Vitalik Buterin, the creator of Ethereum, has said that allowing DAOs to issue transferrable governance tokens is inconsistent and gives power to those who crave it.
As decentralised autonomous organisations (DAOs) grow in popularity on the blockchain, discussions of their governance get more heated. In a thread on Twitter, Ethereum co-founder Vitalik Buterin discussed the trade-offs involved in entrusting authority to a select few against the ability to delegate authority over important matters on a case-by-case basis.
Buterin mentioned an old proverb on Twitter that said leaders shouldn’t be egocentric. The Ethereum founder said the aphorism applies to DAOs and that transferrable governance tokens undercut the premise. Buterin said power-seekers would benefit if the authority could be handed on.
Community Members Think Ethereum Creator is Unrealistic
While the Ethereum creator makes a compelling case, not everyone agrees. Twitter user Muki said that delegating authority is always necessary. The community member argues that it is unrealistic to expect everyone to take part and that delegating decision-making authority voluntarily is preferable to making poor decisions or not making any decisions at all.
On Twitter, participant Willyogo argued that having governance tokens you can sell does not imply a desire to exert authority over others. But the member of the community also noted that DAO voting mechanisms need enhancement.
Twitter user Vagobond added that progress is possible with completely recallable delegates. When delegates stop speaking for the people who gave them the right to vote, they lose authority.
Application of Blockchain Technology
Some referred to blockchain-based technology, such as randomising important DAO roles, while others focused on governance. In a similar vein, another member of the community proposed rotating token holders at random if a certain token holder lacked on-chain engagement.
Hilary Kivitz, a Web3 advisor, talked at the Ethereum Community Conference in Paris about DAOs and hostile takeovers. According to Kivitz, there are solutions such as adding poison pills into smart contracts to dilute the votes of exploiters.
Meanwhile, Alex Tapscott cautioned investors to watch DAO developments amid the market downturn. Tapscott highlighted that DAOs have the potential to replace traditional organizations in organizing resources.