In view of the increasing recognition and popularity of the DAO governance model, this article will do some in-depth analysis and learning of the top ten DAO organizations in terms of activity and market value to see how their members reach consensus and form actionable decisions .
While most of these top DAOs are Decentralized Finance (Defi) protocols , it is worth noting that there are a large number of DAOs serving various platforms, such as: Venture DAOs: MetaCartel to Grant DAO; Hackerlink to Social DAO; FWB and Media DAO. DAOrayaki and more
Uniswap DAO Uniswap's development team launched its governance token UNI in September 2020. This unique act opened a new governance structure and officially gave the Uniswap community a voice on the day (including the daily operation and development of the project, specific The idea is to allow anyone holding UNI tokens to vote on development proposals that might change the operation or infrastructure of the Uniswap protocol.
Before the introduction of this token, the development team was solely responsible for determining the development decisions of the Uniswap project, and now the governance has been transferred to the community, such decisions are made by the entire Uniswap network, thanks to the introduction of the UNI token. To this end, the team issued 1 billion UNI tokens to share with the core contributors to the platform, including the development team, UNI community members, investors and advisors. The percentage of total supply allocated to each group is as follows:
60% of total supply: Uniswap community members
21.266% of total supply: team members and employees with vesting plans for the next 4 years
18.044% of total supply: 4-year investors
0.69% of total supply: platform advisors over a 4-year period
Governance token holders jointly control the following resources: Uniswap governance, Uni community treasury, protocol fee switching, Uniswap.eth ENS name, Token list ranking, Socks liquidity tokens, etc.
How Uniswap holders submit proposals:
Any UNI holder can submit a proposal to modify or introduce new features (the proposer's address needs to have more than 2.5 million UNI to submit a proposal for community consideration) and get approval from other community members. Development proposals need to be extended at different levels.
Phase 1: The temperature check proposer needs to present the idea to the community and get 25,000 UNI upvotes to be eligible for the next step.
Phase 2: Consensus Check Proposers must enable formal discussions to highlight the core changes and advantages of the proposal, and the proposal must attract no less than 50,000 Uni votes in favor.
Stage 3: Governance proposal proposers submit audited code for final consideration. As with the two phases above, there is a minimum voting requirement to decide whether a proposal is adopted or not, and each proposal must receive up to 40 million UNI upvotes to be eligible for implementation.
UNI holders can vote themselves or delegate their votes to other users to make decisions that represent the best interests of the UNI ecosystem.
Aave DAO Aave is another Defi protocol that employs a dynamic governance system that allows users to actively participate in the management and development of the crypto ecosystem by introducing AAVE tokens. As a user, you can participate in the governance process of the project by holding AAVE tokens or staking AAVE. Initially only the AAVE development team could submit proposals, and an updated version of the governance protocol was activated in December 2012 to ensure that decentralization remains the cornerstone of the operation of the entire AAVE lending ecosystem. With this, the governance system becomes stronger.
The innovation of AAVE is the dual voting rights assigned to each token holder. All token holders can delegate their voting rights and proposal rights respectively, if say an AAVE holder delegates his proposal rights to another community member, he can still exercise his vote once the proposal enters the deliberation stage right. The AAVE governance protocol comes with multiple executors:
The first is short-term lock-in, which allows for rapid implementation of ecosystem-related component upgrades.
The second is that longer locks provide a more thorough and longer voting process for proposals focused on changes to the protocol’s governance mechanisms and tokens.
The third is a bright spot, AAVE introduces guardians, basically a group of elected users who have the power to stop implementing malicious proposals.
The AAVE protocol uses a voting threshold, i.e. an improvement proposal must receive more upvotes before it can be implemented. The total circulation is 16 million AAVEs, of which 13 million are allocated to users and the remaining 3 million are allocated to ecosystem reserves.
Maker DAO Maker DAO was one of the first Defi projects to utilize on-chain governance, with the protocol issuing the governance token MKR to distribute voting power to users. Initially, 1 million MKR was minted, but unlike the previous two protocols, the total supply of MKR is not fixed. The minting and burning of MKR depends on the debt status of the entire MakerDAO ecosystem. In the event of a debt-free Maker protocol, new MKR tokens will be minted. Conversely, when the surplus of the protocol exceeds a certain threshold, MKR tokens are automatically destroyed.
Worth mentioning: MakerDAO uses both on-chain and off-chain voting systems to achieve governance consensus. Off-chain voting is entirely limited to the platform’s community forum, where anyone can activate the forum signal to participate in the off-chain voting process, whether or not they own MKR tokens.
How do MakerDAO holders submit proposals?
On-chain voting is limited to MKR holders, and there are two types of on-chain voting systems:
The first: Governance voting system Governance polls help gauge the perception of MKR holders before implementing a proposal.
Second: Execution Voting System Voters are more careful with execution voting to ensure the most relevant and effective changes are implemented on the Maker protocol. So proposals are subject to more scrutiny.
The types of changes or changes considered by voters include:
Add or remove collateral types
Add or remove vault types
An alternative to modular smart contracts
including tuning of specific parameters
Compound DAO Compound is another effective on-chain governance ecosystem that elevates users to the role of decision makers when they hold the protocol’s governance tokens. The protocol distributes 2,312 COMP to active lenders and borrowers every day as a reward. Essentially, users tend to accumulate the number of COMP tokens when they participate in the lending scheme of the comp ecosystem.
How do Compound holders submit proposals?
First: Anyone can create a proposal by locking 100 COMP in the address, but the proposal will not be voted on until the proposer's address reaches 65,000 COMP.
Second: After 3 days of voting, proposals with more than 400,000 positive votes will be queued on the protocol's Timelock for two days before implementation.
Third: The content of the proposal includes: the collateral factor of the asset, the interest rate model, the addition or deletion of the market, and other parameters of the comp protocol.
Fourth: Voters can also choose to abstain, and they can add comments explaining why they support or reject the proposal. Proposers can adjust parameters such as voting delay, voting period and commit threshold.
SushiSwap SushiSwap also has a similar community-driven governance structure system. However, while voting on the platforms listed above uses a mix of on-chain and off-chain voting, SushiSwap’s governance relies primarily on off-chain systems.
Voting here is on Snapshot — a decentralized gas-free voting dashboard. Proposals are first created on the SushiSwap community forum and then moved to Snapshot for voting. To be an eligible voter, you must hold SUSHI.
How do SushiSwap holders submit proposals?
First: Submitting a proposal must receive 5 million votes to be implemented. When a proposal crosses the 5 million vote threshold, those with more votes will decide whether the proposal is passed or rejected.
Second: The maximum supply of SUSHI is capped at 250 million, and there are already more than 127 million SUSHI in circulation, which will reach the maximum supply in November 2023. Interestingly, the SushiSwap ecosystem is looking to upgrade its governance system to a more traditional DAO organization in the future.
Curve DAO When CurveZAI launched the Curve DAO token (CRV) in mid-2020, it implemented an on-chain governance system. The token has a maximum supply of 3, 303, 030, 299 CRV with a circulating supply of over 420 million CRV. Currently, Curve’s liquidity providers receive CRV as a reward and distribute 750,000 CRV per month per day. Part of the core function of the protocol DAO is to determine the share of the daily CRV reward allocated to each liquidity pool in the Curve ecosystem. In addition, the DAO determines the parameters governing the operation of the mining pool, including the fees paid by traders.
How can Curve holders participate in governance?
In order to participate in this governance system, users must lock their CRV tokens in voting escrow to gain weighted voting power, becoming VECRV. The weight of votes issued to each user depends on the time locked for governance tokens.
For example: if you lock your tokens for up to 4 years, you will get a 1:1 relationship between the locked CRV and VECRV. The minimum period for locking CRV tokens is one week. It is worth mentioning that 50% of the total Curve transaction fees will be allocated to VeCRV holders as an incentive to lock up CRV and participate in the governance of the protocol. Once you have the right to vote, you can start voting on proposals.
Additionally, only DAO members with a voting weight of 2500VeCRV and above can submit proposals.
Meteorite DAO Meteorite is a decentralized quantitative strategy platform. MTE is the governance token of Meteorite DAO. The platform supports quantitative strategies for a variety of mainstream digital assets. Meteorite combines traditional Cefi and innovative Defi mechanisms, uses Gamefi, NFT and token ecology to match blockchain quantitative strategists and strategy users, and conduct decentralized governance in the form of DAO. Meteorite is not only rich in quantitative trading strategies, but all encrypted asset quantitative trading strategies need to be reviewed by the DAO organization, which is more in line with the spirit of DAO co-governance in the encrypted world.
The total supply of MTE is fixed at 20,000 pieces, and the distribution ratio is as follows:
Investor 70%
Minning 15%
Foundation charitable donation 5%
Genesis Incentive 5% (for early community supporters, strategists, strategy users, and Genesis recommenders)
Governance Treasury (Community Treasury Fund) 5%
How can Meteorite holders participate in governance?
First: Meteorite DAO members need to initiate proposals or vote by staking the platform governance token MTE, participate in ecological construction, and jointly decide the future and direction of Meteorite.
Second: Meteorite DAO pre-reviews the strategies provided by all strategists. The strategists need to provide at least 18 months of real-time trading data from the exchange. If the pre-review is passed, they will be allowed to initiate a listing strategy voting proposal.
Third: An audit report will be attached to the voting proposal to clearly describe the pre-audit results. Users will use MTE to vote according to the proposal description. Meteorite DAO will provide rewards for voting behavior. If the number of negative votes is exceeded, the strategy listing proposal will be passed. The proposal will be implemented 10 calendar days after the voting ends.
Fourth: Meteorite DAO members can vote on the listing and delisting of strategies and the distribution or investment direction of the community fund library. MTE holders jointly become the masters of the platform, enjoying governance rights and permanent shareholder rights, as well as Meteorite protocol fees and the amount of MTE that needs to be destroyed to mint NFTs.
There are still many top DAOs in the Defi field, and the content is too long to list them all!
in conclusion Ultimately, the DAO's ecosystem is created and maintained through the unique synergy and harmony between its smart contracts and the community, which helps regulate respective on-chain and off-chain parameters. While contracts define the rules of the organization and maintain key aspects such as the distribution and use of funds, members of a DAO or DO still need to regularly vote on proposals and system upgrades to ensure their organization continues to achieve its fundamental goals and visions.
Once the DAO's smart contracts are running on Ethereum or their respective networks, no one member of the DAO can change its protocol without the unanimous consent of other members from all levels and tiers of its infrastructure - from various internal Guilds to their community founders make further evidence that elite and algorithmic systems are working.
The dynamics of DAOs outlined in this article show that the crypto community is increasingly adopting innovative solutions to remove governance risks and build fully decentralized ecosystems. Note, however, that we are still in the early stages of this movement. Therefore, existing and new platforms are bound to come up with more improved methods of decentralization and autonomous governance.