After analyzing 581 DAOs, I summarized the four major dilemmas of DAOs

Original author: @arndxt_xo

Original link: https://x.com/arndxt_xo/status/1818118190725316795

Translation: Baihua Blockchain, PAnews

After studying over 581 DAO projects and analyzing 16,246 proposals over five years, this DAO paper covers all projects using the DAO/governance platform Snapshot, encompassing over 95% of the actual existing DAO projects (over 11,000 spaces). In this "Dilemmas of DAOs," I found four key findings:

1) Centralization Paradox

The data shows astonishing growth—581 DAOs, over 16,000 proposals, spanning five years. Member distribution follows the Pareto principle.

A few individuals hold most of the power.

I can't help but wonder: Are we reproducing traditional power structures under the guise of blockchain? The Gini coefficient of token distribution within DAOs could be an interesting indicator.

2) Technological Time Bomb

The lack of upgrades for IPFS sends chills down my spine. This is a classic case of technical debt that could explode as DAOs scale. We are talking about potential data loss, soaring storage costs, and inefficiencies.

Here’s a thought experiment: What would happen if critical proposal data became irretrievable due to outdated IPFS links? The consequences could be severe.

3) Tug-of-War Between Democracy and Efficiency

The research shows a wide range of voting contexts—from budgeting to hiring decisions. Isn’t this democracy in action? Hold on, I see two huge warning signs:

a) Voting Apathy: Low voter turnout is a common issue in many decisions.

b) Token-weighted Voting: A few large holders can sway the entire ecosystem.

This creates a governance paradox. On one hand, we pursue the ideal of decentralized decision-making. On the other hand, we face the harsh reality of power concentration and community disengagement.

4) Token Dilemma

Things get very interesting here. Most DAOs use self-issued tokens rather than mainstream cryptocurrencies like USDT or ETH. This raises serious questions about incentive structures and long-term viability.

Are we witnessing the birth of a robust governance system, or are we merely observing sophisticated token speculation? My inner skeptic leans towards the latter, but I am willing to be proven wrong by the facts.

5) The Path Forward

Despite these challenges, I remain cautiously optimistic about DAOs.

What I believe needs to be done:

• Implement quadratic voting or other mechanisms to balance influence.

• Prioritize upgrades to technological infrastructure, especially in data storage.

• Develop stronger incentives to ensure ongoing participation in governance.

• Encourage the use of more stable value tokens for governance.

This research reinforces my belief that DAOs are at a critical juncture. The prospects for decentralized governance are immense, but the obstacles are equally significant.

What do you think? Will DAOs become the future of organizations, or are we witnessing a grand experiment destined to repeat the failures of traditional systems?