Proposal

Each governance innovation provides a tool for addressing problems in DAO Governance.

Metagovernance provides a system of secondary incentives to reward governance participants for taking a set of desired actions, which helps limit opportunistic behavior.

Hybrid Governance redistributes voting power among stakeholders using a secondary governance mechanism. The second mechanism provides a system of checks and balances between the two groups, guaranteeing that a single group of voters can only capture a governance mechanism partially.

Market Governance decomposes governance into self-contained organizations, allowing market forces to govern each organization's decisions. As a result, consistently productive organizations outcompete organizations that become bureaucracies or engage in corruption.

These mechanisms improve stakeholder cooperation and alignment using three types of incentives. Metagovernance incentives are incentives provided by a mechanism or protocol. Hybrid Governance relies on incentives provided by other stakeholders or peers. Market Governance incentives are incentives provided by the market through competition.

Should governance attack, corruption, or capture be detectable by a governance mechanism, other stakeholders, or competing mechanisms, incentives offer an opportunity to offset the proceeds of these acts, rendering them unprofitable.

Through our investigations in the field of cryptoeconomics, we aim to design a mechanism or collection of mechanisms capable of providing sufficient guarantees about cooperative behavior in DAOs.

Next, we present an initial exploration of the solution space.