Making DAO Governance Work for You

An excerpt from the recent Twitter Spaces hosted by CommonGround, where Nik Kalyani was invited as the guest speaker. Here, we look at challenges entities face when transitioning to a DAO, as well as experimenting with DAO governance and voting.

Making DAO Governance Work for You

On 7th July, the CommonGround team hosted an intriguing Twitter Spaces discussion about ‘Decision Making Processes in DAOs’. Our CEO & Founder, Nik Kalyani (@techbubble), was invited as a panelist to share his thoughts, and here are the highlights!

Nik Kalyani:Transitioning from a stable organisation entity into a DAO is challenging and cannot happen in a binary fashion. There needs to be a good transition path. And, that’s what we have been doing with the HyperverseDAO.

We’ve got  an existing funded organization and we are transitioning to the HypeverseDAO.

That means you have to gradually get the structured team into DAO mode, while embracing  existing community members. And, keep that structure initially, but gradually taper it back.

Fiduciary obligations don’t miraculously go away

The foundational decision-making that has to happen in all DAOs is related to finances. Especially when you’re coming from a company where there’s capital, and perhaps other fiduciary obligations, there are contracts etc. and you have to deal with that, because that doesn’t miraculously go away with the snap of your fingers.

So, what you have to do is plan your path forwards, that transitions you from a legal entity that exists in a real world with real obligations, to a DAO which may or may not be a legal entity - but there’s a whole separate discussion.

Retaining some of our legal IP

But, in our case, there is Decentology, the company, and we have the HyperverseDAO and we are transitioning, and the idea is that the Decentology company is going to retain some of the legal IP and things like that because you need to have an entity to keep that stuff. So, that’s kind of important.

Experimenting with governance voting

The other thing that I heard a lot today about is voting. The two things we want to experiment with (that other DAOs are not trying out, and I’m not sure why) are:

1. Eliminating gas as a factor at the time of voting. If you clearly want a decentralized community-driven organization, then you need to level the playing field and not make it in such a way that only the people who can afford gas can vote.

There are 2 solutions to this:

a) Voting on the chain, where gas is not a factor.

b) If you want to stick around with Ethereum, then there is no reason why the DAO cannot use its capital to use the votes and submit those transactions with the gas to the blockchain. The DAO can sign the blockchain transactions for the person wanting to vote.

This ensures that everyone’s vote is heard and gas doesn’t become a barrier.

2. Domain-weighted voting. For example, if the decision is about Marketing, then those in the Marketing Working Group have greater weight in their votes vs someone from Engineering whose strong suit might not be Marketing.

So, decentralized doesn’t mean it has to be a democracy and people don’t have to make dumb decisions where you take a super-important decision and leave it for everybody to decide. There needs to be a middle ground here where we can do smart voting, and Domain-weighted voting is one of those things.

Tokens might not be the best when it come to DAO voting

Another model is where many DAOs are using tokens as a way to determine how much voting power one has. We know the obvious the problem is when whales tend to have more voting power., and then solutions like Quadratic voting then come into play.

But, I feel that tokens might not be the best when it comes to DAO voting, and that’s why, with the NftyDreamsDAO, we are about to do a drop called a Renaissance Drop where the whole point of the drop is for people to buy governance NFTs. So, the fungible tokens have no say at all in the DAO voting.

Tiered governance NFTs with expiration period

You basically have to hold governance NFTs which are tiered, with membership at different guilds within the DAO, and they also have an expiration period.

So, when you buy a governance NFT, what you are doing is buying the ability to vote in a specific guild, for a specific period of time. Who knows whether it will work or not, but it is an experiment I want to try because I have been researching what’s been happening in all other DAOs, and I see a lot of chaos and I’d like to come up with something that’s much more flexible, manageable and fair.

So, I think that NFT-based governance is an experiment that is worth trying.

Making doxxing a requirement for Strategic Guilds

Common Ground CG:So, what if someone who is not that involved in the protocol wants to sell or rent their voting power? There is even a platform to rent their governance power. How do you think this situation/problem be faced?

Nik Kalyani

At the end of the day, there is no perfect solution to DAO voting, because we don’t know each individual person. We only have their accounts, not their personal IDs.

So, what we can do is for make certain Strategic Guilds require that the person be doxxed and make the particular governance NFT be non-transferable. That’s up to the DAO to decide on the per-guild basis.

Listen to this convo at its entirety here.

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