The DAO concept is just the tip of the iceberg of blockchain governance
In the short term, the DEFI bubble has basically broken, and those “precious governance tokens” are constantly being sold off by their holders. But after the hustle and bustle, we need to calm down and think about whether those innovative concepts are really valuable. And “DAO” and “governance” are an important topic.
1. What is governance
The concept of “governance” is not native to the blockchain. As early as 1995, the Global Governance Committee gave a definition: Governance is the sum of many ways in which public or private individuals and organizations manage the same affairs. In the blockchain field, a group of project stakeholders discuss, establish, and implement a series of rules together on the network to promote the overall ecological development, and of course there is also a distribution of benefits.
2. The difference between governance and supervision
Many people have difficulty distinguishing governance and supervision. Although both are actually the formulation and implementation of relevant rules for blockchain activities, their fundamental starting points are different. Supervision is characterized by the control of public interests, and governance is characterized by collaboration based on the common interests of participants. In terms of governance, we usually say it is bottom-up, and supervision is top-down. So for governance, collaboration is more important. How to formulate a set of collaborative rules is an important issue in our blockchain governance.
3. What role does DAO play in governance
Many people also confuse DAO and governance. DAO is a governance model, through a series of open and fair rules, an organization that can operate autonomously without human intervention and management. The DAO needs to implement the operation of rules through the “governance token” of rights and rights certificates, and the token is only a tool or means. Therefore, when a project lacks clear rules and a mechanism for establishing rules, and directly issues coins and tells you that this is a “precious governance token”, then this is no different from sending you a “little red flower” when you were a child. Encouragement.
Governance tokens are not a master key
We can see that leading DeFi projects such as YFI, UNI, COMP and AAVE have issued their own governance tokens. Among them, COMP is the first to bring out the concept of liquidity mining; UNI is the core of this round of DeFi’s rise; AAVE has a compliance background; and YFI is a single price that exceeds BTC. These governance tokens have entered the top 50 in terms of market value.
But issuing a governance token cannot solve all the problems in blockchain governance. The establishment of governance rules is far superior to the issuance of tokens, especially the “rules for establishing rules” are not very complete. On the whole, there are two major problems in current DAO projects.
One is that responsibilities and interests are not clear. The voting rights of governance tokens are also responsible for maintaining community and project development, but most investors do not have this awareness. The most important value of holding governance tokens is that there is another wave of people willing to take over. The volatility of its price has also led to the high cost of holding governance tokens. Even if there are trading profits, the overall return is difficult to guarantee.
The second is the lack of maturity of the project and the community cannot unite. The DAO project likes to vote, but this “vote” is not very scattered. In most cases, the governance tokens are highly concentrated. In addition, we must know that “forking” is also an effective means of governance, and it is difficult for the current online community to unite. There is a view in the market that governance tokens have a “game premium”, which means that they will compete for the governance rights of the project, thereby pushing up prices. But not to mention how high the capital cost of the game is, why not use “forking” as an efficient governance method. “Fork if you disagree” is a common method for many projects to achieve “governance”, and forks will undoubtedly lead to the loss of governance token value.
Key elements in blockchain governance
We say that governance tokens are not a master key, but to solve the real problems of blockchain governance, we still need to find some key elements to build and improve the overall governance mechanism.
1. Rule transparent code open source
The most important thing in blockchain governance is to be transparent. It should be said that the principle of transparency is more important than the principle of fairness. It is fair to tell everyone what we should do from the rule level and from the code level. Because the blockchain is a globally distributed community, it is fairer to use smart contracts for automated governance rule execution without relying on manual labor. Then open source code is particularly important. In addition, when possible, reduce the cost of execution as much as possible and improve the efficiency of execution.
2. Balance the interests of all parties
In a large-scale collaborative system like blockchain, it is particularly important to balance the interests and needs of all parties. Our participation in the system mainly includes community members, most of which are currency holders, and there will also be people who are interested in technology and application scenarios, and of course some KOLs; foundations or alliances and other organizations act as governance centers. The core; open source technology developers; network operators, that is, “nodes”, and of course the application ecosystem users of the project. Usually in our governance token design, it is difficult to design a perfect plan to balance the interests of the five aspects.
3. Improve governance structure
To balance the interests of all parties, we need a complete governance structure to coordinate all parties. It is mainly thinking in three aspects. One is the governance agreement. What kind of rules should we have? The second is the technical tool of governance, how do we propose, decide and maintain, and the implementation of this set of rules, here includes governance tokens as a tool. The third is the incentive mechanism, to solve the problem of people’s subjective initiative, why should we jointly implement this set of rules and logic.
Build a new model of future social governance
Blockchain can be divided into internal and external categories in terms of governance form and structure. As we mentioned above, the blockchain system, as a main body, has a set of benefits distribution plan within itself, which we call internal blockchain governance. What’s more important is to use blockchain technology as a tool to the outside world. Because of its fair and efficient characteristics, it is very suitable for the management of a larger scale of collaboration. Enabling externally, using blockchain technology to build some rules and implementation of other social practices.
Realizing social governance is the application direction of blockchain technology. For example, blockchain and government affairs can promote the improvement of administrative efficiency; blockchain and justice can strengthen the construction of the legal system; blockchain and charity can improve fund transparency and so on. These application scenarios of social governance are where the future blockchain should play a role.
The various DAO projects currently on the market are not worthless, but the concept of distributed self-organization is too ideal. As for speculating on governance tokens, as for speculating on governance tokens, we are also participating in a great social experiment.
