![]() ![]() A voter can choose to spread her tokens across different proposals (by putting two tokens on a proposal for an impact of four votes, three tokens on another for an impact of nine, and five tokens on a third proposal for an impact of 25). To understand how this alternative model works, let's assume every member is assigned a credit of 100 votes for ten tokens. Replacing money with tokens is an alternative to using real money for buying votes. This situation contradicts the principles of modern democracy and is in stark contrast to the radical democracy that fans of blockchain technology preach. However, QV is bound to bring about a plutocracy where voting power becomes a function of wealth. This system comes with its pros and cons: It discourages people without a vested interest from voting on an issue and gives a minority a more prominent voice on issues they are passionate about. So, while the representative impact of a single vote is one, it increases to four for two votes and nine for three votes. The voting power increases by the square of the number of tokens a voter has. In quadratic voting (QV), voters are allowed to buy tokens and acquire greater voting power. ![]() This initiative aims to wrestle power from the hands of speculators possessing great numbers of tokens and reward voters based on their track record, giving highly-engaged voters a portable reputation they can transfer to other platforms. Wary of these shortcomings, Snapshot and Orange have joined forces to introduce a reputation-based voting system, which will take into account the contributions a voter made. BProtocol used a flash-loan to borrow $7 million worth of MKR tokens to manipulate a vote, and then returned the tokens after the vote in the same time-block, exposing how vulnerable this new experiment in democracy can be. BProtocol's coup on the MakerDAO platform in October 2020 is a good case in point. This technique is not without its flaws, either. ![]() ![]() The low participation rate draws attention to other voting methods such as relative quorum voting, whereby a proposal passes when 51 percent of voters participating vote in favor. The percentage of members voting on popular platforms like DAOStack and Aragon are below 10 percent, which allows organized groups to dominate the voting process. Also, people don't look too enthusiastic about participating in voting despite all the talk about decentralization and a new form of bottom governance. Then, there is the issue of conflicts of interest: Some people prioritize short-term profit with an eye to selling their tokens for a profit, while others emphasize values the DAO is built around. Wealthy members can even bribe others for support on a particular proposal. People hoarding tokens get to enjoy more voting power in this system. Determining the quorum level can be tricky, though: Too high a quorum level stifles the decision-making process, and the quality of decisions made suffers when the threshold is set too low. It requires a predetermined level of voters to vote in favor of a proposal for it to pass. Quorum voting is the most basic mechanism used for decision-making in DAOs. Here's a look at the most common voting systems in DAOs: Token-based quorum voting □ They all come with their pros and cons, and most of the time, multiple systems will be used together for a better solution. None of the voting systems we will talk about below offer a silver bullet to solve all problems. Members of DAO communities have been trying to balance different concerns like authority, inclusivity, speed, scalability, and economic interests and come up with an optimal method of decision-making. DAO is a construct with many political implications, and governance is a political issue in and of itself as well. How it should be governed is one of the hottest topics in the tech world nowadays. Its vision extends from reforming the current economic system to revolutionizing society. Popular Voting Mechanisms Used by DAOs □ Introduction □ĭAO is political. ![]()
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