Towards Governance Abstraction: Understanding a ‘Friendly’ Way to Manage DAOs

People like to call for the death of decentralized autonomous organizations, aka DAOs, these days. Just like they do for crypto. It is pretty easy to find flaws with groups and money. Especially on the internet.

But the real idea behind DAOs is that people don’t need to trust each other to make decisions as a group, for better or worse, using their own code.

Ross Campbell is a legal engineer and core developer for LexDAO and KALI, in addition to being a corporate attorney.

For this simple reason, I am bullish on DAOs. The existing way we govern things just doesn’t feel final at all. The coordination space cannot call it a day.

But DAOs do have much room for improvement. They optimized for security at the right stage, but did not anticipate, in my opinion, their own success. Self-custody and resilience is great, but so is being usable.

See also: Ethereum’s Technical Evolution and Institutional Interest

Usability issues in DAOs are not unique and are common to other blockchain applications. Chiefly, users don’t want to hold volatile gas tokens or deal with hobbyist UX. They have needed useful abstraction.

The stopgap solution so far in DAOs has been to allow for voting delegation. While this simplifies things and makes governance cheaper (many votes in one transaction), it begins to resemble politics. The flywheel of apathy is hard to ignore: People can’t afford to cast votes on layer 1s, and even on scalable layer 2s; and there is a lack of flexibility around initializing governance, and more importantly amending it.

So many DAOs seem to coast and we only really hear about them when they get hacked or make silly spending decisions that nobody seemed to want.

Each DAO design also tends to be monolithic, partially for development simplicity, but also to also provide a Schelling point to solve for some of the issues mentioned above.

People are asked to understand not only the blockchain and how to use it, but also high-stakes governance systems. Are we therefore surprised they aren’t excited about DAOs?

So, there is more or less a gap between group intents and group outcomes.

To be productive about this (in the spirit of, we have the technology), it is my belief and my recommendation that more people will consider governing more actively in DAOs, and DAOs would therefore be a more…