A good use case in tezos that DAO based dapps would greatly benefit of, would be the access to the roll based self-amendment system that TEZ protocol uses.
Let’s say a DAO Dapp which is a swap/liquidity provider platform have their own governance token, i.e. we will call this token GDAO for the sake of the argument, could it be possible the DAO smart contract could use the built-in governance protocol of TEZ for their own benefit?
In theory, roll based governance will allow DAO Dapps to have collateral based proxies (delegates). One of the problems of DAOs is when they introduce proxies with NO collateral requirement and INFINITE delegation capacity, which will turn into a nest for collusion and centralization of voting weight. Many DAOs appeal to this proxy design without thinking of the consequences, but they do it because lazy people prefer to delegate instead of voting.
If dapps are being able to use the same TEZ built-in governance, they could greatly benefit from its collateral based delegates (proxies). From an economical point of view, a delegate which is required to own collateral is less prone to collude since now he owns a skin-in-the-game, also they could only receive a finite delegation amount according to his bond requirement. This will allow lazy people to delegate, yet, the incentives of delegates will now be aligned with delegators, greatly mitigating collusion.
So let’s say GDAO token roll owners will have the same built-in amendment (4-stage process) as TEZ, 1 roll 1 vote, and the GDAO owners token holders that would prefer to delegate, will be able to delegate to proxies that already own collateral in bonds. This design allows having the benefits from proxies (attending low participation) without the negative collusion risks of non-collateral/bond proxies, which creates misalignment of interests between delegates and delegators.
IF DAO dapps can access to the same amendment process, it would be a very attractive platform for DAO’s. The question is, is it possible?
The problem with this, is that they do not offer a collateral/bond based proxy. DAO’s often introduce proxies as a way to encourage participation because delegators are lazy. But often, these proxies does not have ANY requirement of owning coin collateral and have INFINITE capacity to receive delegation.
The central problem is proxies, and tezos fixes this by require delegates to own collateral and only have a finite delegate capacity. If you own 1 roll (8000 XTZ) you can receive up to around 10 rolls of capacity for delegation, after that you are overdelegated.
In Many DAO’s they also use delegates (proxies) but without any restriction whatsoever, they should use the collateral/bond locking design and also a finite delagation* capacity which only will allow receiving voting weight based on the collateral they lock in, If not, DAO’s proxies will be a nest of collusion due to misaligned interests between delegators and delegates. Once you require delegates to own collateral, this is greatly mitigated.
Basically, uncollateralized proxies with infinite delegation capacity, are detrimental to DAOs, these are entities that are high jacking the rich list with property that is not theirs, and they have decision power without any of the risk that comes with owning the DAO coin. The possibilities of these proxies committing irrational decisions or collusion is quite high, they don’t even need to own any property. It is irrational to let these entities to exist in a DAO framework, unless they are collateralized proxies and only allowed to receive limited delegation.
Could token FA 3.0 have this governance features for DAOs? The main problem with DAOs are uncollotarized proxies, if FA 3.0 can fix that, we will be the main blockchain for DAO’s as well.
