Digital Reading DAO: The scale of funds has increased by more than 5 times in six months, but the motivation of participants is still insufficient

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The multiple innovation models of DAO still have not solved the problem of insufficient motivation of DAO participants, which is of great significance to the future expansion of DAO.

The original title “Data Insight DAO: Capital increased by 523% in half a year, and venture capital DAO increased significantly”
Written by: Carol

DAO (Decentralized Autonomous Organization), as the name suggests, refers to an automated program executed by code to achieve the same functions as a company or organization in the real world. DAO does not require hierarchical management, everyone can participate, and its ultimate vision is to provide a way to replace traditional economic and social coordination mechanisms.

At the end of last year, with the popularity of DeFi, DAO related to DeFi governance began to attract market attention. In these governance DAOs, anyone who holds relevant project tokens can participate in project funding expenditures, mechanism reforms and other decisions. However, it would be wrong to only understand DAO as an upper-level governance agreement.

At present, many application-oriented DAOs have emerged. Most of these DAOs are decentralized investment funds, which achieve management objectives such as fund custody and withdrawal through smart contracts. Some DAOs have also begun to provide other financial services, such as providing DeFi mining services similar to those launched by centralized exchanges.

Farming has already demonstrated the potential of DeFi in coordinating and allocating global capital, and DAO may deepen this. PAData reviewed DAO’s funds, proposals and user data again after half a year and found (click “Can 100 voters achieve decentralized governance? DAO’s dilemma from the data” to read the previous analysis):

1) In the past six months, the size of funds in DAO has increased by 523.63%, participating addresses have increased by 533.53%, the total number of proposals has increased by 55.97%, and voting addresses have increased by 96.00%. However, the actual governance activity of the DAO did not increase simultaneously, and the voting participation rate dropped by 26.35%.

2) From a micro level, the newly launched DAO funds have grown rapidly in the past six months, with a large average number of proposals, and a high turnout rate, which demonstrates the rapid development of emerging DAOs.

3) Governance-type DAO faces a bipolar dilemma. On the one hand, when the number of voters and the number of proposals is small, effective governance cannot be achieved. At present, except for the composite governance-type DXdao which has more proposals and voting addresses, the number of proposals from other DAOs There are not many voting addresses; on the other hand, when everyone is involved in governance, the amount of user funds is directly linked to the weight of decision-making.

4) The main challenges faced by application-oriented DAOs are the mutual restriction of scale effect and security risks, as well as the compliance of policies and regulations. Except for PieDAO’s current asset management scale and the number of participants are relatively large, other DAO’s asset management scale and number of participants are relatively small, and the differentiation is obvious.

5) As far as the voting mechanism of governance DAO is concerned, many innovative modes such as belief voting, secondary voting and reputation system have emerged, but no new solutions have made efforts to provide and increase personal motivation.

The capital scale in the DAO exceeds US$1 billion, and the emerging DAO is developing rapidly

As of May 6, Deep DAO has collected 108 DAO data, which is 23 more than November 4 last year. Various data show that the development of DAO has been very rapid in the past six months.

First of all, from the perspective of capital scale, the current capital scale in all DAOs has reached 1.006 billion US dollars, an increase of 523.63% in the last six months, which is a significant expansion. Secondly, from the perspective of basic operation, the number of addresses currently participating in DAO activities (the number of addresses holding DAO tokens) is about 65,800, an increase of 533.53% in the last six months, and the cumulative number of proposals has reached 7,819, which has increased in the last six months. 55.97%. In addition, from the perspective of user activity, the current total number of voting addresses for all DAOs is about 1911, an increase of 96.00% in the last six months. However, it is worth noting that the average voting rate of each DAO has dropped by 26.35%. This means that the growth rate of participating addresses exceeds the growth rate of voting addresses, the overall activity of the DAO is pulled down, and the influx of more funds and users may not be aimed at governance.

From a more micro-level perspective, there are 5 DAOs whose capital scale has increased by more than US$55 million in the last six months. The capital growth of these 5 DAOs accounts for about 36% of the total DAO growth, which is the main increase in the existing DAOs.量源。 The amount of sources. Among them, the funds in the compound governance agreement DXdao increased by US$63.528 million, the largest increase.

In addition, among the newly launched DAOs in the last six months, API3 DAO’s funding scale has reached about 237 million U.S. dollars, which is the largest DAO in the current statistical range. In addition, the funding scale in BarnBridge Governance has also exceeded 100 million. US dollars. However, the funds of other newly launched DAOs are less than 50 million U.S. dollars, and the scale is relatively small.

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

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In terms of the number of proposals, the 10 DAOs with the fastest cumulative increase in the number of proposals in the past six months have all increased by more than 30 proposals. Among them, there are only 3 DAOs whose cumulative total number of proposals have increased by more than 100. In addition, there are 5 DAOs whose cumulative total number of proposals has increased by more than 50. The largest increase in the number of proposals was PieDAO and BerezkafLezDAO, which increased by 329 and 299 respectively, which is equivalent to an average daily increase of more than 1.6.

the data shows:
The number of proposals includes both the governance proposals of the governance DAO and the interactive proposals of the application DAO. The latter regards each user’s access as a proposal, so the number of proposals is more accurate than the participating addresses (coin holding addresses) Reflect the basic situation of DAO activities.

Among the newly launched DAOs in the last six months, DAOhaus Second Story CCO has the largest number of cumulative proposals, reaching 382, ​​followed by 6 DAOs with cumulative proposals exceeding 100. From the average point of view, in the last six months, the 10 new DAOs with the most accumulated proposals, the average number of proposals is about 145.1, which is higher than the existing (online more than half a year) DAO average of 120.4 proposals, which shows the newly launched DAO Higher activity and faster development speed.

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

In the past six months, only 10 existing DAOs have shown a positive growth in their voter turnout. Among them, mStable’s voter turnout has increased the most, increasing by more than 10%. The voting rates of the remaining 75 DAOs all have negative growth, which means that for most DAOs that have been in development for more than half a year, the real activity has not increased.

Among the newly launched DAOs, 7 DAOs have voted over 50%, of which Odyssy and 0x117 reached 100%. Of course, this may be due to the small scale of the DAO in the initial stage of the launch, which is conducive to mobilizing users to participate in activities. But overall, the activity of newly launched DAOs has increased faster.

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

Governance-based DAOs face bipolar dilemmas, and application-based DAOs face scale and security challenges

At present, DAO can be divided into governance type and application type. The former mainly refers to the DeFi governance agreement, which can be further divided into compound project governance and single project governance. The former mainly refers to multiple projects sharing a governance DAO, such as DXdao. The author mainly refers to the DAO that specializes in managing a project, such as BarnBridge Governance, Decentraland DAO, Aavegotchi, etc. In these DAOs, anyone who holds relevant project tokens can participate in project funding, mechanism reform and other decisions.

However, the governance DAO faces a bipolar dilemma. On the one hand, when the number of voters and the number of proposals is small, effective governance cannot be achieved. Among the current 16 DAOs with the largest funding scale, 9 are governance DAOs. As of May and June, among these DAOs, only the composite governance type DXdao had the largest number of proposals, reaching 463. The number of proposals for other single governance type DAOs was much smaller than this number, except for Aragon Network Budget and Airalab. , Decentraland DAO’s total number of proposals exceeds 100, and the remaining 5 are less than 100, and the lowest is even in single digits.

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

Similarly, in general, the voting addresses of these governance DAOs are not many, and the differentiation is serious. Among them, with the exception of Aavegotchi’s voting addresses reaching 600 and DXdao’s voting addresses reaching 114, none of the other DAO’s voting addresses exceed 100, and most of them only have single digits. Governance DAOs with larger capital scales are not yet active enough, let alone DAOs with smaller capital scales.

However, on the other hand, when everyone is involved in governance, the amount of user funds is directly linked to the weight of decision-making, and the result of decision-making may not reflect democratic consensus, but capital consensus. In essence, governance DAOs have certain constraints between the voting participation rate and the degree of democracy in decision-making, which requires governance DAOs to find a balance in mechanism design.

For application-oriented DAOs, the main challenge comes from the mutual restriction of scale effect and security risk, as well as the compliance of policies and regulations.

Digital Reading DAO: The scale of funds has increased by more than 5 times in half a year, but the motivation of participants is still insufficient

At present, application-oriented DAOs are mainly based on investment funds and liquid market making. The more funds in the DAO, the larger the size of the fund, the easier it is to produce scale effects, but conversely, the larger the size of the DAO The easier it is to be targeted by hackers. This requires application-oriented DAOs to balance and prevent.

However, as far as the current situation is concerned, the scale of funding for application-oriented DAOs is still small. Among the 16 DAOs with the largest funding scale, 7 are application-oriented DAOs. Among them, with the exception of PieDAO’s funds exceeding 120 million U.S. dollars, the capital scale of the remaining 6 DAOs is between 10 million U.S. dollars and 30 million U.S. dollars. Moreover, the number of addresses (number of participants) for subscribed funds is not many, and the differentiation is serious. Only PieDAO, NFTX and Stacker Ventures have more than 1,000 participating addresses, and the largest number of PieDao is less than 5,000. The remaining 4 DAOs have less than 150 participating addresses, and the smallest number is only 8. At present, application-oriented DAOs with larger capital scales are not enough to form scale effects, and application-oriented DAOs with smaller capital scales may be more difficult to form.

On the other hand, the compliance issues faced by application-oriented DAOs have recently emerged. On April 25, the Wyoming State Assembly approved the DAO Act, allowing DAO to be officially registered in the state, and limited liability companies can also be transformed into DAOs. The bill has been signed by the governor and will take effect on July 1. In this way, DAO can already enjoy the same legal status as general commercial subjects, which is of great significance to the development of DAO.

Participants are still insufficiently motivated, and new models such as belief voting, second voting, and reputation voting are launched

Since the development of DAO, many new voting mechanisms have emerged, trying to balance the dilemma faced by governance DAOs. Among them, belief voting, secondary voting, and reputation voting have already had some applications.

Conviction voting is a decision-making mechanism that uses a decay curve to define the accumulation and reduction of beliefs. The longer the user’s preference for a certain proposal, the more beliefs are filled in the bucket. Belief will grow according to the half-life decay curve, and over time, this preference will get more attention. If the user decides to change to a new bucket (new proposal), the belief will flow out of the previous proposal according to the decay function, flow into the new proposal, and then accumulate according to the decay function. This is a cyclical process until the belief has accumulated to a certain limit and the decision can be passed. Currently, 1Hive has adopted this model.

Quadratic voting is a collective decision-making process, which refers to the degree to which individuals express their preferences by allocating votes (tokens are votes in DAO), not just the direction of preference. “Secondary” mainly means that users can purchase additional votes to express support, so that people’s behavior of buying votes is directly proportional to the strength of opinion preference. Therefore, since the marginal cost of each additional vote increases linearly with the number of votes, the total number of votes for a given question is the sum of the voter’s preference strength. This helps to solve the problem of voting paradox and the principle of majority decision. However, the marginal cost relative to the increase in the number of votes is less than or greater than the linear increase, which may lead to the problem of interest groups dominating votes and the “tyranny” of the majority. Currently, Gitcoin has actually adopted this model.

The reputation system mainly refers to granting governance tokens to actual users participating in a decentralized network or protocol. When the network or protocol is widely used, token holders can add economic rights and transferability to the tokens. The DeFi liquidity mining that emerged last year essentially uses this model to complete governance by granting actual users economic rights.

However, none of these new solutions have made efforts to provide and increase personal motivation. Many studies in the field of social mobilization show that personal motivation plays an important role in achieving personnel mobilization. A prerequisite for various voting mechanisms to function is that a certain scale of users needs to participate in it. Even an application-type DAO needs to expand the scale of users through the expansion of the scale of users. Therefore, in the future development of DAO, perhaps in addition to the efforts of computer scientists and economists, sociologists should not be absent.

Reference documents:
[1] “What can we do with a DAO in 2020?”
[2] “Conviction Voting: A Novel Continuous Decision Making Alternative to Governance”
[3] Quadratic voting

Source link: www.panewslab.com

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