Taking a page out of the political book could put DAOs, or decentralized autonomous organizations, on the path to achieving the sweet spot between efficiency and decentralization. In particular, DAOs can learn from the way in which political parties elect representatives, run campaigns and meet long-term goals all while sustaining continuous support from a community that is not always aligned.
This may sound counterintuitive, given that DAOs are supposed to be new ways of building organizations. And why would anyone want to take a page out of political operations, known for being dysfunctional?
While DAOs offer significant advantages over traditional organizations, most DAOs are still trying to overcome the same fundamental roadblocks: achieving efficiency and consensus within the community. These issues are often a result of poor governance structures and poor communication.
Danny Chong is the co-founder of Tranchess, a decentralized yield-enhancing asset tracker.
In particular, most token holders can typically draft proposals today. This may enable something like direct democracy (or what some may even consider "decentralized" governance), but it lends itself to inefficiency. When anyone can propose anything, long-term goals become too diffused.
Additionally, DAOs have had long-standing communication problems. Poor communication often causes backlash, delays important roadmap checkpoints from being decided or executed and reveals a lack of genuine consensus within the community.
These issues are clearly issues with the community rather than the code that comprises a DAO. Which is why they might be addressed by looking at some key practices of political parties.
Lack of expertise and foresight
As mentioned, allowing all token holders to make proposals diffuses the organization's objectives and often creates a conflict between the short-term interests of the token holder and the long-term goals of the project itself. This problem comes in all shapes and sizes.
Firstly, this can result in too many proposals. When proposals come flooding in, many of which are low-quality or are written by someone with their head in the clouds, it can make it difficult for the DAO to prioritize what's important and make decisions in a timely manner. This can be made worse by poor filtration systems meaning that many proposals will be overlooked or missed altogether.
Another problem is that many token holders lack expertise. Not all token holders have the same level of knowledge in the areas that are relevant to the DAO. Therefore proposals are often neither well-thought-out nor in the best interests of the DAO.
Lastly, a lower turnout in voting by token holders can allow proposals to be pushed through by relatively small groups leading to decisions that are not properly aligned with the majority view of the DAO and its roadmap.
Formalizing goals and plans
Political parties elect representatives who draft laws for constituencies. They are elected by the people, and can be removed from office should they cease to represent the will of the people. This creates a context for policies to be made in the electorate's best interests.
DAOs should work in a similar way, whereby the community votes for individuals who are responsible for creating proposals that guide the projects’ future. Elected individuals would have a strong track record contributing to the DAO, and should demonstrably be aligned with the project’s goals.
And should protocol politicians become unaligned, the community can vote for someone else. This kind of structure would also limit or disincentive bad actors from taking control and causing mischief. It may even limit the number of people who rage quit from DAOs.
Campaign for DAO policies
Had there been more transparency and more of a “campaign” in the run-up to Arbitrum's vote, it is possible that there would not have been as much outrage from the community.
Political parties and candidates campaign extensively for proposed policies ahead of elections. Campaigns help inform voters about the candidates' positions on the issues and their plans for the future. DAOs need to undergo a similar period so that the community is fully informed about the proposals they will eventually vote on.
Thorough research is likely needed to understand the concerns and aspirations of constituents — in DAOs and the great public. And so political parties may take into account demographics, preferences and which policies are higher in priority to inform decision-making.
While this cannot be blanket applied because of the product development-focused nature of crypto, a better understanding of who is being communicated to and their concerns could shape how well proposals resonate with the target audience.
Message framing is also done carefully by using compelling narratives and case studies to make policies relatable and impactful. Rather than only focusing on the practical aspects of a proposal, DAOs can better contextualize their plans by connecting them to stories and tangible examples that resonate with people.
Finally, political parties privilege grassroots engagement. There is immense value in the organizing and mobilization of efforts at the ground level. Local networks of volunteers and key community leaders are empowered to speak to their circles of influence, either directly or through door-to-door canvassing, town hall meetings and local events.
For DAOs interested in grassroots mobilization, this can be done through AMAs [ask me anythings] with community managers and a rotating system of community managers.
The dark side to politics
By no means should DAOs try to operate in exactly the same way as political parties. Namely, electing people to positions of power and limiting who can set policies has the potential to corrupt even the most community minded.
To mitigate centralization, leadership roles will constantly need to be assessed and term limits imposed. Like in democracies, after a certain period, DAO members should vote for other representatives to ensure decentralization and diverse ideas.
Another issue with political parties is that constituents can be persuaded by personal bias, favoritism and potentially misleading personalities. Therefore, electing DAO leaders should not become personality contests. Focusing instead on a person's policies will ensure decisions would be in the best interests of the DAO as a whole.
Beyond that, DAOs have in many ways already proven to be more effective than political parties. For example, DAO decisions are recorded on public blockchains, meaning that anyone can see how the ship is being steered. while political parties often operate in secrecy.
DAOs are also by nature decentralized and so are location-agnostic. In a world that increasingly requires international coordination, this allows people across the globe to join. That means organizations can attract the best of the best, and can more truly represent diverse viewpoints.
And finally, DAOs can be more agile than traditional organizations that are often hampered by long, bureaucratic processes.
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