The Decentralization Dilemma
The Tally Newsletter, Issue 103
Welcome back to the Tally Newsletter, your weekly source for DAO governance insights. I'm coolhorsegirl and I’m so stoked to be here. 🟣
Haven’t we agreed to leave the CEO and executive board back in TradFi? Well, maybe not. Officialized leadership teams in DAOs may be a necessary compromise or they may be a one-way ticket to centralization. This week, we’re unpacking the implications of the recent ApeCoin DAO election on decentralization.
Got a few proposals for you, too, including Compound’s quarterly payment to OpenZeppelin and proposals for some physibles-of-sorts and sponsorship of the world’s 20th-best tennis player. Let’s get into it 👇
🤿 Deep Dive: The Decentralization Dilemma
By definition, DAOs should operate in a completely decentralized manner, with decisions being made collectively rather than being dictated by a central authority...right? Well, no matter how much we champion decentralization, there's no escaping the fact that tasks need ticking off the list—fast. That’s where it gets complicated.
We’re talking about the rise of centralized leadership within certain DAOs. ApeCoin DAO recently held an election (via 1 token = 1 vote) for positions akin to a CEO (“President,” they call it) and board (“Special Council”). This move attracted heightened attention not just within its associated communities—Bored Ape Yacht Club and Mutant Ape Yacht Club—but also from those outside these communities who sought to understand the election's structure and dynamics.
Purists (often self-described “decentralization-maxis”) argue that centralizing any aspect of a DAO undermines its fundamental principles. But can decentralization be a spectrum?
I think I have a form of PTSD from having to write up a forum post and put to a vote whether to use Asana or Jira (they’re literally the same) as the project management tool for a DAO I once worked. Weeks went by—“decentralization paralysis,” some call it." Maybe that’s a one-off, but anyway, there’s something to be said about the efficiency of a DAO with a centralized leadership team. That simple question would’ve been decided within minutes.
I also know firsthand that this is a slippery slope—a little centralization (ok) often breeds a lot of it (ew). As soon as leadership level is tied to token holdings, decision-making power becomes intentionally distributed—a self-destructive thing, if you think about it. How much power the President and Special Council of ApeCoin DAO actually wield, we’ll have to see (and potentially police).
Whether this trend towards pseudo-boards is a scary compromise of the DAO concept or a necessary adaptation to enhance functionality, it is a development that will continue to impact the future of decentralized governance. We'll toast to that - right after we finish voting on what kind of toast it should be.
⌛️ On-chain Proposals
On-chain DAOs are decentralized autonomous organizations that operate entirely on the blockchain, using smart contracts and other blockchain-based technologies for its operations and decision-making processes. Tally believes that true DAOs operate on-chain.
Summary: At the start of every quarter, OpenZeppelin creates a proposal to perform the next service fee payment Based on the last week's average price, this would be $29.31 per COMP for a total quarterly payment of 34,118 COMP (equaling $1M per the original agreement).
Voting ends: June 29th
Summary: $375k to create Episode 2 over 100 days after passage. The pilot episode was just released last week with a runtime of 4:30 minutes; the next would be 10:30-11 minutes. Once this episode is released, the DAO can decide if it wants to further develop the movie.
Voting ends: July 2nd
Summary: $57k in USDC to NOUNSWORK to fund another 25k factory production of Lo-Fi Noggles, distributed to a number of Nouns-affiliated organizations.
Voting ends: July 2nd
Summary: $200k to feature Nouns and Noggles in major tennis events via sponsorship of World No. 20 tennis player Borna Coric and developing MVP for NounsTennisFam NFT platform. Keen to tap into the $5.6billion tennis market?
Voting ends: July 1st
Summary: Retro fund 10 ETH to compensate, recognize, and appreciate the work so far on Nouns governance client, voter.wtf. 2 main goals: (1) Attempting to encourage vote with reason, so that we can better understand each other's perspectives and (2) Presenting Nouns DAO as a sort of game that can be played.
Voting ends: June 29th
📝 10 Things To Read or Listen To
📄 “Making DAOs Work” by Laura Lotti, Nick Houde, and Tara Merk
📄 “Measuring Decision Making in Virtual Communities” by BanklessDAO
🧵 “A CALL FOR DAO MINIMALISM IN PROTOCOL GOVERNANCE” by brantley.eth
🧵 “Will governing AI with Web3 data unions be a good solution?” by The Reading Ape
🎧 “DAO Pain Points & Paths Forward” on BanklessDAO’s Twitter Space
🎧 “Co-creation + User Generated Products w/ Aleksija Vujicic” on On the Other Side
🎧 “Digging into DAOs | Ashley Caines” on Boys Club
🎧 “Competition, Community, and Culture” on Rehash
💫 DAO Talk: the summer DAOstice || DT weekly ep. 44
🤭 Meme of the Week
Last week, Tally talked about the current state and future of onchain governance with ENS Interviews. Catch up here!
~ coolhorsegirl 🐴
p.s.- Saw this at the night market in Thailand. No, you cannot pay using crypto, it’s just the name of the place. To be fair, though, decent marketing as it did draw me in.