Supporting decentralized autonomous organizations (DAOs) with transferable governance tokens, according to Vitalik Buterin, co-founder of Ethereum, is incongruous and gives the powerful an advantage.
The debate over governance is becoming increasingly heated as DAOs gain popularity in the blockchain space. Vitalik Buterin brought attention to the tension between granting authority to a select few and the option to willingly delegate decision-making authority in a Twitter conversation.
Agreeing with the proverb "those who most want to rule people are those least suited to do it" and supporting DAOs being run by transferable governance tokens is a contradiction.
Transferable governance tokens are all about giving *more* power to "those who most want to rule".
— vitalik.eth (@VitalikButerin) July 28, 2022
Buterin mentioned an old proverb in a tweet that asserts that those who are power-hungry are unfit for leadership. The creator of Ethereum (ETH) emphasized that the saying applies to DAOs and said that transferable governance tokens in DAOs go counter to their entire purpose. Buterin pointed out that the ability to transfer power empowers those who want it.
Although the Ethereum creator makes a good point, several people had opposing views. In response, Twitter user Muki noted that it is unavoidable to provide decision-making authority to others. The community member argues that it is difficult to expect everyone to participate and that voluntary delegation of decision-making authority is preferable to making hasty judgments or not participating at all.
Willyogo, a Twitter user who participated in the conversation, stated that possessing transferable governance tokens does not imply a desire to dominate over others. The community member did add, though, that there is certainly potential for improvement in DAOs’ voting procedures.
A second commentator on Twitter, Vagobond, said that having completely re-callable delegates is a step in the right direction. According to this theory, the chosen delegates may quickly lose their power the minute they ceased to represent the people who gave them their votes.
Some referred to the usage of blockchain-based technology, such as choosing key roles in a DAO using verifiable randomization, while others focused on governance mechanics. Another member of the community recommended choosing token holders at random and rotating them once they stop being active on the blockchain.
Hilary Kivitz, an advisor at Web3, spoke about DAOs and how they might stave against hostile takeovers at the most recent Ethereum Community Conference in Paris. In order to reduce the influence of exploiters, Kivitz suggests that poison pills be included in smart contracts.
Meanwhile, Alex Tapscott stated that DAO developments are something to watch out for during the downturn market. DAOs have the potential to take the place of conventional organizations in the management of resources, according to Tapscott.