The Evolution of Decentralized Autonomous Organizations: From Token Voting to AI Driven Governance
Let's talk about a phenomenon that is slowly transforming how digital communities make decisions: Decentralized Autonomous Organizations, most commonly referred to as DAOs. Think of everyone voting, smart contracts that are simple and transparent and that everyone anticipates will go well with no one in charge; that's the point of a DAO. A DAO is a group online that uses a blockchain to operate in a decentralized manner without a central authority.
No longer do DAOs simply comprise voting with tokens. They are changing rapidly. Communities are experimenting with new, smarter and more inclusive methods of governance: AI assisted decision making, liquid democracy, and hybrid governance using both the best of technology and intelligent human collaboration are becoming common.
In this article, we are going to discuss the state of DAOs, what the future may hold for them, and what the final chapter of decentralized governance might look like.
DAOs in the Present
Presently, most DAOs employ token based voting; the more governance tokens you hold, the more power you wield. You can vote more times with additional tokens. It appears to be a form of democracy, but it often ends up being a plutocracy where a small number of wealthy individuals are making the decisions.
It initially works somewhat well because the individuals that publicly own the most of a project will likely receive returns of some sort. The risk is that smaller contributors become disincentivized to participate, which increases voter fatigue and discourages new contributors from contributing their ideas. Eventually, the judgment appears to reflect the interests of a couple people instead of the total community.
To maximize the value of DAOs even more, some have been testing innovative governance structures. One terrific example of a DAO experimenting with this is Gitcoin Grants, which utilizes a quadratic voting structure. In a voting process like quadratic voting, smaller weights generate more weight than larger votes and therefore the broader community outcomes more accurately reflect the interests of everyone. That said, while quadratic voting is a step towards a more egalitarian system, it still lacks fairness (e.g. voting may not be accessible to all; some will have smaller contributions than others; etc.). Quadratic voting also throws up issues with Sybil attacks, which is when one actor opens multiple fake accounts to influence votes or decisions.
The problems I highlighted above indicate that anything that isn't a traditional voting structure will not matter very much, since the outcome would still be biased against equity and security. In governance systems, there are many ways to improve equity and efficiency, and DAOs will need to implement more carefully designed and robust governance systems.
AI in DAO Governance
What’s exciting is AI is starting to come into the DAO space. Imagine a smart assistant that can help the community sift through fifty proposals, identify duplicates, even highlight possible conflicts of interest before the vote takes place.
AI can examine trends in thousands of past proposals and provide suggestions for improvement. For instance, if two or three proposals kick around similar ideas, the AI could suggest merging them to save time and effort. It even has the capacity to show communities which prospective proposals worked or didn’t in the past, which could help groups make a better decision based on evidence.
Is it a perfect solution? It could exclude different or out there ideas simply because they don’t represent proposals from the past and that is a problem not only with this idea, but with algorithmic bias in general.
DAOs can mitigate this with a model of human AI collaboration: the AI does the boring work of analyzing the evidence and generalizing the data, while people make the final substantive decision, especially where the proposal has previously been flagged with "different." This model will encourage flow of ideas, while also encouraging efficiency and adding clarity.
What is Liquid Democracy and How Does It Work Within DAOs?
Liquid democracy, as a low risk experiment of how DAOs can be implemented, has to be one of the most interesting experiments so far too. Members can decide to give their vote to someone they trust or somebody who is an expert in something, instead of voting on every single proposition. It is like giving a voice to someone who knows more than you, but you are still in control.
You can delegate your votes to a developer for technical decisions, or to a community strategist for funding decisions. The amazing thing about liquid democracy is its ability to also be literal. If you ever disagree with your delegation, you can just take back your voting authority and vote directly any time!
This accomplishes two things: firstly, it will help users from burning out from voting, you may be voting for more proposals than you feel comfortable with. Secondly, it allows for efficiency to allow for deliberation and for expert decisions to happen while keeping some of the community there or partially out.
Liquid democracy addresses the balance between direct democracy and representation.
As with any system, abuse can happen. That is to say, as members can delegate to one another in circles. This can create invisible power structures. In any event, the best way to remedy this would be to find pacing in delegation and be very transparent about the arrangements so that everyone can see how much voting power they have as voting power is transferred in trust. Like all things, we must continue to place accountability first.
Models of Hybrid Governance
Envision a model that integrates artificial intelligence decision support, liquid democracy, and tokenized voting, all at once. This is your future of DAO governance. In this model, the AI sorts and selects proposals while experts weigh in, and token holders vote on whether to implement.
The outcome of this system resembles a governance model being smart, flexible, and community based. It will be as if a parliament exists which is not in one place, where AI acts as clerk and experts act as advisers, while all members make the law together.
However, hybrid systems become problematic and the AI delegate echo chamber is one of them. If the algorithms and subsequent human delegates learn to prefer similar types of proposals, it loses diversity and can be biased.
The solution? Use random audits, rotate panels of delegates, and apply diverse selection criteria on bids. This step will correct the imbalance, so it can be determined that any new proposal will be adequately represented, need not look like past proposals, and debated by community members. Success in hybrid governance is about balancing automation over human intuition, being efficient over inclusive.
Important Issues in the Evolution of DAOs
There are speed bumps on the road to improved governance in DAOs. The most difficult part is finding the sweet spot between openness and safety. You want everyone to be able to vote freely, but you also have to keep bad actors or fake accounts from using voting tactics to trick people.
Another issue is power centralization, even with improved voting methodologies, a small set of token whales or delegates can still decide everything that a DAO does. This is not in alignment with the decentralized ethos DAOs represent.
And there is always the issue of privacy versus openness. Depending on how it is written, a blockchain allows anything to be seen and that is great for transparency and accountability, but it could also reveal personal or private information. Finding a balance between transparency in governance and knowledge protection is also a consideration.
What the Future Holds for DAO Governance
So, what does this mean for the future? The future of DAOs quite possibly is related to the application of artificial intelligence, and further democratic experimentation. With the advancement of technology, we might have self amending DAOs that will deal with new uncontrollable changes and communicate across DAOs as an interoperable.
Imagine a time where DAOs could all 'speak' to each other in real time and cooperate without issue to create globally interconnected decentralized autonomous governance. AI bots could help communities understand what will happen if they make this or that decision, test some policy proposals, and recreate the voting effect.
In the not so distant future, DAOs may become self evolving ecosystems, systems of governance learning and evolving as if they themselves are alive. Finally, the ultimate objective is beyond decentralization; it is to create a model of governance that is efficiently inclusive, and truly democratic in practice, inclusive and defined by the scale of decision making with limited deliberative process.
Conclusion
We have come a long way since the days when people voted using pieces of token. Today, as more and more DAOs experiment with enhanced governance models, including AI, liquid democracy, and hybrid governance systems that aim to make government more intelligent and open to all, there are still challenges such as AI bias or concentration of power, but progress is being made. At their core, DAOs are not just a new type of organizational model; DAOs actually change the way we think about trust, leadership, and community. As we work to improve these models, they can serve as the future of government on the web in the shape of DAOs, allowing people to collaborate in a transparent, self-sustaining, and global way.
This article is contributed by an external writer: Razel Jade Hijastro.
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