At Tally, we've helped organizations like ENS, Gitcoin and Rarible become on-chain DAOs. They use an ERC-20 token or NFT for voting power and a Governor Contract to manage proposals. The Governor controls the treasury and the protocol.
This setup lets DAOs take advantage of the best parts of blockchains and smart contracts. On-chain DAOs are trust-minimized. They don't depend on third parties to execute decisions. Instead, they run on neutral, transparent blockchains.
But there's a catch!
Voting on every decision does not scale. People do not have the bandwidth to vote on hundreds of proposals. Organizations need to increase their bandwidth without trading away trust-minimization and neutrality.
DAOs can increase organizational bandwidth by relaxing trust assumptions. But, that comes at the cost of what makes them special in the first place. Some DAOs trust contributors or small groups with control and custody of funds. But that trust model gives up transparency, openness and security.
DAOs can do better. We need setups that increase bandwidth without relying on trusted third parties. Good news: We have the technology to make this happen!
Tally's recipe for increasing governance bandwidth without sacrificing on-chain basedness.
Keep the power of the purse: Make high-level decisions about goals and metrics. Renew funding for providers only if they hit their goals. e.g. Pet3rpan's proposal for SafeDAO.
Revocable Permissions: The top-level DAO should keep the root permissions. For example, the ENS Governor controls working group membership using Metropolis pods.
Roles and Scopes: Use smart contracts that limit what is and isn’t allowed by contributors. Gnosis Zodiac Modifiers and Guards manage who can do what.
Optimistic governance: Let contributors do things, but transparently and with a delay. During the delay, voters can veto bad decisions. Check out this DAO Talk podcast about Tribe/Fei's Nope DAO. Nope DAO is an optimistic governance: a multi-sig that Tribe holders can veto.
Automation: Vote once, run forever on-chain. Pay contributors and service providers with streams and recurring payments. Check out tools like Superfluid for streams and Loop for recurring payments.
The tools to scale DAOs already exist, and they're getting better every day. The cost of blockspace used to be the biggest hurdle. Rollups increased the supply and reduced the cost of blockspace. DAOs will happily use all this new blockspace for permissions, approvals and automation. Let’s DAOit together.
Run your DAO on-chain today
Reach out to us on twitter at @tallyxyz and stop by our event: On-Chain Summit on December 7, 2022. On-Chain Summit brings together projects building the infrastructure for running DAOs on-chain!