At DAOstack, we often refer to the conflict between scale and resilience as one of decentralized governance’s central challenges. I’d like to point out what I think is another important challenge that’s been largely unaddressed in the DAO space: that of stake vs. expertise.
Lots has been written supporting the idea that organizations should be governed by their stakeholders. The evolution of firms from owner-controlled to shareholder-controlled also supports this. In the DAO space, this looks like: reputation holders in the dxDAO should mostly be people who have earned Magnolia tokens by trading on the DutchX; rep holders in the PolkaDAO are Dot holders; and so on.
The reasoning is that stakeholders ought to have the best incentives to make their organization better, because they’re the ones who depend on its quality. However: having the best incentives is different from having the capability. Stakeholders may know the problems their organization needs to solve in order to improve, but there is no systemic reason to believe they will be good at finding solutions to those problems. Why would traders on the DutchX be able to tell the difference between good and bad solidity code, or proper legal language? What about Dot holders or GEN holders?
There are people who are experts in solidity code or blockchain and law, but these people aren’t stakeholders: they lack the proper incentives toward improving the organization. This is the conflict between stake and expertise. The bigger the DAO, the bigger this problem is: most people are highly skilled in just a few areas, so in managing an organization making choices in many areas (code, marketing, event planning, research, etc.), a majority of the organization is likely to be uninformed in every area! That probably won’t lead to good decision-making about specific projects.
Scale and attention also rear their ugly heads again here: even in a DAO that uses holographic consensus to limit the number of proposals people need to look at, expecting most members to regularly read and understand even a handful of detailed, specific proposals is a stretch.
I think protocols that address this conflict are possible (DAOs can pay other orgs to evaluate this kind of thing if they trust them, or use things like this), but before discussing that, I wanted to ask: do others agree that this is an issue? Have existing DAOs already been experiencing it? Should we start exploring solutions?