Crypto Basics Series: DAO Governance Primer

May 22nd, 2023

Tools and Tactics for Coordinating People and Achieving Consensus

Article by EthHunter | Cover Art by pub-gmn.eth

Welcome to Bankless Publishing’s Crypto Basics Series. We’ll be shipping all of our introductory web3 content on Mirror each Monday, enabling users to curate a web3 reference library by minting NFTs on Optimism.

Organizing people is like herding cats some days! There must be easier ways to do this…

Governance is a word that is not understood by most people. That is until they start getting involved in a DAO. Governance sounds a little too similar to governments, and as such, most of us have not really wanted to, or needed to, take part in it.

Governance is a mechanism used to create the structure or framework that allows groups of people to cooperate as effectively and efficiently as possible. This is a very important aspect of DAOs and human interaction in general.

Included within the governance framework are models for how to adequately compensate people for their efforts and contributions to the DAO, as well as best practices for how to stay in alignment with a DAO’s mission and values while continuing to build a strong vibe.

It is the governance structure that determines how many interactions we have in a decentralized social system, and it is always changing and evolving to make the cat herding seem easier!

“Governance is everyone’s responsibility”, as nonsensetwice reminds us. In order to best prepare our DAO members, we’ve produced this governance primer to help you understand the importance of taking part in governance.

Getting Involved

For those of us wanting to live a Bankless life and take part in DAOs, there are a few things we need to learn in order to set off on the right path. In order to thrive in this space, you need to start understanding how governance works and how to get involved. You are just as responsible for governance as the rest of us!

At BanklessDAO, some of the ways you can get involved are:

Attend guild governance calls
Read up on polls in #polls-discussion and vote in #polls
Write, take part in, and comment on forum proposals
Vote on Snapshot

What Does Getting Involved Actually Look Like?

Like many areas of BanklessDAO, the easiest place to get started is to attend a guild governance call and start to talk about governance. Governance calls are an open space for members to meld ideas and have constructive, engaging conversations about challenging topics. The topics vary from broad overviews of concepts and projects to “rubber meets the road” conversations about challenges that need to be solved in a timely manner. It’s all too easy to look at this space with too much optimism and then be stuck when something goes wrong or we outgrow our current framework.

Governance Is an Iterative Process

Luckily, bDAO is a very forward-thinking group that’s great at identifying and assessing the various hurdles we encounter on a regular basis, then designing solutions as we go! We are all on a journey, and as such we need to keep adapting to the changing landscape. The purpose of all of these conversations is to iterate on a problem, create a proposal that can be brought to the DAO to help solve the problem, and then ratify the proposal and enact the solution.

Got an idea for a project? Write a proposal!

A few basics of a project proposal:

Initiatives organized around specific outcomes that benefit the DAO
Often requires cross-guild resources
Often requires funding
Spearheaded by a champion(s) and a squad willing to commit their time
Have measurable outcomes
Impact DAO revenue streams or brand image

Voting

Voting is important, and every idea has to start somewhere!

Sometimes voting is simply a temperature check inside Discord or a forum proposal to gain soft consensus on an idea, and sometimes it’s the beginning of something big for bDAO! Brainstorming is a great way to fill in gaps and create discussion around a project or idea and to gather a feel for how it is being received. Some examples of this are:

What should our next move be?
Weather or not members would be interested in an event or activity
Future project proposals and requests
Opinions on which design to feature on guild swag
Seasonal spec adjustments that determine future changes

Soft Consensus

The first stage of the process is known as ‘soft consensus’ and is usually done through forum proposals or sesh bot, or even more informally in Discord posts with reaction emoji to signal your opinion. Sesh bot is a one-person-one-vote system. The information collected through sesh is valuable and informs the creators as to when something needs to be revised or if it can head up the pyramid for further consideration once traction is gained. At this phase, either a poll or a draft of a proposal is needed. Some use cases are:

Nominations to L2 for people’s meaningful contribution to bDAO
Temp checks and revisions needed for proposals
If we should change the schedule for the holidays
Gap week as interim between seasons.
Any project that you would want to go to hard consensus

This is also the stage where some more formal answers are received. Soft consensus voting usually consists of a few standard options: (1) Yes (2) No or (3) Adjustments Needed, and a space to vocalize said adjustments either in the chat or by adding an option to the poll. This is normally where a proposal or idea either goes up to further stages, or back down for conversation and revision before attempting the process again.

Hard Consensus

There are many proposals or projects that tackle bigger issues or require funding, and they need to pass through all the steps in order to be funded and implemented. These changes and proposals are often complex and need to be communicated to the DAO, with proper time for members to digest and process new information. The proposals that make it to this point are usually well polished and concise. They have passed through multiple stages and drafts, and have had opinions offered and revisions applied. Soft consensus has been passed at this stage and a more official and formal vote is needed to finalize.

Voter Fatigue Is Real!

For these reasons, we have a very comprehensive proposal process that makes it possible to reduce the amount of hard consensus voting needed and thus increases voter participation, giving the DAO a more accurate representation of the DAO’s opinions.

Snapshot

The final stage of the process is voting, where the proposal is sent to Snapshot for hard consensus. These votes are the most important inside bDAO and as such are token gated, where the voter must connect their wallet to Snapshot and vote with a specific token (in our case BANK), where the amount of token held reflects the weight of your vote. As an example:

Total amount of BANK used to vote: 1,000,000 BANK

You hold and vote with 1,000 BANK

Total vote weight: 0.01%

Why Do We Need Governance?

Keeping the DAO running and heading in the right direction is HARD! It takes a lot of collaboration and it isn’t light work. Testing is necessary, and we need to make adjustments as we go. Sometimes you just don’t know until you do the damn thing! The solutions that were made in the first few seasons were needed to get us to this point, but now we face new challenges. We need to be mindful of our current challenges and continue to create the solutions necessary to maintain our steady journey west.

Nothing Is Set in Stone!

This space is constantly evolving and changing as we go. Governance requires upgrades and members need to continually level up. It’s kind of like changing the engine of a plane as it’s flying! It is super complex and yet we can trust in our forward momentum to carry us through. With a community as big as Bankless, if we fail to make governance a priority we would most certainly lose our way and ultimately succumb to Moloch! This is not an option for us!

It has been stated many times in the DAO and once before here, but it is important enough to reiterate!

“Governance is everyone’s responsibility”!

Now is the time to get involved and start to contribute to the future of the DAO.

A version of this article was originally published by Bankless Publishing on July 7, 2022.

Author Bio

EthHunter is a crypto enthusiast with a desire to learn and explore the ecosystem and the communities in it, through the craft of writing.

Designer Bio

Pub-gmn.eth is a blockend developer.

BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.

Disclaimer: this isn’t investment advice. This article has been written for informational and educational purposes only and it reflects my personal experience and current views, which are subject to change.

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