No DAO will not fork, it’s just a matter of time.
Written by: Jaleel
Edited by: Jack
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Having a well-established forking mechanism does not mean encouraging forks, but forking may be an inevitable outcome after a DAO becomes decentralized.
The forking of NounsDAO has been discussed many times, and it was officially implemented last month when Proposal 356 of NounsDAO V3 was approved. After the Forkv3 proposal was passed, NounsDAO launched a forking page on its official website, allowing holders to join the fork and split the DAO treasury. The time window for supporting forks is one week. According to the rules, after the window period ends, if 20% of Nouns NFTs support the fork, the supporters will separate from the NounsDAO main body and directly split the corresponding proportion of ETH from the treasury.
On September 9th, 214 Nouns NFTs chose to join the fork, exceeding the 20% threshold. At that time, the forking of NounsDAO was already destined to happen.
Does the forking mechanism always lead to forks? How does the trust crisis occur? In addition to decentralization, does DAO also need to be “dehumanized”? To what extent should dehumanization be achieved? With the progress of the Nouns fork, the debate about DAO forks is brought back to the stage, forcing the entire crypto community to reassess DAO governance and understand forks. These issues may be a continuous challenge for all DAO organizations.
Exploration of Governance Mechanisms in DAOs
The DAO that is widely recognized by many OGs as one of the most elegant in the crypto industry has forked.
Born on August 8, 2021, Nouns, as a major part of Nouns’ culture, still holds daily auctions. After each auction, 100% of the proceeds are sent to the treasury and managed by Nouns owners.
On September 16th, known as “Fork Day” in the Nouns community, NounsDAO completed the fork. 472 out of 846 Nouns NFTs joined the fork, and more than half of the holders chose to leave Nouns, withdrawing nearly $27.3 million worth of ETH from the treasury.
Ragequit Does Not Only Mean “Quitting in Anger”
The forked NounsDAO fork0 has a major difference from the original NounsDAO, which is the introduction of the “ragequit” mechanism. Similar to forking, the ragequit mechanism has been discussed many times in NounsDAO but has not been implemented until now.
“Contrary to what many people understand, ragequit is not just used to describe the act of members angrily quitting a DAO,” said Wang Chao (@cwweb3), a prominent participant in the DAO field, during an interview with BlockBeats. “The ragequit feature originally came from the design of the Moloch protocol. If a member is very dissatisfied with a decision to invest in a certain project, they can vote against it. After voting against it, if the proposal still passes, the member has seven days to choose to ragequit the DAO. The proposal will be executed after the seven days, and this waiting period is the window for dissatisfied members to ragequit. However, the practice of ragequit in the DAO field is not common, and it can even be said to be very limited.”
The rage quit feature refers to allowing members to burn their own tokens in order to exit and receive a certain proportion of the treasury shares. The Moloch protocol gave rise to MolochDAO, which can be said to be a pioneer in investment DAOs. It is a DAO that promotes ETH2.0 through donations and is the first DAO launched based on the MolochV1 protocol. After receiving support from Vitalik and ConsenSys founder Joseph Lubin, each donating 1000 ETH, Moloch became famous and it can be said that most of the investment DAOs currently running worldwide are built on Moloch.
Subsequently, the “rage quit mechanism” was gradually adopted by some DAOs. Under the implementation of majority consensus, the value of the “rage quit mechanism” lies in considering the individual will of a small group in addition to the consensus of the majority. For example, if a member of a DAO disagrees with the decision made by the group consensus, they can exercise the “rage quit” ability.
Since NounsDAO is open, anyone can freely join. As the members’ preferences continue to evolve, it is inevitable for DAOs to gather various opinions. As more dissatisfied members gather in the DAO, angry quitting may have long been an option.
In March of this year, one of the founders of NounsDAO, 4156, wrote in a blog post about his thoughts on the rage quit mechanism: The original intention of the “rage quit” design is to protect the minority in the DAO and prevent them from being oppressed by the majority. The basic logic is: if a proposal is supported by the majority but opposed by a minority, then these opposing members have the right to withdraw their shares from the DAO’s treasury and exit before the proposal is executed.
An extreme example is a “51% attack,” where the majority voters propose to withdraw the entire treasury. However, more commonly, it may be concerns about legal risks or dissatisfaction with fund allocation. We cannot explicitly encode in the protocol when the rights of the minority should be protected, so their rights are ultimately guaranteed by the “rage quit” mechanism. Reasonably implementing the “rage quit” not only provides protection for the minority in the DAO but also prevents an existing minority from transforming into a majority through strategic actions. Developing a highly compatible “rage quit” mechanism should be considered a top priority because it will ensure the protection of future minority groups and make the DAO more focused on its core goals.
Vesta Finance, a DeFi lending protocol in which crypto KOL DCFGod participated as an investor and strategic advisor, has recently experienced major disagreements among the project team. Two out of the three co-founders of the project, James “Atum” Peterson and Midnight, have proposed a “rage quit” on the governance forum to exit the project.
Some investors, including early supporters of the project, have called for a “rage quit.” Ogle, a major investor in Vesta, believes that “for investors, ‘rage quitting’ is the best outcome at the moment. It’s hard to recover from all of this.” Several DAO members are also strongly demanding a “rage quit,” which is seen as the “best solution” for all parties involved.
In the question of whether the rage quit mechanism is important, BlockBeats interviewed Shawn (@ShawnMelUni), the head of SeeDAO incubator. Shawn believes that a DAO should have three basic mechanisms: ensuring multi-signature for the treasury, having a sound on-chain voting mechanism, and then the rage quit mechanism.
In the interview with BlockBeats, Shawn emphasized the importance of building the rage quit mechanism for DAO organizations: “In a DAO organization, the rage quit mechanism should be the most basic and fundamental function. Currently, many teams, regardless of success or failure, will encounter various problems in the early stages, and cases where team members choose to leave due to differences in opinions are also common. However, if there is a rage quit mechanism, most problems can be resolved more smoothly. After all, it can also solve the partnership issues that we often encounter in traditional companies. Personally, I think the rage quit mechanism is a cornerstone of DAO.”
The Guardians behind DAO in the Late Night
“When NounsDAO forked, I felt like I saw the moment of the Ethereum and Ethereum Classic fork in 2016.” Compared to the rage quit that many DAOs ignore, forking is one of the most native cultures in the crypto industry.
Brian Flynn (@Flynnjamm), the CEO of Rabbithole, also expressed a similar view. He supported this fork and chose to join NounsDAO fork0. In his eyes, the original NounsDAO is more like ETC, while the forked one is more like ETH.
Forking allows the community of holders to migrate to a new protocol instance together, so as to maintain the original ecological momentum as much as possible. The most famous examples are the Ethereum Classic fork and the Bitcoin Cash fork.
As a well-known NFT collector, xaix2k is also the owner of Noun 1. He successfully won the first auction of Nouns on August 8, 2021, with 613.37 ETH. Although he didn’t comment much on the subsequent development of Nouns, it is obvious that he has reservations about this fork and rage quit of Nouns, believing it is unfair to early holders.
The Nouns Protector governance group expressed strong support for forking, but they voted against Proposal 356 for the fork. The reasons are concentrated in two aspects: first, it is a mixed issue, Proposal 356 bundles two drastically different topics. The Fork proposal involves deep-level incentive mechanisms and organizational structure changes, while the V3 function focuses on improving the governance participation process. This bundling method leads to confusion in discussions and damages governance transparency.
More importantly, the NounsDAO Fork proposal bypassed the normal procedure and should not have been proposed by only one team. From start to implementation, the Fork function was emotionally driven, avoiding the expected process. After the rage quit in Proposal 248, a utopian voice emerged in the community, envisioning an infinite forking future for NounsDAO. The two emotional trends hastily launched the Nouns DAO Fork function, bypassing the normal procedure.
“The quick introduction of the fork mechanism, with its incentive mechanism, distorts the behavior of community participants.” Therefore, the Nouns Protector governance group recommends rejecting Proposal 356, pushing for the V3 upgrade without the fork function, and returning the fork function to the research stage, initiating the DAOFork Research Sprint, soliciting research from multiple parties, and pushing forward the proposal again.
When a new proposal appears, members of the governance group conduct extensive research behind the scenes and discuss it at the Tuesday evening meeting. “Sometimes when I see a good proposal, I am glad that I have a vote and can support it, which is worth spending time on research. On the other hand, for proposals that are too bad and need to be shot down, I am glad that there is an organization like Nouns Protector to supervise.”
Nouns Protector does not vote in favor, and they choose to appear in front of relatively radical proposals, believing that excellent proposals will be liked and voted in favor by everyone, while proposals that waste funds need to be discerned and supervised. Therefore, Nouns Protector only votes against or abstains, presenting the risks to DAO members, pouring a bucket of cold water in the heat of brainstorming, like a cool guardian of NounsDAO, the guardian behind DAO in the late night.
Rethinking Forking
For many people, whether it’s forking or rage quitting, they seem to be signs of pain and confusion for DAO, a bad omen. Because of this, many opinions believe that Nouns’ first fork involving over 28,000 ETH is an astonishing number and a very bad thing.
However, Jacob, co-founder of Zora, has a positive view of Nouns’ forking, and overall forking is a good thing.
Jacob believes that unlike Ethereum’s forks to combat large-scale hacker attacks, Nouns’ forking is long-term and continuous, and has become an inherent part of the protocol. Nouns’ design is a progress because it allows Noun holders to easily choose whether to fork, and the entire community can monitor this process transparently.
Furthermore, unlike Ethereum’s forks where people can simultaneously hold ETH and ETC, Noun holders must choose between the original Nouns and the new version. At the same time, this forking method provides a complete exit mechanism. Through Nouns’ design, users can choose to exit peacefully and retrieve the value behind their Noun, which is approximately 36.6 ETH.
Having a well-established forking mechanism does not mean encouraging forking, nor does it mean that forking is a necessity. Forking is just an option, and the forking mechanism is just a feature.
Healthy forking is positive evolution
The forking mechanism is perhaps the most unique feature of DAO. It allows the replication and creation of new versions of the system under new ownership. Just like the mutations in biological evolution, small DNA changes lead to the emergence of new species, while the old species still exist.
The forking event of NounsDAO is a big deal in the crypto community, and one of the main reasons is that the community is rethinking and understanding forks because of it. Although forking is a big challenge and can lead to reduced liquidity, decreased concentration of talent, and increased complexity of management, when the community becomes large and wealth accumulates, forking may be a natural result. This may also be a touchstone for DAOs, as a DAO that can solve these problems may be a successful experiment.
If we consider DAO governance as finding consensus among countless decisions, rather than just enabling a minority of decisions by the top management, we can see it as a way to split a large group into smaller, more efficient subgroups when coordination becomes difficult, while still creating value for each other. From this perspective, forking is actually the highest form of decentralization, as it transforms governance into social interaction, helping people find like-minded small groups to achieve their goals.
The core of this governance model is to encourage the community to share and express their preferences: good governance equals a good user experience. Through healthy divergence, we can encourage the formation of sub-DAOs and promote the development and growth of the ecosystem. Forking, like cell division and biological reproduction, can generate diversity.
Healthy forking is not only an improvement in technology or governance models, but also a refinement of community culture and values. It allows a large community to be subdivided into smaller, more focused groups to meet their unique needs and goals. This subdivision is not a zero-sum game – one group gains while the other loses. On the contrary, it is positive-sum, because each subgroup can innovate and thrive based on its specific needs and goals.
In most cases, forking occurs when there is a disagreement within the community on a certain issue. Large organizations are bound to face disagreements, and if these disagreements are irreconcilable, they may lead to forking. Organizations that can survive will have a group of staunch supporters, and as long as the overall consensus is not compromised, the community will not perish.
However, from another perspective, forking can be seen as a form of “evolution” for the community. Just as species adapt to their environment through natural selection and variation, communities can also adapt to their unique challenges and opportunities through forking. This adaptability ensures the persistence and resilience of the community, allowing them to thrive in the ever-changing crypto space.
In the era of memes and CC0, there are also many hidden forks, where a new perspective and use case for a story based on core IP is a fork. By incentivizing anyone to use their IP for free, more value will be returned to the core IP. By giving up the demand for short-term revenue, the value of a brand may become more valuable.
For memes and CC0 IPs themselves, this is still a form of brand building and marketing communication. Therefore, forking is not just a zero-sum game that replaces the original version, but it may also be a positive-sum game that accumulates value back to the original IP and brand.
subDAO is another form of fork
In the Nouns ecosystem, there are already many subDAOs, which are essentially DAOs that receive funding or organize and carry out work within the Nouns ecosystem. Nouns Builder is a tool specifically designed to make this precise behavior as simple as possible. By presetting the parameters of the auction, such as the auction period and starting price, anyone can initiate a DAO structured like Nouns. The team behind Nouns Builder is Zora, which used this tool to establish Nouns BuilderDAO. Nouns BuilderDAO applied for 1000 ETH from the NounsDAO treasury and used this seed funding to incubate more creative NounishDAOs and spread the Nouns pattern.
One typical subDAO is LilNouns. Except for differences in parameters, LilNouns follows the same rules as Nouns in other aspects. LilNouns has a 15-minute auction period and a starting price of 0.15 ETH. The votes in LilNouns’ treasury will participate in the voting for each proposal in Nouns, bringing more members into the Nouns ecosystem by lowering the participation threshold.
subDAO offers more flexibility and to some extent reduces the constraints and impacts of large scale and complexity, just like another form of fork.
Maker is one of the oldest DAOs, with MakerDAO’s annual revenue exceeding $142 million and project expenses exceeding $44 million. At this scale, MakerDAO has also struggled with governance coordination issues for many years. To address the governance challenges in the MakerDAO ecosystem, this veteran DeFi project announced the Endgame plan, which caused dissatisfaction among many VCs, including a16z, leading to the sale of all tokens.
In addition to rebranding, subDAO is undoubtedly the biggest feature of Endgame, after all, one problem that any cryptocurrency project cannot escape is community governance. Rune, the founder of MakerDAO, believes that in order to govern the community well, it is necessary to “simplify the complexity” and divide the large and complex system into various subsystems, and Endgame is obviously born for this purpose.
MakerDAO has four subDAOs, among which Sakura DAO has rapidly emerged in the Japanese community, and SLianGuairk DAO has allowed the Korean community to discover that they can build interactions here. Quant is a SubDAO focused on real-world assets (RWA), using technology and scale to create value by combining Maker’s billions of dollars with tokenized assets. Quant is a SubDAO focused on real-world assets (RWA), using technology and scale to create value by combining Maker’s billions of dollars with tokenized assets. Qual is also a SubDAO focused on RWA and finance, but Qual is more oriented towards the Chinese crypto community and the Southeast Asian community.
In an interview with BlockBeats, Rune, the founder of MakerDAO, expressed his views on subDAO: “Even when subDAO was still in the hypothetical stage, I could already see clearly that subDAO is the future trend. I believe that any project that wants to succeed and have the opportunity to expand in this field will adopt some version of the subDAO model. If there is no separate management from the beginning, as a DAO, it can only expand to a certain extent or even become a company, thus giving up decentralization and governance as a whole. Now we have further development, and we have shaped the DAO based on signals from the market and the community.”
The Origins of Governance Wars and Arbitrage: How Trust Crisis Arises
Many people in the community believe that the main reason for the fork of NounsDAO is the decay of trust among community members. Noun 40 (@noun40__) also expressed his views on this issue: It is certain that the reason for adding the fork mechanism is not to repay arbitrageurs or to invite people we disagree with to leave. The reason for adding the fork mechanism is to enable the remaining factions to coordinate with more trust. I’m not saying that the fork mechanism will definitely lead to a fork. My hope and expectation is that the existence of the fork mechanism will allow both sides to obtain more sincere cooperation from each other.
Similar trust issues are not limited to NounsDAO.
BuidlerDAO, LianGuairasLianGuaice: Who Controls the Treasury?
Earlier this year, BuidlerDAO was caught in a controversy over its treasury fund management and disputes between the founding team. Chen Jian, a former member of the BuidlerDAO team, claimed on his social media that “the founder did something against the bottom line.” This statement quickly gained widespread attention in the community, and there were even rumors of the founder speculating with the treasury, which caused BuidlerDAO to face a credibility crisis.
Several months later, BuidlerDAO founder Kui Xiaoba Niels publicly clarified the situation, stating that the controversy stemmed from his conflict with another core member of the team, Chen Jian. According to Kui Xiaoba Niels’ clarification, he admitted that he had converted 150,000 U assets in the treasury into ETH and BTC in December 2022, but this operation was consulted and advised by investors, and there was no evidence of funds flowing into personal wallets or exchanges. The on-chain data is as follows: https://etherscan.io/address/0x72Dcfc6F1Aa963d01b1D48C53a1b0630EF87db28.
The BuidlerDAO incident is not just a conflict between two founding team members; it also reflects core issues such as transparency and automated governance in DAO governance. Although Kui Xiaoba Niels has provided a reasonable explanation for his actions, because the treasury multisig signers and rules were not established before, the BuidlerDAO treasury multisig wallet was controlled solely by Kui Xiaoba Niels. However, this also made him vulnerable to criticism and weakened the transparency and credibility of BuidlerDAO to some extent. BuidlerDAO has also learned a valuable lesson from this.
Not only BuidlerDAO, LianGuairasLianGuaice, a team that has received multi-million-dollar investments from top VC firms such as Sequoia, Coinbase, and Founders Fund, has also staged a fascinating “power struggle” over funding-related issues. On the afternoon of May 10th, several well-known KOLs warned of problems with the NFT lending protocol LianGuairasLianGuaice and advised users to withdraw their funds as soon as possible. This news quickly spread and caused strong panic on Twitter and in the community. LianGuairasLianGuaice founder Yubo not only faced accusations of misappropriation of funds but also internal governance disputes erupted like a volcano within LianGuairasLianGuaice.
The cause of the incident was that LianGuairasLianGuaice was previously attacked by hackers and suffered financial losses. When BlockSec, a security company, returned the damaged funds to LianGuairasLianGuaice, the return of funds was not promptly completed according to the agreement.
In response to the embezzlement allegations, Yubo stated on Twitter SLianGuaice that this was because the debt gap in the agreement was stablecoin, but the funds returned by BlockSec were in ETH. Therefore, it was decided to gradually sell and make up for the debt gap according to market changes. The address starting with 0x909 is actually LianGuairasLianGuaice’s daily operating wallet, which is controlled by the individual for efficiency reasons. The reason for the debate over “misappropriation of public funds” is based on the fact that BlockSec sent the stolen funds to a user address that the protocol smart contract cannot control. However, as a whole, the LianGuairasLianGuaice team should have immediately decided which address to receive the funds and what repayment process to adopt after recovering the stolen funds. The main point of contention in this “battle” is the specific repayment process of the funds, which has caused a crisis of trust.
Arbitrage activities that have existed longer than DAO
Arbitrage activities in the market have been around longer than DAO itself.
Returning to NounsDAO, the dissatisfaction of community members with the waste of Nouns treasury funds has become increasingly evident. The endless number of arbitrageurs, high passage rates for garbage proposals, and proposals that have been passed but not delivered well have caused participants to vote with their feet, and many holders have expressed their grievances. One of the initiators of NounsDAO, seneca, admitted that in the early stages of NounsDAO’s development, the attitude towards finance was indeed lenient, which not only wasted opportunities for trying out many experiments but also damaged Nouns’ network value. But now NounsDAO should improve in this aspect.
Kol hype (@hype_eth) also exposed on social media how nounsbrand stole nearly 400e (about $640,000) from the treasury: first, they raised 355e from the treasury to establish the brand nounsbrand, and then they applied for another 33e from the treasury to make counterfeit LV suitcases with shaking heads, but they never delivered anything. They have now also deleted all nouns-related content from their pictures, website, and social media.
0xBobateas is the proposer of “Nounify New York Fashion Week” (Proposal No. 129), and he has also made more detailed disclosures about this matter in an article: after getting to know the Advsiry team, Advsiry promised to provide Advice X Nouns attendance proof badges and Nouns gifts to guests, put up Nouns brand signs at the venue, host a Nounish afterLianGuairty, showcase Nouns objects designed by Keith Herron on the T stage, and shoot a documentary for Nouns. The total price for all these activities was 33ETH.
After leveraging the support of 0xBobateas, Proposal 129 was passed with 59 votes in favor and 1 vote against. However, it was disappointing that there was hardly any presence of Nouns during New York Fashion Week. The proposal was almost not executed, and the 33ETH was not refunded, which led to a decline in trust among the Nouns community members. Since the birth of Nouns, community members have been contemplating how to use treasury funds to purchase influence and become prioritized decision-makers in the public domain. The proposal passed with ease, which seemed like a design flaw for many holders.
Furthermore, the entire forking process of Nouns was also a large-scale arbitrage activity.
For forking participants, they can choose to continue using the new NFTs in the new Noun DAO fork or utilize the “rage quit” mechanism to withdraw their ETH contributions proportionally. Considering that participating in the fork could bring about a book value of about 35ETH, and the current market dynamics show that the Noun price has always been lower than its “book value,” with auction prices mainly ranging between 20-30ETH, arbitrageurs clearly see the price difference opportunity.
In recent months, arbitrageurs have been actively buying Nouns during the market downturn, hoping to exchange their ETH for higher returns after the fork. These voters have purchased nouns at a value lower than the book value and have held opposing views on most proposals, only holding positive attitudes towards v3 audits, core development funds, and voting refunds – measures that directly or indirectly support their arbitrage or cost-saving efforts.
Regarding such arbitrage behavior, Shawn, the head of SeeDAO Incubator, told BlockBeats, “Arbitrage is actually an expected phenomenon. It provides a challenge and opportunity for DAO organizations, even a litmus test for DAO organizations. Just like the witch attack, we cannot avoid witch attacks, but similar attacks can actually lead the organization towards perfection. What is important is that the organization should recognize these phenomena and make appropriate adjustments and improvements. Without such challenges, the organization may become complacent and stop progressing.”
BlockBeats learned from the Nouns Protector governance team: operations purely driven by arbitrage account for a small part of the reasons for the fork. From May of this year to before the fork started, it can be observed that the number of Nouner participants was not increasing significantly, while Nouns auctions were still ongoing. During this period, participating in the auction to “hoard” Nouns and acquiring more Nouns from the secondary market before and after the fork are normal market behaviors. Among them, there are genuine long-term Nouns holders who have also contributed to Nouns. The final widespread participation in the fork should not be attributed to individuals but to the spontaneity of the whole.
DAOs need to be decentralized and “de-managed”
In an interview with BlockBeats, Wang Chao, an OG participant in the DAO field, expressed his opinion: “If we follow the standards and ideals of DAOs as stipulated in the Ethereum whitepaper, there may not be a true DAO in the world yet because human participation and governance are still needed in practical operation.”
The concept of DAO is to automate certain governance processes so that they can continue to operate without human intervention. In the Ethereum whitepaper, a true DAO should be a fully decentralized autonomous organization that does not rely on human coordination. Even Bitcoin only partially achieves this concept and is closer to the definition of DAO, but not completely in line. Strictly speaking, although many organizations claim to be DAOs, they have not yet achieved true autonomy and self-governance. DAO not only needs to be decentralized, but also needs to be “dehumanized”.
Reducing human governance and moving towards autonomy
In some DeFi DAOs or community DAOs, excessive “human governance” due to design flaws or other constraints has led to unreasonable decisions or actions. On March 28th, the Arbitrum community initiated a proposal vote on Arbitrum Improvement Proposal 1 (AIP-1) on Snapshot. The proposal aims to introduce a decentralized autonomous organization structure called ArbitrumDAO, managed by ARB holders. The Arbitrum Foundation will also serve and be managed by the ArbitrumDAO community.
However, the vote is not yet over and the AIP-1 proposal has not been approved. But it was revealed in a blog post by LianGuaitrick McCorry that the Arbitrum Foundation had already created a multisignature wallet named “Arbitrum DAO Treasury2” in advance, receiving nearly 700 million ARB tokens and selling ARB tokens in advance for stablecoins. The community and some partners are extremely disappointed with the Arbitrum team and the so-called governance, believing that AIP-1 is not a true vote and directly disregards DAO principles. The proposal was executed without the consent of the community, so what is the meaning of such a vote?
Although the concept of DAO aims to make organizations fully controlled by code, in reality, many DAOs still involve excessive human participation and decision-making, and this excessive human participation is the root cause of the trust crisis in DAOs.
In an interview, Wang Chao, an OG participant in the DAO field, told BlockBeats that he agrees with this view to some extent. “If a DAO still requires a large amount of human governance, then it may have deviated from the true definition of a DAO. When an organization relies too much on human decision-making, it is closer to a simple decentralized organization rather than a fully autonomous DAO,” he said.
With the development of smart contracts and infrastructure, DAOs are gradually increasing their degree of decentralization. For example, NounsDAO has already implemented fund management through multisignature wallets and uses smart contracts to automatically trigger fund allocation after a proposal is approved.
However, complete on-chain governance is still a major challenge for many projects. Although the underlying technology is continuously improving, many complex decisions and business logic are still difficult to automate. This means that human participation is still necessary in many cases, such as the execution risks that DAOs face in the real world, whether it is staggered funding, reviewing task completion, or most importantly, executing proposals.
How “decentralized” should DAOs be, and to what extent should they be “dehumanized”? This is perhaps a continuous challenge for all DAO organizations.
After the fork, where do we go from here?
Which is more legitimate, the new DAO or the original DAO?
On this issue, the Nouns Protector governance team told BlockBeats that the current debate about legitimacy is not important, it is too early for this question. Many of the discussions about legitimacy are only because people are pursuing practical interests. If we were discussing the legitimacy of Ethereum in 2016, it would be absurd. In the short term, the party with the most funds often has the greatest influence. But in the long run, the key is which organization can nurture meaningful and valuable innovations.
Of course, many people also worry about the possibility of unlimited forks with Nouns. On this issue, BlockBeats learned from Wang Chao that from a technical point of view, Nouns seems to be easy to fork. But in reality, it is believed that forks will not occur frequently, after all, it is extremely challenging to maintain an active and socially consensus organization. “Although the recent fork has sparked a long debate and exposed some dissatisfaction, I think this is just a temporary state. I am not very clear about the current development trend, but this fork is likely to be a wake-up call, and I still believe that Nouns can continue to develop healthily,” Wang Chao said.
After the fork, where do the holders go? In the choice between the new DAO and the original DAO, BlockBeats found that the community’s choice is mostly based on their trust. “Where our trusted friends, teams, and community members are, that’s where our choice is.”
Let’s take a look at the precedent MolochDAO, which has undergone many forks. Since its launch in March 2019, MolochDAO has been forked into multiple DAOs with different goals, such as MetaCartel Ventures and Marketing DAO. Although MolochDAO has not invested in many well-known projects other than Tornado.cash, the DAOs forked from MolochDAO are undoubtedly diverse.
The forking plan of NounsDAO has also attracted a lot of attention in the governance of other DAO organizations and has become a reference blueprint for other DAOs. For example, members of FloorDAO have proposed a proposal in the community to implement an angry exit mechanism for token holders by forking DAO “FloorkDAO”.
Is complete autonomy and decentralization just a utopian illusion? In this encrypted new world defined by “code is law”, does subjective human will still play an important role? The forking event of NounsDAO has also led many governance practitioners and the crypto community to re-examine the meaning and prospects of DAOs.
Perhaps at present, DAOs are difficult to completely eliminate the influence of humans, and the path to autonomy is full of twists and turns. But with the progress of AI tools and secure industry infrastructure, the future of DAOs will certainly be more than just a large-scale experiment for idealists.
Special thanks to: Nouns Protector Governance Group, OG participant in the DAO field Wang Chao, and Shawn, the head of SeeDAO incubator.
Reference materials:
1. “S1E10｜VENTUREDAO Prologue: The Arrogant Proposal of an Unknown Person, Eventually Becomes an Industry Cornerstone｜DAO Special”
2. “Keeping up with the Nouns”
3. “Introducing Nouns Fork: A Last-Resort Minority Protection Mechanism”
4. “Thinking About Rage Quit”
5. “Fork is a Good Thing: It’s a New Feature, Not a Bug”
6. “Cross-Community Sharing – When Elegant NounsDAO Meets Governance Attacks”
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