature. The benchmark is 0 points. In the three dimensions of proposal, voting, and execution, if each action is conducted on-chain, one point is added, and each point is increased by one level; if on-chain and off-chain actions are combined, the score is halved; if a representative system is used for elite management, one point is deducted; if fair voting is not adopted, it is directly judged as negative, that is, A-.
AAA: Proposal, voting and execution are all done on-chain.
AA: Proposals are made off-chain, voted on-chain, and the voting results are executed by the contract; or major proposals are made and voted on off-chain, key proposals are made and voted on-chain, and the voting results are executed by the contract.
A+: Proposals are made and voted on off-chain, and the voting results are executed by smart contracts.
A: Proposals are made and governance is voted on off-chain, such as using Snapshot, and code is deployed by multi-signature administrators.
A-: Governance is through community communication, and funds are managed through a multi-signature wallet.
Classification
1. AAA
Compound (project governance DAO):
Governance uses three different on-chain components: COMP tokens, the governance module (Governor Bravo), and Timelock. Together, these contracts allow the community to govern functions through cTokens or Comptrollers.
Proposal made on-chain (+1)
On-chain voting (+1)
Contract execution voting results, implementation of changes (+1)
Maker DAO (Project Governance DAO):
Off-chain governance: A decision-making process of community discussion and feedback collection. Anyone can participate in off-chain governance.
On-chain governance:
Governance Polls: Anyone can create an on-chain governance poll using the polling smart contract, but there is currently no UI provided to do this. Governance polls establish soft consensus and measure community sentiment through time-based voting.
Executive Votes: Executive Votes “execute” technical changes to the Maker Protocol. When activated, each Executive Vote commits a set of proposed changes to the Maker Protocol’s smart contracts. Unlike other types of votes, Executive Votes use a “continuous approval voting” model.
On-chain proposals (+1)
On-chain voting (+1)
Contract execution changes (+1)
Tezos (Project Governance DAO):
Proposal period: Proposers can use the "Proposal" operation to submit protocol modification proposals on the chain
Explore voting period: Users can use the “Vote” operation on-chain to cast a vote for the winning proposal to continue the voting process or not to vote.
Cooling/Testing Period: A testnet fork that runs in parallel with the mainnet for 48 hours
Promotion Voting Period: Users can use the "Vote" operation on-chain to vote for or against the proposal, and vote on whether to pass the amendment based on previous off-chain discussions and their behavior.
Proposal made on-chain (+1)
On-chain voting (+1)
Contract execution voting results (+1)
2. AA
Lido (project governance DAO):
Members mainly participate in managing protocol parameters, node operators and oracle member lists, and can vote on application upgrades based on the Aragon chain. Other matters are based on Snapshot off-chain governance.
Proposals are discussed in the forum and voted on via Snapshot
On Aragon, any LDO holder can propose a proposal and vote on it.
EasyTrack is designed to make the daily operations of DAOs easier. EasyTrack consists of 16 smart contracts, a standalone UI application, and a notification bot that provides alerts of major Easy Track-related events to the DAO community and development channels.
Off-chain proposal + on-chain proposal (+0.5)
Off-chain voting + on-chain voting (+0.5)
Contract execution (+1)
Nexus Mutual (project governance DAO):
Five co-members will be elected to form the Advisory Board, including members of the founding team and other experts. The goal is to have a qualified mix of people covering the following three skill sets:
Technical expertise: Smart contract security and blockchain,
Technical expertise: Insurance and mutual insurance
General expertise: Legal, regulatory, corporate governance and business management.
Proposals on the chain: Members make proposals through the governance mechanism.
Whitelist: The proposal is then sent to the Advisory Board, which whitelists the proposal by categorizing it and setting the total NXM token reward to be shared among those who participated in the vote.
Committee Vote: The Advisory Committee then votes on the proposal to provide all members with their opinion on the proposal. For regular proposals, the Advisory Committee vote is also set as the default result if a quorum is not reached.
Membership Vote: The proposal then goes to a formal, binding membership vote.
Proposal Implementation: In some cases, such as simple parameter updates or fund withdrawals, the proposal is then automatically implemented by the code. For other complex transactions, there will be an additional step to develop new code and make further proposals to upgrade or not upgrade to the new version.
On-chain proposals (+1)
On-chain voting (+1)
Contract Execution (+1)
Committee Representative Review (-1)
Constitution DAO (Investment DAO):
Through Juicebox DAO donations, you get a corresponding share. When the auction of a copy of the Constitution fails, the contract automatically starts a refund. Users can freely choose to keep the tokens or get a refund. The entire process is completed through the contract on the chain, and finally the auction is carried out through the multi-signature wallet. After the auction failed, Constitution DAO voted to abandon the multi-signature wallet and transformed from a simple "crowdfunding" to purchase a copy of the Constitution to a meme, so Constitution DAO no longer exists.
On-chain proposals (+1)
On-chain voting (+1)
Multisig wallet execution
3. A+
Uniswap (Project Governance DAO):
Off-chain governance:
Temperature Check: Proposals are made on the governance site and voters use Snapshot to indicate whether they are interested in moving it to the next stage
Consensus Check: Use the first phase temperature to check the feedback of the post and create a new Snapshot poll
On-chain governance:
Execute proposal: After the proposal is submitted successfully, the proposal() function will deploy the proposal
Off-chain proposals
Off-chain voting
Contract execution voting results (+1)
YFI (Project Governance DAO)
Forum discussion, proposals, and voting
Proposals that pass the forum vote will be subject to Snapshot voting
Snapshot voting results are executed by smart contracts
Off-chain proposals
Off-chain voting
Contract execution (+1)
Aave (Project Governance DAO):
Built on the Aragon framework, using modular function management.
Propose: Aave Request for Comments (ARC) is the first step in the governance improvement process. Anyone can participate in the governance forum, create ARCs, and vote on improvements.
Community voting: Gauge community sentiment on new proposals through Snapshot voting.
Proposal Execution: The proposal is submitted through a GitHub request and executed by the contract.
Off-chain proposals
Off-chain voting
Contract execution (+1)
4. A
BitDAO (Investment DAO):
A soft proposal is drafted using Snapshot and a formal community vote is conducted. Proposals that pass the vote need to be adopted by the development team, and the final code is audited and submitted before being deployed by the multi-signature administrator.
Off-chain proposals
Off-chain voting
Multi-signature administrator execution
YGG DAO (Guild DAO):
Based on smart contracts built on the Ethereum blockchain. Smart contracts will be used to automatically execute the functions of the guild, including reward distribution, and eventually advanced functions such as NFT leasing.
The DAO's assets (tokens, NFTs, virtual plots of land) are managed by the YGG Treasury, which is currently overseen by the three co-founders of Yield Guild. Assets can only be transferred from the treasury when two of the three co-founders sign the transaction. Transactions will be proposed by DAO participants, and a vote will be held to decide the course of action.
Off-chain proposals
Off-chain voting
Executed via a multi-signature wallet
OpenDAO (project governance DAO):
OpenDAO manages the DAO Treasury (20%), Staking smart contracts (20%) + LP incentives (10% + SUSHI) through a multi-signature wallet. Multi-signature holders are selected through voting. For proposals that cannot be put on the chain on a daily basis, they are decided by voting on the Metaforo forum; for contract operations, Snapshot needs to be used for proposals and voting, and ultimately executed by accounts controlled by OpenDAO; for proposals to change the governance model, Snapshot needs to be proposed and voted on after the Metaforo forum votes.
Off-chain proposals
Off-chain voting
Executed via a multi-signature wallet
5. A-
Bankless (Guild DAO):
Most decisions in Bankless DAO are made by soft consensus. The corresponding consensus is the consensus that needs to be passed by the whole DAO level through voting (hard consensus). It can be simply understood that decisions related to the fiscal budget are made through the hard consensus process, and other decisions are made through soft consensus.
Hard consensus is achieved through snapshot voting. But Bankless DAO does not actually have any clear definition of the concept of soft consensus. What level of decision-making requires what level of consensus and where it is achieved are quite arbitrary. There are many places where soft consensus can be achieved, such as chat channels, forum posts, group meetings, or some discussions on Twitter.
No vote in off-chain discussion (-1)
Multisig wallet execution
Pleasr DAO (Investment DAO):
Distribute ownership of DAOs in the form of tokens, manage their funds through multi-signature wallets, conduct asset sales (including spin-off proceeds), and manage assets. Governance is conducted through group chat.
Off-chain chat governance no vote (-1)
Multisig wallet execution
AAA：
Compound (project governance DAO), MakerDAO (project governance DAO), Tezos (project governance DAO)
AA：
Lido (project governance DAO), Nexus Mutual (project governance DAO), Constitution DAO (investment DAO)
A+：
Uniswap (project governance DAO), YFI (project governance DAO), Aave (project governance DAO)
A：
BitDAO (investment DAO), YGG DAO (guild DAO), OpenDAO (project governance DAO)
A-：
Bankless (guild DAO), Pleasr DAO (investment DAO)
From the emergence of The Dao with great ambitions to its decline, to the fact that most DAOs now appear before the world with online collaborative organizational structures native to the crypto community. Can the current DAOs with such diversity meet people's imagination of decentralized technical features such as automated operations and anti-censorship capabilities when the concept was first proposed, and perfectly interpret the rule of "Code is law"?
OP Reasearch has divided the well-known and representative DAOs in the market into five categories based on the types of proposals, voting and execution and the forms of community representation of DAO organizations. Among them, Class A is the benchmark, with off-chain proposals, off-chain voting and proposal execution through multi-signature wallets. It is simple to build, efficient to execute, relatively transparent, and can ensure the safety of funds. The project team also has relatively large authority to control the direction of the project, which is conducive to the development of early projects. Therefore, although this method is not autonomous enough, most DAOs at this stage still use this method for management.
In terms of DAO types, DAOs with a high degree of autonomy are all project governance DAOs, which demonstrate how to use internal capital to complete the operation of the protocol governance module. The reason may be that most of these DAOs are converted to DAO governance after the project has existed for a period of time. The project product structure is logically clear and has been in operation for a long time. The team has certain experience, the project route is relatively certain, and the community is stable.
In contrast, DAOs with a lower degree of autonomy are mostly investment DAOs and guild DAOs. Investment DAOs require a high degree of freedom due to their investment attributes, and investment behavior also has a certain degree of randomness, and investment pursues timeliness. The lengthy on-chain proposal voting and execution mechanism is just contrary to its natural attributes, and the transparency of the blockchain will also disclose its investment targets, resulting in competitors seizing the opportunity. Therefore, investment DAOs are mainly operated in a more efficient way of human rule. For guild DAOs, the reason is similar. Guild DAOs have more categories, adopt a multi-level management mechanism, have many management affairs, and need to frequently call the treasury. Therefore, they also use human rule to handle tedious affairs and use multi-signature wallets to ensure the safety of funds.
In summary, due to the different types of DAOs, their operating mechanisms and management models are also different, and the requirements for DAO governance efficiency are also different. The current DAO infrastructure is still in its infancy, and there are many restrictions on the operation of DAOs, which leads to limited usage scenarios and relatively few suitable projects. The development of the degree of DAO autonomy also needs to rely on the technological progress of DAO-related infrastructure. For some DAOs whose governance content continues to expand, they can only operate in a less "autonomous" way in the short term. Despite this, we are still in an era of rapid development of DAOs, and we are witnessing how DAOs interpret a powerful and new form of social organization in the era of encrypted networks.
