Learn With SubDAO: DAO Frequently Asked Questions (FAQs) Answered
Decentralized Autonomous Organizations (DAOs) are set to revolutionize organizational structures with the shift of internet protocol to the blockchain-based internet (Web 3.0). If you followed our social media pages, you would have learned much about DAOs and how they function; however, you may have some more questions to clarify confusion about how DAOs work.
We have culled some Frequently Asked Questions (FAQs) about SubDAO and DAOs in general from our social media engagements, and we will answer them in this article.
Question 1: Why is it important for DAOs to launch on multi chains?
Decentralized Autonomous Organizations (DAOs) are entities that preach decentralization with the use of the blockchain (a decentralized, public ledger). Hence, limiting the platforms through which intending members can join to only one chain defeats the purpose of decentralization. Interoperability is an essential requirement for the success of the blockchain-based internet; we want all chains to communicate with one another. Hence, it is vital that a leading DAO protocol in the Web 3.0 space is compatible with several chains, enabling cross-chain communication and governance.
Question 2: Is my Privacy Ensured in a DAO?
The blockchain offers a healthy level of privacy, allowing you to make transactions without necessarily divulging private information. By default, the blockchain is pseudonymous — meaning that it offers a thin layer of anonymity that may be uncovered if you interact with centralized exchanges or any platform that requires your personal details. However, if you maintain all transactions on DEXs, your privacy will remain intact.
Similarly, when using a DAO, you are only required to join in via your wallet, submitting funds. No one cares about your real identity — all the DAO requires of you is to actively participate in proposals and voting to make excellent decisions. However, a DAO cannot be held responsible if your wallet’s privacy is compromised via other transactions you make on the blockchain.
Question 3: How much Influence Can I have in a DAO?
In traditional organizations, where hierarchy exists, some members have more sway over some other members’ decisions. However, in a DAO, all members can suggest a proposal, and no one needs to wait for a CEO, director, or leader sorts. However, voting on proposals requires users to spend DAO/equity tokens (based on their stake in the fund pool).
Hence, there are many questions about how wealthier members can tilt the votes to themselves by spending more DAO/equity tokens to strengthen their voting position; however, several voting systems are aimed at curtailing the actions of vote manipulation. Some of them include:
- Liquid Voting: Liquid voting involves vote delegation in a DAO. For instance, if there is a situation where some members are unsure of how to vote in a DAO, they can delegate their votes to other members whom they trust. They can withdraw their delegation anytime and vote themselves or transfer these voting rights to other people they trust. Liquid voting helps to increase participation in voting and prevent situations where only a few people vote on a proposal; however, it could lead to bribery, collusion, and dishonesty.
- Quadratic Voting: Quadratic voting is a mechanism proposed by Vitalik Buterin; it is aimed at stopping vote manipulation by members with a large wallet. In a quadratic voting system, 1 vote will consume 1 token, 2 will consume 4 tokens, 3 will consume 9 tokens… n votes will consume n2 tokens. Hence, DAO members with large DAO/equity tokens cannot bully other members.
- Conviction Voting: Conviction voting is a mechanism that attributes more weight to a vote with time. For example, if a proposal is put to the vote for 2 weeks, and you cast your vote on the first day, by the 13th day, your vote will be much more valuable than someone who just cast their vote. Similarly, if you change your vote on the 13th day, your vote will be regarded as new, and will lose strength. Conviction voting incentivizes people to take a stand and not be swayed by other people’s influence.
- Multi-sig voting: Multi-sig voting doesn’t involve voting with DAO tokens. In a DAO voting with multi-sig tokens, all members hold a private key to the wallet. So, in a DAO of 20 people, requiring 2/3 consensus, if 14 people sign the proposal with their private keys, then it will pass.
Although these are the most common types, there are many more DAO voting systems which will determine each participant member’s voting power (and influence).
Question 4: How many DAOs can simultaneously run a DAO protocol without leading to network failure?
Most DAO protocols can host thousands of DAOs because most of the DAO action isn’t actively congesting the blockchain network; smart contract calls are only required when it is time to delegate funds to a specific user or when on-chain decisions are being made — other communication and interaction can be done off-chain.
Question 5: Is there a Custodian for funds raised in a DAO?
Typically, no. A DAO is decentralized, so no single entity acts as a custodian for pooled funds; however, the members of a DAO may allocate temporary exclusive access to a specific user, allowing them complete control of the DAO funds to carry out transactions on behalf of the entire group.
Question 6: DeFi protocols get hacked all the time; how can I be sure that my funds are safe?
When interacting with DeFi protocols, you are chiefly responsible for your security. Hence, before committing funds into any DAO, ensure that they have undergone an audit from a third party to ensure that the protocol isn’t susceptible to hacks.
Question 7: Are there other plans for more DAO templates apart from Ventures and Community DAOs?
At the moment, two primary uses of DAO groups include investment (ventures) and socials (community). However, in the future, the entire DAO ecosystem is expected to diversify into other DAO templates, particularly in entertainment, media, philanthropy, etc.
If analyzed deeply, all other DAO templated are subsets of Venture and Community DAOs, which is why many new DAO protocols are looking to achieve success in these templates before diversifying to others.
SubDAO is a multi-chain DAO protocol. It allows any decentralized organization to swiftly create and manage DAOs. We are committed to serving as a Web3.0 entry by providing blockchain-based digital agreement signing, DAO social networking, asset management, and other tools and services.
The founding team of SubDAO is composed of the former Technical Team leader of the IBM Group and many early well-known developers from Polkadot. SubDAO has completed multi-million dollar financing from dozens of institutions including Hypersphere, Huobi Ventures, OKEx Blockdream Fund, as well as investment by Messari founder Ryan Selkis.Follow SubDAO