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Op-ed: Current DAO infrastructure isn’t truly decentralized, but it can be

Press Releases Crypto News CryptoSlate Op-ed: Current DAO infrastructure isn’t truly decentralized, but it can be

Over the past few years, blockchain technology has paved the way for a new governance model known as the decentralized autonomous organization, or DAO. Built with the philosophy of doing away with a centralized hierarchy that fully controls all decision-making within a given company, DAOs flip the traditional corporate structure on its head, giving shareholders the power to vote on proposals for the organization’s future.

Unfortunately, this hasn’t played out too well in practice. Early attempts have been fraught with issues, many of which boil down to the fact that these systems aren’t quite as decentralized as they seem. Fortunately, DAOs can be built in a way that delivers on the promises of their predecessors, and it’s time to see this shift in action.

An Honest Look At The First Generation Of DAOs

DAOs seem like an idea whose time has come. At first glance, the notion of an organization that grants voting power to every member seems highly equitable. It is also in line with the general sentiment behind the creation of blockchain technology. However, just because these organizations are designed to be decentralized doesn’t mean that’s how they operate in the field. In fact, the term DAO is often thrown around loosely, with the reality of a given organization being much less decentralized than they advertise.

In many cases, a relatively small number of governance token holders actually control a significant portion of the voting power. This can happen either because they have deep pockets or, in the case of an exchange because they control a massive amount of user funds. There are also times when the DAO community only has superficial control over lesser aspects of a project, making the entire practice more or less an empty gesture.

Even worse, sometimes centralized development teams make decisions regardless of the voting outcomes from the community

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Author: Lomesh Dutta

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