The future of collective decision-making, Decentralized Autonomous Organizations (DAOs) are a paradigm shift from centralized hierarchical structures to decentralized governing bodies. The total value of digital assets in the treasuries of over 50,898 DAOs is $17.8 billion with 3.2 million active voters and proposal-makers out of 10.9 million governance token holders. DAOs have been limited so far, mainly governing technology, such as blockchains and the applications deployed on them, but what if the DAO model was applied to government?
Majority of DAOs are deployed and managed on public ledgers (e.g., Ethereum), visible to anyone with an internet connection. All decisions, transactions, and operations of the government would be recorded on an immutable public blockchain, offering citizens the ability to audit a government’s actions and finances in real-time. For treasury management operations, some DAOs adopt tools such as Safe, a multi-signature wallet requiring several approvals from software and hardware wallets before any transaction can be executed, ensuring funds are managed responsibly. The transparency of a DAO could reduce corruption from political officials while increasing trust in public institutions.
DAOs could enable a more democratic form of governance, giving citizens a direct say in policymaking including the management of funding. Tools such as Snapshot, an offchain voting platform for decentralized governance, could enable citizens to directly participate in the decision-making process by submitting and voting on proposals pertaining to their country. Imagine U.S. citizens submitting a proposal on how to spend funding allocated to the Department of Transportation. Snapshot often serves as a “temperature check” for a proposal before it is submitted to a community for a final vote onchain.
Tally an onchain governance infrastructure, could enable the creation of DAOs where members could delegate their voting power to more knowledgeable third parties and elected officials. DAOs are governed by smart contracts, self-executing and self-enforcing terms directly written into code. This ensures that all actions are carried out as agreed upon, without the possibility of human error or manipulation. A country governed by smart contracts ensures that once a decision is made through the voting process, the agreed upon terms would automatically execute, leading to faster implementation of policies and reduction of bureaucratic inefficiencies.
Snapshot’s integration of XMTP (Extensible Message Transport Protocol) offers a glimpse into the future of coordinating constituents at scale. The XMTP is an interoperable messaging protocol enabling communication between wallet addresses. Imagine email and messenger platforms without the walled gardens. The XMTP could provide government a direct way to engage voters, ensuring constituents are informed and notified of critical decisions, while providing the ability to submit votes on proposals from the convenience of their mobile phone. The direct relationship facilitated by XMTP could reduce voter apathy while increasing voter participation.
The integration of blockchain by government is not a new concept. Back in 2020, the U.S. Postal Service filed a patent for a voting system based on blockchain. More recently, the California DMV has tokenized 42 million car titles on Avalanche with the goal of reducing in-person DMV visits and lien fraud. Despite the promise of DAOs, the complexity of scaling from small organizations to nation states presents several challenges. Participation in a DAO-based government would require a level of technological literacy and equitable access to the necessary infrastructure, potentially excluding segments of the population. Additionally, DAOs are vulnerable to security exploits, as demonstrated by the infamous attack on The DAO in 2016. Ensuring the security of a DAO-based government would be critical, as potential exploits could have severe global implications.
DAOs facilitate a level of global collaboration and coordination unfathomable in the 20th century, enabling individuals regardless of their physical location, the ability to directly participate in the decision-making process of organizations. The arrival of DAOs is reminiscent of the “static web” of the 90s, where users accessing AOL with dial-up modems were unable to fathom the evolution and impact of the technology in the decades ahead.
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