DAO Governance Models Explained

As the Decentralized Autonomous Organization development (DAO) community expands enormously in size, governing the decentralized protocols takes on added significance. In fact, the long-term success of DAO development demands the choice of a sustainable governance model.

What is DAO Governance?

DAO governance comprises structures with an objective to uplift the management of an enterprise in achieving its goals. These structures are the area that assists self-managed enterprises in succeeding as the structures replace hierarchies. Structures eliminate the hierarchical decision-making power and help in coordinating large teams and attaining efficient outputs. All these structures work together as the governance of DAO.

Why Does it Matter?

The governance models are now paving the way for modern DAOs in numerous ways. One notable area is security as no user will trust an unreliable network where their funds are at risk. Governance models are addressing these security-related concerns with secure DAO smart contract programming languages that portray improved programming standards backed by modern token distribution mechanisms.

Different Types of DAO Governance Models

1.) ConstitutionDAO

Having a market cap of $119,881,219, ConstitutionDAO enables users to pool their resources for making purchases and even share ownership of assets with cryptocurrencies. Established in 2021, ConstitutionDAO is a defunct DAO with an initial motive to persuade people to buy a copy of the US Constitution. But despite week-long discussions, nothing was put up for a vote.

Initially, $47 million in Ether cryptocurrency was gathered by DAO which later got limited to $43 million in Sotheby’s auction, accounting for taxes and the costs of protecting, moving, and insuring the Constitution. DAO agreed to and made refunds to all members’ contributions excluding the Ethereum fees. People who denied refunds withheld the PEOPLE governance tokens received in return for their donation.

2.) ENS DAO

Launched in 2017 by Nick Johnson, Ethereum Name Service (ENS) DAO has a market cap of $172,581,269.32. Commonly known as ‘an open public utility that belongs to the community’, ENS is backed by a delegate model at its base. This model enables voters to elect their representatives as delegates for the constituency which permits people to propose changes to other users and those users can further delegate the tokens for supporting them.

The demand for delegates and legendary airdrop gave rise to ENS DAO where an ENS token is supplied for every registered Ethereum domain.

ENS DAO works on a three-layered approach:
● Discourse of proposals
● Off-chain voting used by delegates
● Voting on the blockchain

ENS DAO can assist in launching the following types of proposals:
● Social proposal: This includes modifications that don’t require on-chain activity like fee changes or petitions to root holders.
● Executable proposal: Smart contract execution via DAOs wallets.
● Constitution amendment: Modifications that are proposed to the constitution.

All these proposals are further divided into 4 work streams:
1. Meta governance includes governance modifications and discussions
2. Community-related proposals
3. ENS ecosystem that facilitates ENS adoption and develops a booming ecosystem
4. Public good that involves proposals for the public betterment

However, this DAO governance model turns out to be slow and complex, unlike the other models.

3.) Friends with Benefits (FWB)

The idea of FWB emerged in the year 2020 when an idea struck the mind of Trevor McFedries, a digital entrepreneur. He planned to build a private chat room where special cryptocurrency tokens would be utilized to unlock the online club.

FWB DAO comprises a cluster of Web3 pioneers that includes innovators, cultural creators, artists, thinkers, and so on where the FWB token acts as a portal for FWB DAO while connecting individuals with similar interests or thoughts to work together towards a common goal. With a market cap of $6,416,761, FWB is a sort of co-op utilizing cryptocurrency tokens for making payments, coordinating access, and carrying out voting on collaborative decisions. Gaining the spotlight in no time, FWB has succeeded in gathering 6,000 unique token holders.

To join, individuals are vetted by a community of existing members and upon approval, they get benefits depending on the number of groups’ in-house $FWB tokens they own. As of now, FWB is inclined toward a centralized consensus model with an emphasis on the funnel of proposals ensuring better visibility and reach.

FWB tokens have got a restricted supply of 1 million. Earlier known as FWB classic token, now the name is replaced by FWB pro token. FWB allows the community members to experience engaging experiences and one-of-a-kind products that will revolutionize human interactions and connections.
However, on the downside, FWB has a centralized team that formats and makes edits to the proposals which accompanies high-risk specifically in the case where it isn’t disclosed how the team will be governed and conformed.

4.) JuiceBox

JuiceBox is a powerful yet popular Web3 protocol with a motive to fund and manage shared treasuries. Ideal for a group of individuals or a global network, JuiceBox is a community-owned, on Ethereum ideal for DAOs, NFT projects, crowdfunding, and Indie creators and builders. It has a market cap of $2,808,784.

All a user needs to get started is to get funded, give ownership, manage funds, and build trust. Powered by public smart contracts on Ethereum, the main highlights of JuiceBox include flexible appearance, funding, distribution, reserved tokens, and additional configurations.
JuiceBox’s governance structure is centralized and procedural where the voting process is marked in cycles.

The downside of JuiceBox is that the proposal process demands a lot of effort.

Wrap Up

Every individual governance model listed above has its own significance with wide adoption across the globe. Few of them are archaic while others tend to be more reflective, it’s too early to discern which model is ideal out of all. Rather, it is all based upon the requirements, objectives, expectations, and business model of an enterprise.

All you need to do is choose the governance model wisely and patiently while ensuring that the chosen governance model perfectly complements your business not only today but in the long run since the entire system will upgrade with time and it might become complex if you don’t choose a scalable system. It is recommended to look for an ideal DAO platform development company that can assist you not only in identifying the suitable DAO governance model, but also deploy it from scratch till the final execution.

Antier Solutions can be your ideal DAO development partner and ensure flawless, scalable, and next-gen solutions. We are well-versed in delivering exceptional DAO development solutions to diverse industry verticals. From DAO crypto coins development, DAO blockchain development to Olympus DAO development, we excel at all.

Connect with our subject matter experts to share your needs for DAO development.