In fact, blockchain and smart contracts are governance technologies that provide a higher level of transparency while also reducing bureaucracy through self-executing code, which can minimize an organization's existing principal-agent dilemma and subsequent moral hazard. DAOS in blockchain can be said to solve an age-old governance problem. DAO members are not bound by legal entities or signed into any formal legal contracts, and it is completely different from traditional companies that are structured in a top-down manner with multiple layers of management and bureaucratic coordination. Many investors are curious about how this blockchain DAO is governed?

How is blockchain DAO governed?

DAO takes a completely new approach and goes the other way, using local order to achieve overall order. This is similar to the way order is realized in nature. For example, in our body, every cell follows the same rules and completes its own mission, thus realizing the order of complex human body. In the DAO, this rule is embodied in the governance mechanism based on the DAO consensus. The voting mechanism is the core of DAO's governance mechanism and the embodiment of its democracy.

The governance of DAO is a kind of democratic governance with the participation of community members. Although there are various forms, the essential goal of these governance is to achieve trust-free co-management with the help of blockchain technology. The means to achieve this is the voting mechanism.

The governance of DAO can be generally considered as consisting of six steps: proposal, review, vote, execution, dispute and arbitration. A proposal is a proposed change, grant application, or asset change in a community initiated by a member. Each proposal must be approved by a vote before it can be implemented. Normally, that would be the end of the bill, but some members might be unhappy with the results or believe that the voting was rigged. This is where the dispute comes in. If the dispute is accepted, it will go to the arbitration stage. The decentralized court was created for this purpose, and members who were not satisfied with the outcome could apply to the decentralized court for arbitration, and the decentralized court would decide on it. At the heart of this governance process is the voting phase. It can be argued that the voting mechanism plays the role of a CEO in a traditional company, and that the CEO's wisdom comes from the consensus of the entire DAO organization.

Existing voting governance tools

Through combing, we find that the existing voting tools on the market mostly exist in four ways: protocol, voting component in DAO platform, decentralized project, and voting module in governance suite. We've listed typical examples of each tool to help readers understand how they are used.

The agreement. There are three well-known protocols related to voting, namely Compound Governor, Moloch DAO and Gensis Protocol. Compound is a DeFi project designed to provide a developer-friendly automatic interest accrual agreement. In Compound, a governance protocol, Compound Governor, is provided for the governance of DeFi projects. It is based on streaming democratic voting, and is currently used by many header projects, such as Uniswap, Radicle, and Cryptex. Moloch protocol is the governance protocol adopted by Moloch DAO, which uses the voting mechanism of restricted authority. Since MolochDAO is itself a financing DAO, Moloch was favored by both investment DAO and financing DAO, and he is currently used by many projects including MetaCartel Ventures,Raid Guild and DAOhaus. Another Protocol, Gensis Protocol, is developed by dxDAO to experiment the holographic consensus mechanism (a Futarchy mechanism) proposed by dxDAO, which is mainly used on dxDAO platform at present.

Voting components in the DAO platform. Some DAO building platforms provide voting tools with various mechanisms. A typical example is Aragon Governor. In addition to optimistic governance, Aragon also provides apps such as belief voting and streaming democratic voting. In addition, Aragon integrates third-party tools such as Vocdoni and Snapshot.

Decentralized projects. At the moment, there are a few projects that focus exclusively on voting, the best known being Vocdoni. It is a decentralized digital voting platform and provides a framework for the development of various voting mechanisms. Through Vocdoni, various voting algorithms including quadratic voting and streaming democratic voting can be realized. Vocdoni has been launched in partnership with Aragon.

The voting module in the governance suite. Tally, for example, is an on-chain governance dashboard that also offers voting modules based on streaming democracy.

Compound Governor, Aragon Governor, Moloch and Vocdoni were the most widely used tools among the four categories.

Through the above article on the introduction of blockchain DAO governance process, we must have understood how to govern blockchain DAO. Because the DAO is open source, it is transparent and theoretically clean. All transactions in the DAO are recorded and maintained on the blockchain, and proposals are the primary way decisions are made within the DAO, which are approved by majority consensus voting among the relevant network participants. In fact, DAOs can be viewed as distributed organisms or distributed Internet tribes that live on the Internet and exist autonomously, but also rely heavily on individual experts or smaller organizations to perform tasks that cannot be replaced by automation.