Excellent post @ham.
Let me address some of the issues in this reply:
Governance band-aids StableLab can apply now.
We’re currently working on two things to address this:
1.) A community sensemaking session to gather sentiment in a clearer and more beautiful way than a 114 answer Discourse thread.
2.) Another Discourse thread here on the forum highlighting pertinent posts and summarizing sentiment.
For 1.) we’re going to roll this out to the DRF as a test this week, tweak and then invite Lodge members, before going broad.
For 2.) We’ll drop the thread tomorrow.
Then I want to weigh in on challenges with centralization and with DAOs in general.
It’s a topic that is very dear to my heart and one where I have spent a lot of time thinking, experimenting and observing from our position as StableLab. My position might seem extreme, and maybe inflammatory, but I think I can back most of this up with evidence.
Challenges with DAO Governance today
Let’s start out with some of the positives:
- A few of the fastest growing organizations in the past are DAOs: Sky/Maker, Aave, Uniswap, ENS, Arbitrum, among others
- DAOs are completely unique in the history of human organizations in their openness. Literally anyone can walk in from the street and participate in every decision!
- This openness attracts intrinsically motivated participants, some of which manage to really move the needle for everyone through their ingenuity, grit and ability to interact with the community.
But not all is well in DAO Land:
DAOs don’t offer meaningful outlets for community sensemaking, and instead rely on a tech support forum software for meaning making.
- Without a clear path to set a north star and clear priorities for the community, many DAOs drift or whiplash from project to project, diluting resources.
- Unclear procedures and expectations for contributors favor entrenchment and scope creep.
- Small token holders can participate, but feel they lack power, and get disenfranchised.
- Without clear paths to paid contributions, quality participants eventually churn, leaving those in place that have managed to secure some form of compensation through the founding team or operating entities, further strengthening the impression of centralization.
Participation is not a meaningful goal…
If you read this far you might wonder why I didn’t mention low voting participation as an issue.
In my - probably radical - opinion voting participation is not a meaningful goal in itself.
A quick thought experiment explains the idea: Imagine a DAO with 100 voters. There’s a deeply technical security upgrade proposal to vote on that will prevent many hacks and plug important security holes, but leads to a small loss for token holders up front.
Of the 100 voters, 2 are smart contract experts with a track record in audits, while 98 won their tokens in a raffle on Binance. Would you want more participation here? Probably not!
The median voter doesn’t add meaningful information to the decision making process very quickly. This is something that Jeffrey Strnad from Stanford pointed out in detail in his seminal paper on the subject.
… In the current mechanism
But clearly an organization that is “governed by it’s token holders” should heed the will of the holders? right?
As I established earlier, any form of democratic voting doesn’t necessarily participate from participation. Not participating is instead an act of delegation, called “delegation through absention”, where non-voters implicitly delegate to the outcome, because they feel they have nothing meaningful to add to the discussion. This is their prerogative and right.
The question of “how to increase particpation?” should be reframed as “How can a system be designed that attracts participation and has an output where more participation yields higher signal?”
I’ve written about my thinking on this on X here and here. To sum it up, governance systems need to be designed that token holders with low bandwidth can still cast a signal in a way that aggregates righteously.
One such system is gauge voting, where token holders stake their tokens on a one or more of a small menu of top-level items or priorities. The gauges with the most stake now receive the most of the available resources. These gauges need to be incentivized with token emissions that reflect how successful the gauge is in affecting positive outcomes for the protocol. Designing this is a hard problem, but can be iterated on. It also yields immediate outcomes and can become a large demand driver even without perfect reflection of outcomes.
For token-holders that bring more bandwidth and motivation, sense-making sessions are great. These are typically surveys of some sort, like Negation Game or harmonica.chat, where 10-20 minutes of token holder time funnel their take on important issues into a meaningful and coherent whole.
For the most steadfast champions of an ecosystem there should be a road to being paid for their contributions, whether through councils or working groups, or through a revenue share for activities with a positive sum for the ecosystem, such as the eUSD champion.
The important thing here is that there is a meaningful and lucrative path for token holders to participate that matches to their ability to bring meaningful signal to the table.
Challenges unique to Reserve Protocol
Reserve Protocol represents a unique challenge because it is actually a DAO Factory of sorts.
Each Yield and Index DTF is it’s own DAO, some of which are governed by tokens other than $RSR. This independece was baked in from the start and makes Reserve Protocol uniquely resilient . It also offers a tremendous challenger for concerted action.
StableLab has facilitated community thinking on this subject in this thread here.
TL;DR: Do we need the “United DAOs of Reserve” organization? If so who will fund it and who will obey it’s decisions?
StableLab will continue to push for a function like this, because we believe this will unlock benefits for all. In that regard we want to highlight that Index DTFs would benefit greatly from being visible here on the forum and coming into the governance fold, as Ham rightly pointed out.
Increasing meaningful governance participation now
As Ham pointed out StableLab ran a delegate training program for Scroll, with very good resonance across the ecosystem. We’d be more than happy to design and run such a program for Reserve. My main concern here is: For which DTF?
One potential answer to this question would be to run it across DTF and then give the newly minted, and educated, delegates a basket of delegated $stRSR tokens to vote with on the top 5 or top 10 of DTFs.
Conclusion
DAOs are new. They really represent a completely novel way to organize. If there’s one thing I personally wish for, it is the willingness to run way more experiments so we can learn how to make this work as quickly as possible.