Democracy for DAOs: An Empirical Study of Decentralized Governance and Dynamic (Case Study Internet Computer SNS Ecosystem)

TL;DR

This study empirically analyzes user participation and decision-making efficiency in SNS DAOs on the Internet Computer, revealing sustained engagement and improved governance metrics compared to other blockchain DAOs.

Contribution

It provides the first comprehensive empirical evaluation of SNS DAO governance, highlighting its higher activity, lower costs, and sustained user engagement over time.

Findings

SNS DAOs have high approval rates and better alignment.

SNS governance leads to faster decisions and lower costs.

Engagement levels in SNS DAOs are sustained or increasing over time.

Abstract

Decentralized autonomous organizations (DAOs) rely on governance mechanism without centralized leadership. This paper presents an empirical study of user behavior in governance for a variety of DAOs, ranging from DeFi to gaming, using the Internet Computer Protocol DAO framework called SNS (Service Nervous System). To analyse user engagement, we measure participation rates and frequency of proposals submission and voter approval rates. We evaluate decision duration times to determine DAO agility. To investigate dynamic aspects, we also measure metric shifts in time. We evaluate over 3,000 proposals submitted in a time frame of 20 months from 14 SNS DAOs. The selected DAO have been existing between 6 and 20 months and cover a wide spectrum of use cases, treasury sizes, and number of participants. We also compare our results for SNS DAOs with DAOs from other blockchain platforms. While approval rates are generally high for all DAOs studied, SNS DAOs show slightly more alignment. We observe that the SNS governance mechanisms and processes in ICP lead to higher activity, lower costs and faster decisions. Most importantly, in contrast to studies which report a decline in participation over time for other frameworks, SNS DAOs exhibit sustained or increasing engagement levels over time.