The DAO Dilemma
a deep dive into the biggest challenges that DAOs face today.
welcome back to the Tally newsletter, your weekly source for DAO governance insights in the Tally ecosystem. we’re tommy and ellie and this week we’re diving into the biggest challenges that DAOs face today.
✦ DEEP DIVE
this week we're discussing some of the biggest challenges that DAOs face today.
in order to build for the future, we must solve problems of the past and the present.
The biggest problem for DAOs today is that governance tokens intermingle financial and organizational utility, failing at both.
governance tokens are misaligned at the incentives layer
as the DAO’s token price approaches zero:
treasury raids become extremely cheap & increasing in likelihood (i.e. cost to raid treasury is trivial)
governance participation bottoms out due to apathy & zero future value expectation
as the DAO’s token price approaches infinity:
governance participation bottoms out as participants cash in
only incentive is to sell token as future price appreciation is minimal
treasury raid liability remains unmitigated
DAOs struggle setting security parameters because the majority of the circulating token supply is not actively being used in the DAO’s governance.
Governance tokens attempt to combine financial speculation (DeFi & CEX) with organizational utility (governance, delegation) and fail at both.
innovation is needed.
stay tuned for a big announcement from Tally in the weeks ahead ☻
❉ ONCHAIN PROPOSALS
Arbitrum: Security Council Improvement Proposal
This AIP seeks to propose changes to the structure of the security council so Arbitrum can maintain the “Stage 1” designation as per L2BEAT and not fall back to “Stage 0” designation.
voting ends: Sunday, June 9th
Uniswap: Uniswap Delegate Reward- 3 Months Cycle
This proposal outlines the Uniswap Delegate Reward Initiative, a compensation program designed to improve participation quality and dedication among Uniswap delegates. The initiative was developed by several members of the Uniswap Delegate Reward Working Group, which conducted extensive research and produced findings supporting the implementation of such a program.
voting ends: Saturday, June 1st
https://x.com/DennisonBertram/status/1794140357191438818
☻ DAO TALK
check out April’s DAO Talk Monthly Episode here and stay tuned for another DAO Talk Monthly releasing next week!
❀ MEME OF THE WEEK
https://x.com/Whotfismick/status/1794405603210830301
