I've been following all the recent drama surrounding CompoundDAO, and it's been an education, that's for sure. So this Golden Boys group is called in the midst of a lot of debate within the crypto community with their so-called "governance attack." The thing is, I don't really think it was an attack at all.
Let's be real for one second: The Golden Boys didn't hack anything or exploit smart contracts; they played by the rules. They only used the governance structure to ram through their proposals, which were of a controversial nature. Sure, but that is decentralized governance, if other COMP token holders had issues with it, they should have shown up to vote.
This only goes to show the flaws in the current DAO governance models. The case in point is participation. Only 49% of voters turned out for a proposal to create goldCOMP. Less than half of token holders even bother to have their say in some major decisions. It's like complaining about the election results when you didn't even bother voting.
I think Dennison Bertram hit a very good point when he pointed out the hypocrisy to cry foul where voter apathy was actually the real problem. We can't expect DAOs to run well if most stakeholders are sitting on their hands.
That brings me back to quite an interesting point about incentives. In the traditional finance world, people are compensated, rightfully so, for their time and experience in running large organizations. But within the DAO space? We basically force people to run billion-dollar protocols for free. We should really actually look at how absurd that is; people's free time reading forums, analyzing proposals, auditing code with no compensation. No wonder the participation is low.
What Tally Protocol has done is quite interesting. Its notion of governance staking and yield provision for active participants simply changes everything. This somehow makes sense, like rewarding people for giving their time to a DAO rather than passively sitting on tokens.
This is something I feel the DAO space really needs in terms of binding economic incentives to performance; might actually drive more sophisticated and engaged participation. After all, we are dealing with organizations having hundreds-of-millions-of market capitalization. It's high time that we started taking DAO governance seriously.
I mean, I reflect a lot on the comparison to traditional companies. Who would expect board members for a $450 million company to work for free? What makes anyone assume that in the crypto world? It's high time we recognized the fact that running these protocols is real and deserves real compensation like other jobs.
The Compound situation has made one thing very clear to me: we need to evolve our approach toward DAO governance. Whether through improved incentives, better voting mechanisms, or education and empowerment for token holders, something needs to change. Otherwise, we'll continue to have situations similar to the Golden Boys saga.
Ultimately, I believe this whole episode may turn out to be a win for DAOs. It is forcing us to look at some uncomfortable truths about participation, incentives, and the kinds of responsibilities both enabled and required by decentralized governance. You know the saying: sunlight is always the best disinfectant. Perhaps this wake-up call is what the DAO space really needed to mend its deficiencies and hammer out stronger governance systems into the future.
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