The Rise of Friendly Governance Abstraction in DAOs

Dagon, a technical implementation developed by core contributor Ross Campbell, aims to enhance DAO governance and delegation through the use of smart contracts.

Approaching Governance Abstraction Exploring a ‘Friendly’ Approach for DAO Management.

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People love to criticize decentralized autonomous organizations (DAOs) and cryptocurrency these days. It’s easy to find flaws in groups and money, especially when it comes to the wild west of the internet. But the underlying concept behind DAOs is intriguing – the idea that people can make decisions as a group, without needing to trust each other, by using their own code. And that’s why I’m bullish on DAOs.

The existing way we govern things just doesn’t feel final at all. The coordination space is constantly evolving and improving. But DAOs have their own set of challenges. While they have optimized for security and self-custody, they have neglected usability. Users don’t want to hold volatile gas tokens or deal with clunky user experiences. They need something better.

The current solution for DAOs has been voting delegation, but this starts to resemble traditional politics. Apathy sets in when people can’t afford to cast votes on layer 1s or even scalable layer 2s. There is also a lack of flexibility when it comes to initializing and amending governance. As a result, many DAOs seem to coast along, only making headlines when they get hacked or make questionable spending decisions that nobody wanted.

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Furthermore, each DAO design tends to be monolithic, making it difficult for users to understand both the blockchain and the high-stakes governance systems. It’s no wonder that people aren’t excited about DAOs. There’s a gap between group intent and group outcomes.

To address this, I propose the concept of friendly “governance abstraction” (GOA). Just like how developers and advocates have focused on simplifying the blockchain user experience through smart contract accounts, we need to simplify the process of making group accounts and on-chain decisions. In other words, users shouldn’t even know they’re using a blockchain. The relationship with their DAO should be effortless.

To achieve this, there are two primary developments that need to happen.

1. Migration to Smart Accounts

We need to migrate blockchain users to smart accounts, removing the need for users to deal with gas fees in order to participate in DAOs. Users should be able to pay for network costs in any currency and even be rewarded for their votes. This upgrade will significantly increase participation and enhance the legitimacy of DAO governance.

Account abstraction alone won’t work without GOA. Self-custody risks are too high without involving more programmable rules and guardians. Delegation in DAOs won’t go away, but users will have more leverage in how their votes are used. For example, GOA can allow scoped delegations guarded by smart account plugins, executed by agents who can perform specific actions (e.g., only use my votes for one day or vote no on any proposal made by Alice). These agents may not even be actual people; they could be a market-based solution.

2. Governance Patterns as Singleton Smart Contracts

Instead of building monolithic DAOs, we should collapse the duplicative DAO code and shift towards a bazaar of primitives. The blockchain ecosystem doesn’t need another DAO factory. We should focus on building a pipeline of smart accounts to group accounts and get that process right. There will still be unique patterns and edge cases in governance design, but we need to repackage them as installations rather than full-on upgrades that affect custody. Let’s adopt an app-store mindset.

By treating DAO users as partners, rather than locked-in users, we can strengthen our data sources and collective sovereignty. Just like tokenization interfaces have standardized the movement of tokens between apps, we need a similar singleton and interoperability standard for DAOs. This will allow users to move between apps while maintaining their intent and ownership. It’s time to make DAOs cool and useful again.

To demonstrate how GOA can work in practice, I have released Dagon, a smart contract for governance abstraction on the Ethereum blockchain and Optimism L2. This proposal is not only for the Moloch DAO community but also for the greater coordination scene and ERC4337-AA enthusiasts. Let’s build practical and user-friendly solutions together.

Looking ahead, L2 will serve as an active laboratory for improving user outcomes. Account abstraction and other proposals promise more native ways to turn accounts into smart contracts. GOA and the Dagon installation design are just the beginning. We plan to test the alpha version in Q1, followed by a public beta and migration app for existing DAOs in Q2, with a private release at ETH Denver in early March.

In conclusion, DAOs have immense potential, but they need to evolve to be more user-friendly and accessible. The implementation of friendly governance abstraction can bridge the gap between user intent and actual outcomes, making DAOs a powerful feature of daily life. It’s time for DAOs to deliver!

Q&A

Q: What are the main challenges DAOs face currently?

DAOs face challenges related to usability. Users don’t want to deal with volatile gas tokens or clunky user experiences. Additionally, there is a lack of flexibility in initializing and amending governance, and voting delegation can lead to apathy within the community.

Q: How can DAOs be made more user-friendly?

One approach is through friendly “governance abstraction” (GOA). This involves simplifying the process of making group accounts and on-chain decisions, so users don’t even realize they’re using a blockchain. Moving blockchain users to smart accounts, reducing the need for gas fees, and providing scoped delegations are other ways to enhance user-friendliness.

Q: How can DAOs improve participation and legitimacy?

By allowing users to pay for network costs in any currency and incentivizing their participation, DAOs can increase engagement and legitimacy. Rewarding users for voting and ensuring scoped delegations can give users more control over their votes, making them feel like valued participants in the DAO ecosystem.

Q: What is the role of L2 in enhancing user outcomes in DAOs?

Layer 2 solutions can serve as an active laboratory for improving user outcomes. They provide opportunities to implement account abstraction and enable more native ways to turn accounts into smart contracts. By leveraging L2 advancements, DAOs can offer better user experiences and empower users to actively participate in governance.

Future Outlook

The future of DAOs is promising. With the implementation of friendly governance abstraction, DAOs can become a powerful feature of daily life, offering efficient and user-friendly ways to make collective decisions. As the space evolves, there will likely be further advancements in account abstraction and more innovative ways to enhance DAO governance. It’s an exciting time to be part of this revolution!

📚 Reference links:

1. Ethereum’s Technical Evolution and Institutional Interest
2. MetaMask’s Secret Project Could Shake Up How Ethereum Users Interact With Blockchains
3. Focal Point (Game Theory)
4. Singleton Pattern
5. ERC1271
6. ERC4337-AA
7. ERC3074

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Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.

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