DAOs are hard because balancing democracy with efficiency is hard. That’s why DeXe and others are building tools to make them easier. Polkadot is a well-known DAO that recently tried to make DAOs both more democratic and more efficient by launching the Polkadot OpenGov platform.
No doubt, the intention behind it was good and the reasoning solid. Polkadot deserves all the credit for trying to make its DAO better and developing tools for that. However, something did not go well with the execution. And by examining it, we do not mean to throw shade on Polkadot but rather want to study this case in order to better understand the consequences of specific governance solutions and how to improve them going forward.
The OpenGov promise
Per Polkadot’s website, OpenGov is intended to revolutionize blockchain governance by:
- Automatically enacting proposals
- Allowing multiple referenda to run simultaneously
- Agile vote delegation and conviction voting
- Seamless updates of Polkadot and all parachains without any hard forks
It’s easy to see how the combination of the above can create a more efficient and democratic Polkadot DAO. Yet, something went wrong, at least according to some long-term contributors to Polkadot.
In a detailed Twitter post, PolkaWorld outlined how OpenGov affected them. And it’s not pretty. According to the post, PolkaWorld has been contributing to the Polkadot DAO for over 4 years, getting funded by Polkadot to do its work. According to their Twitter profile, PolkaWorld is dedicated to building Polkadot’s global community. So what happened?
Apparently, PolkaWorld’s requests for funding are now being rejected by the Polkadot treasury. They claim that other long-term contributors are suffering the same fate. Why?
The “me” in democracy
Again according to PolkaWorld (and to be fair, this is just their side of the story), exposing treasury grant proposals to voting by the entire community of DOT token holders has led to behavior that Polkadot’s team probably didn’t anticipate and certainly didn’t intend to promote: fear and greed.
The problem is that rank-and-file token holders saw that, in their funding proposals, PolkaWorld and others wanted to convert DOT to stablecoins (which makes sense to fund operations). Seems that DOT token holders feared that this selling off of DOT was harmful to the token price and thus to their own positions. This led to many Polkadot members to automatically vote down any funding proposal.
But what are PolkaWorld and others to do? How can they ask for funding and then not spend it?
The professional approach
Prior to Polkadot OpenGov, treasury/funding decisions were made by a council elected by the DAO’s community. This council had some professional and/or reputational qualifications to determine which funding proposal had merit. Granted, the drawback of such an approach is that it’s not fully decentralized since a limited group of people are making key decisions. And that may be one of the primary reasons for switching to the “everybody votes” OpenGov model.
Yet, that opens up a Pandora’s box of a question: does “everybody” understand what they’re voting on and the ramifications of their vote?
Where to now?
PolkaWorld intends to amend its funding proposal to address community concerns and get its funding approved. But what if the approval never comes? Same for all the other long- and short-term contributors. No doubt, democracy is important. But so is expertise. Maybe a more meritocratic system can make sure that every voice is heard and valued while worthy proposals get the approval they need.