The current state of DAOs

DAO’s have a very large problem that needs worked out quickly. Most DAOs are not “Autonomous” by nature, rather they rely on multisigs to execute governance decisions. Making them neither decentralized nor autonomous.

What is a DAO?

A DAO is a Decentralized Autonomous Organization. This entity has some similarities to corporate shares, but should have a much greater level of autonomy, so that there is no reliance on the executive board to execute decisions.

These systems should allow for automatic dispersal of funds from a treasury wallet, to the destination with automatic execution of whatever tasks are needed to fully execute a proposal. If a DAO wants to execute on an order to change the code, it should be able to happen autonomously. No need for manual approvals, the ultimate approval has been authorized and there should be no new execution needed. Without these systems of true autonomy, we have glorified corporate shares or network shares, that have no legal backing.

What does a DAO look like today?

The huge problem with the current iteration of DAO’s, as they are built today is that most DAO’s rely on multi signature wallets, to do the actual execution of on-chain governance. There is little, to no autonomy.

Take Arbitrum as an example, they had a community spend proposal that failed to pass, yet they executed the transaction anyways. That’s because the central point of failure was trusting the multisig, to execute the will of the community rather than their own.

The same story can be told for Aragon DAO. The the community is in a fight for transparency with the developers of the DAO and are looking to try to attribute value back to the DAO token, via a treasury spend, but the developers have yet to actually relinquish the treasury to the actual DAO community. Therefore, there is no Decentralization or autonomy. Only an organization, utilizing its resources the way the developers think is best.

What is the best way to solve this issue? I know some projects use formal councils, which hold elections, to allow for a quasi-DAO autonomy. But corporations vote in elections, to elect a board.

We need to figure out DAO’s, before Congress figures out regulation. Because most projects claiming to be decentralized or autonomous, hold a 5/8 multisig and that is a massive issue.