Perils of current DAO governance
Aida Manzano Kharman, Ben Smyth
TL;DR
The paper addresses the problem of fragile and opaque governance in decentralized autonomous organizations (DAOs), arguing that token-based voting fosters wealth-based influence, vote buying, and coercion, while exposing serious privacy and verifiability tensions. It surveys the current state of DAO governance protocols and uses Vocdoni as a detailed case study to illustrate how privacy protections often collide with verifiability and security. The authors highlight a progression of solutions, including off-chain polling, hybrid on-chain/off-chain designs, and merit-based voting concepts, while noting persistent vulnerabilities such as flash loan-enabled takeovers and the use of mixers. The work emphasizes the practical impact on decentralization, treasury security, and fair participation, and calls for governance designs that deliver true decentralization, private yet verifiable voting, and resistance to predatory actors.
Abstract
DAO Governance is currently broken. We survey the state of the art and find worrying conclusions. Vote buying, vote selling and coercion are easy. The wealthy rule, decentralisation is a myth. Hostile take-overs are incentivised. Ballot secrecy is non-existent or short lived, despite being a human right. Verifiablity is achieved at the expense of privacy. These privacy concerns are highlighted with case study analyses of Vocdoni's governance protocol. This work presents two contributions: firstly a review of current DAO governance protocols, and secondly, an illustration of their vulnerabilities, showcasing the privacy and security threats these entail.