Summary of optional DAOs voting mechanisms

This article explores the different voting mechanisms used by DAOs through conversations with DAO creators and builders.

Summary of optional DAOs voting mechanisms

This paper explores the different voting mechanisms used by DAOs through conversations with DAO creators and builders.

I. Token-Based Quorum Voting

Quorum voting requires a certain threshold of voters (voting threshold) in order for a proposal to pass (e.g., 60% quorum, which means 60% of the votes need to be cast to vote). Once this threshold is reached, the decision with more votes wins. The proposal fails if the quorum threshold is not met.

The threshold is usually based on the total number of votes cast, although some protocols (such as compound governance) set a statutory threshold only for the number of votes in favor of passage of the proposal (in this case, a statutory threshold of 20% means that 20% of the votes cast in favor of the proposal in order for it to be considered for passage).

Projects that have used this approach include Compound, Curve, and Kleros (among many others).

This governance mechanism has been around for a long time, has a long history in our political system, and has a relatively simple user experience.

On the other hand, there are some problems with voting based purely on tokens. Plutocracy is not good, and choosing the “right” quorum requirement is difficult. A low quorum allows proposals to pass easily and the system is vulnerable to attacks. But a quorum that is too high makes it difficult to pass. The challenge is even greater when it comes to whales (holders of large amounts of tokens). Token-based voting is sensitive to certain types of attacks (such as the flash governance attack we saw in Maker). Quorum-based voting also requires significant member participation to pass proposals, which is both expensive and time-consuming.

Here is the Q&A session with Michael from Curve.

1) How do you see the use of quorum-based voting in your DAO?

Quorum-based voting makes sense for us. However, turnout is usually very low. We didn’t have too many challenges getting proposals through (only 1 didn’t have a quorum of 30). What is annoying is that voting does turn into a game of whale gaming. the number of gas is an obstacle to some extent, but we hope to subsidize gas in the future through meta transactions (meta transactions).

2) Are you concerned about some of the risks associated with quorum-based voting? (Note: Curve does not use direct token voting. They require token holders to lock in tokens, and the voting power given is proportional to the number of tokens locked in and how long they are locked in, and its possible to reduce the attack vector.)

No worries. Because voting rights are given to token lockers based on how long the tokens are locked, other risks I’m not too worried about, such as not being able to achieve a quorum.

3) If you could easily change the voting mechanism of this DAO, would you do it?

What I would really like to have is a liquid democracy, i.e. a voting proxy.

Here is the Q&A session with Clement from Kleros.

1) How do you feel about quorum-based voting in your DAO?

I hate it. The only quorum percentage I would suggest a project use is 0 (i.e., no quorum).

2) What do you dislike the most?

It leads to tactical voting. There are many reasons why tactical voting is not ideal and does not make the best decisions. (Tactical voting means that people may be motivated to hide their true preferences in order to get the best results. For example, this is often the case in U.S. elections, where people vote for Democrats or Republicans even if they support an independent party because their “votes don’t count.”) In a quorum vote, those who oppose the proposal will usually abstain rather than vote against it because it is more likely to prevent it from passing.

Quorum-based voting also leads to governance locks when a quorum cannot be reached. It also creates forced conservatism because only extremely popular proposals pass, and simple proposals are hard to get people to vote on.

3) Are you concerned about some of the risks associated with quorum-based voting?

Yes, I am concerned. The risk of a governance lock is significant and could lead to termination of the project or failure to respond to new environmental conditions in a timely manner.

4) If you could easily change the voting mechanism of this DAO, would you do so?

The conviction voting is interesting, and the Moloch permission style could fit some DAOs. i also like the Condorcet method voting system.

Here is the Q&A session from Compound’s Anonymous.

1) How do you see quorum-based voting being used in your DAO?

At least in Compound, it seems to work, and the community is constantly upgrading it. Reaching a quorum is not a problem, probably because there are active giant whales.

2) What is your least favorite thing about quorum voting?

As a voting mechanism, tokens have a market price that is formed primarily around speculation. It would be better to separate voting rights from the financial side.

The challenges of composite governance seem to be more related to social and incentive issues. For example:Many people participate in communities because they care, not because there are long-term benefits. Getting more people to align with the long-term direction of the agreement is good, but getting more people to care overall is hard. In addition, even though Compound is decentralized, many people still just reach out to the team rather than work within the community. Part of this problem may be due to the lack of infrastructure around proposals and voting, and the perceived centralization.

3) If you could easily change the voting mechanism of this DAO, would you do so?

The idea of quadratic voting seems interesting. It might require locking tokens to increase voting power. Possibly also vesting compensation to “farmers” to adjust long-term incentives.

The other thing I can think of is that voting power is related to the length of time the token is staked.

II. Holographic Consensus

Holographic Consensus (HC) is a concept spearheaded by DAOstack. This voting mechanism links a prediction market to each proposal. Predictors can use their funds to support or oppose proposals that they think will pass or fail. If the prediction is correct, they receive a financial gain. Proposals that are predicted to pass are “bumped up” and the vote switches from a 50% quorum to a relative majority (only yes and no votes, no quorum required), making the hurdle to passage much lower than if the proposal had no money on the line.

Projects that have used this voting mechanism include DXdao, NecDAO, and Prime DAO.

This voting mechanism naturally protects projects from malicious proposals that require payment to attack (by staking money on the proposal). It works very well for projects with many proposals, as members only really need to focus on the proposals with stakes. It also allows DAOs to be able to pass proposals quickly.

On the other hand, its user experience is rather confusing and it introduces a new token mechanism (betting on proposals), which is not always desired.

Q & A session with Sky from DXdao.

1) How do you see HC based voting being used in your DAO?

The holographic consensus-based voting being used by DXdao has been working well. It is very interesting to participate in a system that uses non-transferable REPs for voting and GEN-staking tokens for predicting proposals, as this is unique compared to most other single token governance systems.

My understanding is that the holographic consensus is designed to be a system that can scale to tens or hundreds of thousands of members. Obviously, there is no practical experience with this at scale, so DXdao is practicing what we call a lighter version of the design. The locking mechanism becomes an important aspect of filtering when the proposals in the queue reach a certain level, which is not often the case.

In general, it works very well, and DXdao does not have many controversial votes. Part of the reason for this may be that the people making proposals often gain social consensus through forum postings/chats and community discussions before making proposals. This approximates adding a third layer to the governance mix.

2) What do you dislike most about HC-type voting?

Holographic consensus for adds complexity to the governance process. Probably the biggest drawback is that it is difficult to understand the exact details of how the system works, especially if one is new to DAOs and systems.

Because of this, it takes a lot of time and effort for people to become familiar with the governance process and how to best use it for governance. Also, I would say that a holographic consensus governance system with many members and moving parts active would become quite expensive, especially with the rising price of ethereum’s gas.

3) If you could easily change the voting mechanism of this DAO, would you do it?

For me, the most interesting addition to the current governance system would be some way of incorporating conviction voting into the governance process for specific types of proposals on top of the current system. I saw Commons Stack’s Panvala conviction voting system in action during my Gitcoin funding and it felt really cool. I think this type of fluid voting makes a lot of sense in some cases.

I also really like the simplicity of Moloch DAOs – they are fairly easy for newcomers to understand quickly, and its efficient and secure (if you have the necessary community overseeing them).

At this point, I don’t think it makes sense to switch to any other voting mechanism altogether, as HC already serves DXdao’s needs well, but we’re also forever experimenting!

Q & A session with Luuk from Prime DAO.

1) How do you see HC based polling in your DAO?

I think HC is useful for a DAO filtering proposal. But I’m not sure its the best decision for a DAO, after all people with expertise in something don’t necessarily have the right to vote. colony’s nascent idea (i.e. people having a reputation in a specific area) looks interesting. In fact, in another DAO I’m working on (CuraDAO), some people even find it unethical to vote on certain proposals they don’t understand! I don’t necessarily believe in the vision of these giant DAOs.

Although it has little to do with the voting mechanism, I do really like the proposal information and process in the DAOstack DAO.

2) What do you dislike most about HC-type voting?

Using GEN is very challenging.

3) If you could easily change the voting mechanism of this DAO, would you do so?

I would use multiple voting mechanism for different decisions. HC is used for base level decisions and then belief voting is used for budget decisions. One Token One Vote (1 Token 1 Vote) is used for other cases. To me, it makes the most sense to do the right thing with the right tool. HC makes sense for the top level, but not necessarily for the lower level.

III. Relative Majority of Authorization (Moloch DAO)

Relative majorities (i.e., you just compare the total number of yes and no votes) are not a viable governance option for DAOs because they are easily attacked (one person can easily deplete a DAO’s funds without anyone else noticing! . However, the Moloch DAO has a nice little feature to prevent this: proposals need to be sponsored by DAO members in order to be voted on, which provides a nice security buffer.

Projects that have used this approach include MetaCartel Ventures, Raid Guild, and DAOhaus.

Some of the advantages of this voting mechanism include a simple user experience, fewer actions required by members, which means lower attention needs and gas costs. On the other hand, because proposals are easy to pass, it poses a risk if no one pays attention. This mechanism was designed to be slower.

Q & A session with Adam from LexDAO.

1) How do you see the application of “authorized relative majority” in your DAO?

LexDAO used to use quorum-based voting, which was a nightmare. We had to go without whipping each vote to get enough people to join. The complaints about gas were endless, even when the vote was $0.50. Even when the vote is small, people are still bothered by gas. Moloch, on the other hand, tends to effectively align incentives to promote community development. It shifts the burden from “get enough people to say yes” as the threshold for getting anything done to “say no if you care”.

2) Do you have a pet peeve about this voting mechanism?

It’s really slow. A lot of the built-in protections revolve around the timing of the proposal process.

3) Would you switch to a different voting system or make some changes to it?

Mandate might be a good addition.

Q & A session with Dekan from Raid Guild.

(Dekan is the builder of DAOhaus, the platform running Moloch DAOS)

1) How do you see the application of “relative majority of authority” in your DAO?

I like the simple majority rule and the fact that there is no quorum in Moloch voting. Only one vote is needed to pass a proposal, which saves gas, but also requires members to be vigilant in monitoring the proposal. This requires a participatory community.

2) Do you have a pet peeve about this voting mechanism?

While “majority rule” has its positives, it is also a negative in a sense. One vote can decide a lot of things, so if the community doesn’t participate, a proposal can sneak through. If a proposal does pass, members can still rage quit, but this can also be missed. So be highly accountable for the votes that happen in your DAO.

3) Would you switch to a different voting system or make some changes to it?

I would like to have an early voting mechanism so that a special proposal can be passed as soon as a certain quorum is reached.

IV. Conviction Voting

Conviction Voting is a high-level voting mechanism for predicting real-time collective preferences in a distributed work proposal system. Voters continually express their preferences and vote tokens on the proposals they wish to approve. As the voting time progresses, their belief (i.e., weight) in their vote grows. Collective conviction accumulates until it reaches an algorithmically set threshold for the percentage of funds required for a proposal. When the belief accumulation exceeds the threshold, the proposal passes, funds are released, and the project can begin.Aragon recently began a pilot of this new voting mechanism, which is still in a very experimental stage.

Projects that are using this approach include 1Hive, Panvala, and Commons Stack.

This voting mechanism theoretically prevents people with large stakes and strong opinions from suppressing a minority of voters. Instead of requiring a majority consensus on each proposal, token holders can simply focus on the proposals they support.

On the other hand, this voting mechanism has not been battle-tested, it is a confusing user experience, and will likely need to be used in conjunction with other voting mechanisms that are better suited for “Yes or No” or time-sensitive decisions.

Luke from 1Hive’s Q&A session.

(Luke is a member of 1Hive and Aragon, the two organizations that funded the belief voting system)

1) What do you think of your experiments with belief voting so far?

Belief voting is really interesting and it’s still early days, but I think it’s a game changer from a decentralized governance perspective. It’s hard to compare it to other voting mechanisms because it works in a very different way. At least in the context we use it, its more about budget and resource allocation than reaching a specific consensus/decision.

2) Do you think it can be used effectively for a specific consensus/decision? Or are there any reasons why it doesn’t work as well?

It’s not really the right tool, although it can be applied in some cases. For example, we use it for fundraising where the amount of support needed depends on the amount of money a proposal requests from the available funds in the treasury/pool. Another use case is to update a linear parameter (e.g. inflation rate), which can be done by periodically averaging signals to move the parameter values. But if you make an arbitrary decision like “upgrade this smart contract”, it doesn’t make much sense.

3) Would you switch to a different voting system or make some changes to it?

I would like to have an early voting mechanism so that a special proposal can be passed as soon as a certain quorum is reached.

V. Multi-signature

Many projects and communities have chosen to go the Multisig route (usually using Snapshot for off-chain signaling). In this voting mechanism, token holders signal their proposals, which are then executed by a more centralized committee that usually controls a Gnosis Safe. a more in-depth analysis of this option, as well as Q&A, will be published later.

Colony’s “lazy consensus” voting mechanism

In this system developed by Colony, anyone in the community can make a motion to make things happen. If no one objects within a certain period of time, it will happen. If there are objections, a reputation-weighted vote determines whether it should happen. This voting mechanism is still under development, so we do not have first-hand information or example projects yet.

VII. Conclusion

The vast majority of projects are currently using quorum-based voting, in part because it is the most tried and true, and the easiest to integrate for existing projects. However, we are still in the super early stages of product/protocol governance. The voting mechanism used by the project affects everything from member engagement to security and community culture. The “right” voting mechanism can play a key role in the long-term success of a project because it allows groups to make the best decisions at the right speed and with the least amount of risk.

Until an absolute winner emerges, projects should minimize locking themselves into a particular protocol or voting mechanism and be open to experimentation as the space evolves.

Posted by:CoinYuppie,Reprinted with attribution to:
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