Observed Problems

(unordered)

• Problem 1: DAO members may be legally liable for the decisions made by the DAO
• Problem 2: crowds are bad at long-term strategic planning
• Problem 3: crowds are good at identifying problems, not proposing solutions

(real problem 2 and 3: crowds want to empower leaders but current DAO protocols don't have processes for this)

• Problem 4: participation rates are too low to be representative.
• Problem 5: some decisions need higher security than others
• Problem 6: existing solutions prioritize their own token over building useful tools and standards

Market Analysis

Every project is trying to solve problem 1 through the idea that a "sufficiently decentralized" DAO provides its members with some kind of legal protection — but this is actually quite unclear. The only thing it does seem to provide is legal protection for the original launch team if they skidaddle after launching the DAO.

Any system that supports delegation or uses a multi-sig with only a handful of decision-makers (the latter not really being a DAO) at least partially addresses problem 3, since these systems give "experts" or "specialists" more influence. We know Compound supports this, but it's not clear who else does yet.

Every project is trying to solve problem 4 with some kind of "optimistic governance" — decision-making systems where very few or no members need to vote on chain, and some kind of oracle is depended on to report what the result would have been if everyone had voted on-chain. This does allow DAOs to function with fewer on-chain transactions (i.e. cheaper), but 1) it puts huge pressure on the oracle, and 2) it leaves problems 2 and 3 unaddressed.

Only Colony really addresses problem 5, and it's highly opinionated, doesn't resemble what people are doing today, and hasn't really been tried in the wild.

Opportunities

Any of: