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The On-Chain and Off-Chain Mechanisms of DAO-to-DAO Voting

Thomas Lloyd, Daire Ó Broin, Martin Harrigan

TL;DR

It is demonstrated that metagovernance obscures voting context and introduces entities driven by self-interest that can significantly influence governance in instances of metagovernance between DAOs operating on the Ethereum blockchain where current governance tools inadequately reveal such dynamics.

Abstract

Voting is the primary mechanism through which Decentralised Autonomous Organisations (DAO) reach decisions. Although transparent, the voting process can be complex: it can involve many interacting smart contracts. The nexus of the decision-making process can be relocated and the true voter demographic obfuscated. Furthermore, DAOs can govern other DAOs -- metagovernance. We present a method for identifying DAO-to-DAO metagovernance on the Ethereum blockchain. We focus on the links between DAOs and token contracts. We employ a signature-matching algorithm to flexibly handle a variety of DAO frameworks and voting schemes. Once we establish token-to-DAO relationships, we gather and process voting data to produce a list of metagovernance relationships. We apply this algorithm to an initial set of sixteen DAOs and we extend the dataset as more DAOs are identified. We produce a metagovernance network with 61 DAOs and 72 metagovernance relationships. We examine three case studies that show metagovernance of various forms: strategic, decisive, and centralised where a DAO becomes a nexus for metagovernance. We demonstrate that metagovernance obscures voting context and introduces entities driven by self-interest that can significantly influence governance. We highlight instances of metagovernance between DAOs operating on the Ethereum blockchain where current governance tools inadequately reveal such dynamics. To preserve the transparency-centric ethos of DAOs and mitigate risks associated with metagovernance, there is a pressing need for enhanced tools to address such issues.

The On-Chain and Off-Chain Mechanisms of DAO-to-DAO Voting

TL;DR

It is demonstrated that metagovernance obscures voting context and introduces entities driven by self-interest that can significantly influence governance in instances of metagovernance between DAOs operating on the Ethereum blockchain where current governance tools inadequately reveal such dynamics.

Abstract

Voting is the primary mechanism through which Decentralised Autonomous Organisations (DAO) reach decisions. Although transparent, the voting process can be complex: it can involve many interacting smart contracts. The nexus of the decision-making process can be relocated and the true voter demographic obfuscated. Furthermore, DAOs can govern other DAOs -- metagovernance. We present a method for identifying DAO-to-DAO metagovernance on the Ethereum blockchain. We focus on the links between DAOs and token contracts. We employ a signature-matching algorithm to flexibly handle a variety of DAO frameworks and voting schemes. Once we establish token-to-DAO relationships, we gather and process voting data to produce a list of metagovernance relationships. We apply this algorithm to an initial set of sixteen DAOs and we extend the dataset as more DAOs are identified. We produce a metagovernance network with 61 DAOs and 72 metagovernance relationships. We examine three case studies that show metagovernance of various forms: strategic, decisive, and centralised where a DAO becomes a nexus for metagovernance. We demonstrate that metagovernance obscures voting context and introduces entities driven by self-interest that can significantly influence governance. We highlight instances of metagovernance between DAOs operating on the Ethereum blockchain where current governance tools inadequately reveal such dynamics. To preserve the transparency-centric ethos of DAOs and mitigate risks associated with metagovernance, there is a pressing need for enhanced tools to address such issues.
Paper Structure (20 sections, 3 figures, 2 algorithms)

This paper contains 20 sections, 3 figures, 2 algorithms.

Table of Contents

  1. Introduction
  2. Related Work
  3. Metagovernance
  4. On-Chain/Off-Chain
  5. Voting Power
  6. Delegation
  7. Governance Frameworks
  8. Method
  9. Governance Smart Contracts
  10. Delegation
  11. Snapshot Spaces
  12. Account Labelling
  13. Results
  14. Metagovernance Network
  15. Delegation
  16. ...and 5 more sections

Figures (3)

  • Figure 1: Metagovernance occurs between two daodaos*daos (*dao)dao , dao A and dao B, when the result of a proposal in dao A either creates or votes on a proposal in dao B. The solid lines show the progression between the stages in a typical proposal process within dao A and dao B; the dotted lines show the output of the process in dao A becoming an input to the process in dao B.
  • Figure 2: The metagovernance relationship between daodaos*daos (*dao)dao can be visualised as a network: each vertex corresponds to a dao and each directed edge connects a source to a target where the dao corresponding to the source metagoverns, or influences the governance of, the dao corresponding to the target.
  • Figure 3: daodaos*daos (*dao)dao delegate voting rights to third-parties who vote on their behalf. Although our dataset included 1299.0 instances of contract accounts delegating their voting rights, this only added 12.0 additional edges to the metagovernance network in \ref{['fig:metagovernance-network']}.