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An Overall Observation of DAOs’ Development and Governance Mechanism



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I. What is a DAO

1.1 Definition and Evolution of DAO

  • Distributed
  • Autonomous
  • Organization

1.2 The capability and boundaries of DAO

  • Fairness — ensure fair decentralization, so that everyone’s opinions can be reflected in governance, and the adopted proposals can be accurately implemented.
  • Transparency — ensure that governance rules are transparent and cannot be tampered with, and that governance and resource information is visible and timely.
  • Efficient collaboration under multi-party cooperation game — provide an efficient collaboration basis of de-trust and no regional restrictions for participants with different interest demands.
  • Profit maximization — maximize governance but not profits, depending on the intelligence and orders of the group of people.
  • Quick decision — applicable to complex and multi-party governance scenarios but not rapid decision-making (i.e., decision within 1 hour).
  • Overall economical improvement — still far from various applicable scenarios, faster decision making, better functionality and less governance costs.

1.3 The development stages of DAO

  • Introducing Period (2011–2014): Concept forming and spread.
  • Chaos Period (2015–2016): Appearance of Dash DAO signaled DAOs moved from concept to implementation; the flash across of The DAO stroke down the expectation of DAO in some extent. Impact of The DAO caused: 1) cooldown in heat of the community; 2) shake the confidence due to the exposure of technical risks under complex scenarios; 3) potential legal risks indicated by the SEC.
  • Reconstruction Period (2017–2019): Continuous development of DAO platforms including Aragon and DAO Stack, and specific representatives including MakerDAO and Moloch.
  • Exploration Period (Current): Paradigm given by Moloch v2 adopted widely, as well as the DeFi boom triggered by Compound and its governance token.

II. Classification Methods of DAO

2.1 General v.s. Specific

2.2 By blockchain layered structure

2.3 By application scenario

2.4 By governance framework


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