Governance of Decentralized Autonomous Organization on Blockchains: Roles of Pre-voting Discussion in Facilitating Decentralization

Abstract

This paper evaluates how the use of pre-voting discussion helps materialize the decentralized governance in Decentralized Autonomous Organizations (DAOs). Our analysis focuses on the voting approval of two types of proposals: (1) proposals with novel ideas; (2) proposals from peripheral DAO members, which represent the primary principles of decentralized governance. Using the research context of the decentralized governance of the Dash cryptocurrency, we first identify the disadvantages of novel proposals and peripheral members' proposals in getting support in voting, as they are less likely to be approved in voting, receive a smaller proportion of supportive votes, and incur lower voting turnouts, compared with routine proposals and active members' proposals. Then, our analysis demonstrates that the use of pre-voting discussion can effectively alleviate these disadvantages and examines the possible mechanisms. In specific, pre-voting discussion facilitates novel proposals by helping tailor the original novel ideas to resonate with prospective voters and convincing voters with signals of favoritism toward the proposal content. Proposals from peripheral proposers can obtain more favorable voting outcomes when the proposers have more experience with the pre-voting discussion forum and actively engage in the discussion of the proposal. Overall, our research sheds light on the complex dynamics of decentralized governance in DAOs and the roles of prevoting discussion in shaping governance outcomes.

Keywords: Decentralized Autonomous Organizations (DAOs), blockchain, cryptocurrency, onchain voting, on-chain governance, decentralized governance, group decision making