Hello guys, long time ago, I come in zen mode, peace and love i come with idea to make Tezos more future proof than it is now.
The problem of DAO’s
Governance in crypto DAO projects comes with the same problems democracy faces today, one of the issues that tezos governance will have to address soon if it wants to be really future proof, is the issue called “The tyranny of the majority” or simply TOTM, is not a surprise that DAO projects are now looking solutions for this issue.
If you see the link above, you will see 3 solutions to mitigate the issue of a abusive majority.
From those 3 solutions, 1 and 3 are bad in my opinion, so i will just discuss solution number 2.
Mechanism #2: Rage Quitting
Rage Quitting ensures that everyone still retains full custody over their share of assets in the DAO treasury.
In this model, when a DAO proposal gets submitted, it needs a sponsor before it can be put to vote. If approved by the majority, the voters can still withdraw support and receive any undeployed capital they contributed to the DAO. This ensures the majority doesn’t squander these resources for their selfish gain.
This model is perfect to apply for a inflationary subsidized treasury and I’ll try to explain why, this way we can avoid the TOTM issue in regard with the subsidies to make it much more difficult for the majority to hijack the subsidy for their own selfish interest.
Why we have to be extra careful with subsidies?
Subsidies comes from the only source we can easily use to tax ourselves to fund X or Y projects, monetary emission, so the moment we print XTZ to fund, that money is now considered public money, since we are in crypto, we need to be really careful how that public money is handled, or it will likely become a source of parasitic behavior by the TOTM, and to take the biased source of public money away from majority, it will be a task very difficult to achieve, therefore it quickly becomes tyrannical .
Simple example of a smart contract Treasury DAO design to mitigate this TOTM issue with subsidies
The Treasury only democratic vote that the majority will get to decide is what would be the annual % emission of XTZ to fund a given thing, let’s say the majority decides to issue 1% of XTZ annually to fund a project, that 1% is divided into shares, each roll owner gets a treasury share, the share/roll owner has 2 options, he can individually vote with his share to fund the project or he can burn his share (or never be printed in the first place), this way the individual roll owner has COMPLETE control if he wants to support something financially with his share or not, he doesn’t need the approval of the majority to choose, this way if the majority decides to fund the project, it will be truly the ones who individually choose to support the project with their own treasury roll shares, and not a abusive majority who hijacked the source of funds.