The On-Chain and Off-Chain Mechanisms of DAO-to-DAO Voting

TL;DR

This paper introduces a method to identify and analyze DAO-to-DAO metagovernance on Ethereum, revealing complex, often obscured governance relationships that impact transparency and decision-making in decentralized organizations.

Contribution

It presents a novel signature-matching algorithm to detect DAO relationships and constructs a metagovernance network, highlighting the prevalence and implications of metagovernance.

Findings

Identified 61 DAOs and 72 metagovernance links.

Demonstrated various forms of metagovernance, including strategic and centralized.

Showed that metagovernance can obscure voting context and influence decisions.

Abstract

Voting is the primary mechanism through which Decentralised Autonomous Organisations (DAO) reach decisions. Although transparent, the voting process can be complex: it can involve many interacting smart contracts. The nexus of the decision-making process can be relocated and the true voter demographic obfuscated. Furthermore, DAOs can govern other DAOs -- metagovernance. We present a method for identifying DAO-to-DAO metagovernance on the Ethereum blockchain. We focus on the links between DAOs and token contracts. We employ a signature-matching algorithm to flexibly handle a variety of DAO frameworks and voting schemes. Once we establish token-to-DAO relationships, we gather and process voting data to produce a list of metagovernance relationships. We apply this algorithm to an initial set of sixteen DAOs and we extend the dataset as more DAOs are identified. We produce a metagovernance network with 61 DAOs and 72 metagovernance relationships. We examine three case studies that show metagovernance of various forms: strategic, decisive, and centralised where a DAO becomes a nexus for metagovernance. We demonstrate that metagovernance obscures voting context and introduces entities driven by self-interest that can significantly influence governance. We highlight instances of metagovernance between DAOs operating on the Ethereum blockchain where current governance tools inadequately reveal such dynamics. To preserve the transparency-centric ethos of DAOs and mitigate risks associated with metagovernance, there is a pressing need for enhanced tools to address such issues.