DAOs are either revolutionary concepts defining a virtual future, leaderless organizations, or dystopian structures rife with existential and self-destructive challenges, depending on who you're talking to. In recent months, DAO has emerged from the segmented track in the Crypto field and has become the current mainstream news.

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tortuous history

The first major historical event about DAO happened in 2016,A project called The DAO was set up to crowdfund new projects on Ethereum and managed to amass over $150 million from investors. An anonymous hacker discovered a vulnerability in an underlying smart contract and stole $60 million worth of ETH.

The move split the ethereum community, with some in favor of restoring blocks to recover stolen funds, while others argued that "code is law." While the former won, the latter decided to fork the blockchain, creating Ethereum Classic.

The story resurfaced recently as investigator Laura Shin resurfaced in a book in which she believes the hacker was identified by using a previous Crypto analysis tool from blockchain security firm ChainAnalysis.

Regardless, this incident illustrates one of the biggest challenges of governing a decentralized community, establishing off-chain governance capable of reaching consensus. However, it also destroyed the concept of DAO to some extent, so only a few projects continue to use the term DAO.

In March 2020, when the global market was on the verge of collapse due to the epidemic, another DAO-related incident shook the Crypto community.

As bitcoin and ethereum plummeted, so did the value of funds locked in smart contracts that underpin DAI’s stablecoin, leading to a crisis in which there wasn’t enough collateral to back the loan and positions automatically liquidated.

While many dubbed the incident a "black swan," others were quick to point out that MakerDAO, which maintains the DAI protocol, does not have any crisis governance processes.secondary title。

The concept expands, the problem expands

Recently, several other incidents have also exposed the flaws of the DAO model. In mid-February, an anonymous entity managed to purchase enough tokens in the BuildFinance DAO to pass a proposal that would allow them to effectively take full control of the project’s treasury, conducting a hostile takeover.

Another project, FortressDAO, was also recently taken over by the developer who built it, who seems unwilling to restore "decentralized governance".

In the past few days, The DAO has launched what may be the largest DAO operation to date to buy the Denver Broncossecondary title

Addressing Governance Challenges

All of these issues point to something fundamental: governance challenges that will be deal breakers for many non-crypto investors. We can say that the first two incidents were unpredictable, but anyone who watched the hit TV show "Silicon Valley" knows the possibility of a 51% attack.

So far, no one has come up with a panacea for DAO governance problems. It is likely that no single solution exists, as each DAO may face different types of governance problems, depending on the nature of the project itself.

From this perspective, it is interesting to examine some of the mechanisms that project founders embed into DAO governance in order to secure the future of the project。

For example, DropsDAO is a project that provides loans to users who want to use NFT and DeFi assets as collateral, using the same protocol as Compound. The token of DropsDAO is DOP, if someone wants to use it to participate in DAO governance, they have to lock DOP to create another token called veDOP.

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Remove financial motivation for attack

The GoodDollar Protocol, which shares Jack Dorsey's vision for a Crypto-based Universal Basic Income (UBI), is another project taking a new approach to DAO governance.

In launching GoodDAO and the GOOD token, it defined two unique properties designed to incentivize active participation.Each GOOD has only one non-transferable vote with a market value of 0, eliminating the financial incentive to attack the protocol。

There are limited ways to earn more, either by staking GoodDollar as a UBI payment to the GoodDollar Trust, or by staking it to the GoodDollar protocol itself. Any GoodDollar community member who controls more than 0.25% of the Prime supply can make a proposal, and any Prime holder can vote. Proposals must pass a certain number of votes to become effective.

And FriesDAO is taking another, so far relatively untested approach, to see how it performs in a real-world setting.

The project bills itself as a “decentralized social experiment” and purchased a fast-food franchise with crowdfunding from the Crypto community. Although it does not provide any actual equity ownership due to securities regulation, it does provide a way for DAO to participate in social production and life as well as investment.

While this won't solve any specific governance challenges by itself, FriesDAO will serve as a proof of concept for how a DAO can work as a real-world based community initiative with real-world impact.

This model has the potential to create new governance dynamics beyond what we have seen in the current crypto space.

The challenges of DAO governance are complex and likely to continue for some time, for the simple reason thatBecause the DAO concept is so new and relatively unexplored。

The original text comes from bitcoinist, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.

The original text comes from bitcoinist, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.