DAOs are distributed, member-controlled organizations with computer-encoded rules made possible by blockchain technology and smart contracts.
The two primary models for joining a DAO are token-based and share-based membership.
To guarantee decentralized voting and governance and to encourage more community members to participate in decision-making, a number of DAO voting mechanisms have been proposed since tokens and shares were the primary forms of voting rights.
What is token-Based Quorum Voting?
When voting in a DAO, the token-based quorum is one of the rudimentary mechanisms. If a majority of DAO members vote in favor of a proposal, then that proposal will be approved.
The most popular option will be implemented if enough votes have been cast. If the proposal doesn’t get enough votes, it dies.
Token-based quorum voting faces obstacles despite its good intentions to increase member engagement and take consensus into account. Establishing the necessary quorum can be difficult.
Few people may cast their ballots if more people are required to vote on each proposal.
Setting a low quorum, however, exposes the DAO to the possibility of bad practices and makes it very simple to pass a proposal, which could lead to the DAO evolving in the wrong direction.
In most DAOs, reaching the set quorum is only one of many time-consuming and money-consuming challenges.
It’s possible that some people won’t participate in preventing an idea from being approved, while others might not care either way.
As a token-based voting model, this mechanism links financial security with voting power, as members with more tokens may manipulate and bribe others to change their votes. This has the potential to transform DAO voting into a form of politics.
Permissioned Relative Majority
The number of votes cast “for” and “against” a proposal is the most important consideration in a permissioned relative majority DAO voting mechanism.
No specific number of members is needed to make a decision; decisions can be made with as few as one person’s input.
There are fewer resources expended and fewer resources required due to the simplicity and efficiency of the voting process.
One DAO member can amass too much influence and decide how to allocate resources if this mechanism remains in place.
Furthermore, the mechanism makes passing a proposal risky since it is a simple process that does not require much focus from the other members.
One solution to these issues is to have the DAO enforce sponsorship of all proposals. It’s worth noting that Moloch DAOs have already looked into this possibility.
Rage Quitting
Sponsorship has been used to increase security in the DAO voting process, as seen with the rage quitting voting mechanism. The mechanisms may answer the problems faced by the relative majority.
A motion needs to be backed by members before it goes to a vote. If the majority approves the proposal, there will be a cooling-off period during which people can change their minds and withdraw their votes or participation in the DAO.
If the proposal loses enough votes at this point, it is dropped.
The primary benefit of this voting system is that it mitigates the possibility of the majority’s voters having an unfair advantage over the minority’s voters. On the other hand, the voting process takes a long time and might not be practical for all DAOs.
What is quadratic voting?
Voting strength in the quadratic DAO is proportional to financial strength. Members can demonstrate their commitment to proposals, particularly on matters they feel strongly about.
The price of a vote is proportional to the square of the number of votes a member needs to acquire, and every member has the right to vote multiple times on the same proposal.
Tokens can be used to cast multiple votes, with two votes costing four tokens and three costing nine.
This voting model mitigates the problems associated with majority votes and makes it easy to see where the DAO community stands on contentious issues.
Proof of identity is significant with quadratic voting because using a false identity in voting could lead to inaccurate results.
What is conviction voting?
Conviction voting is one of the more experimental voting mechanisms for DAOs; it is based on the weighted preferences of the community and values time as an asset.
Votes on various ongoing proposals can be cast by members, with those votes carrying more weight the longer they are consistent.
If a voter changes their vote after casting it, the value of their original vote decreases over time.
As the voting utility increases toward a maximum, the rate at which it increases slows down.
The values of the community, rather than a simple majority vote, are the basis for all decisions.
This mechanism helps show the level of interest in a proposal among voters and, perhaps, the extent to which internal or external factors influence their views. It’s also an effective method of preventing new DAO members from quickly amassing too much control over the DAO system.
However, the mechanism takes a long time to reach a verdict, making it unsuitable for DAOs that need instant decisions. More DAOs may use a faster mechanism in tandem with conviction voting if it becomes widely used.
Holographic Consensus
The General Consensus in Holography The goal of the DAO voting mechanism is to eliminate unpopular ideas and direct resources toward the most likely candidates for adoption.
The goal of this voting model is to address the issue of scalability and resilience in governance in distributed systems.
Tokens can be used as wagers by members on proposals they think will pass or fail, per the mechanism. The predictor earns tokens as payment if their prediction comes true and loses them if they’re wrong.
This allows a vocal minority within the DAO to speak for the organization.
A voting protocol of this type can be costly to implement and difficult to maintain over the long run, despite its potential benefits in increasing scalability and decreasing attack probabilities due to the necessity of funding malicious proposals.
Multisig Voting
To strike a middle ground between centralized control and decentralized decision-making, DAOs can employ multisig voting.
Members of the DAO can send signals on proposed changes, and a central, elected body will then cast votes on those changes.
When quick action is critical to the DAO’s continued existence, this model may be the best option for its voting mechanism. Yet, the centralized authority could potentially abuse its power by voting against the interests of the majority of DAO participants.
Liquid Democracy
The principles of political democracy are also at the heart of liquid democracy, also known as vote delegation.
In this scenario, a DAO will appoint experts to serve as part of an electorate that will ultimately make decisions on behalf of DAO members.
When it comes to crucial matters affecting the future of the DAO, members can delegate their votes to experts of their choosing.
This method is more centralized than others, but it is balanced because DAO participants can change who votes at any time by transferring delegation.
As a result of this DAO voting mechanism, it is more likely that decisions will be made that are in the best interest of the DAO and take into account all relevant factors.
Bribery and corruption could influence decision-making, just as they do in the political democracies we are used to in the real world.
A state of trial and error
Due to the novelty of DAOs, no tried-and-true voting mechanism has emerged to ensure fair representation of all stakeholders.
Different types of DAOs can benefit from the flexibility of each voting model, but there are still significant obstacles that must be addressed.
It’s possible that as blockchain technology evolves and DAOs gain traction, novel DAO voting mechanisms will emerge, or existing voting models will be combined to create a more robust system.
