Lines

DAOs: How Fair can Decision-Making be and Why is Private Voting Essential?

Project UpdateAugust 15, 2023
New image

What are DAOs, what are their challenges and how are they influencing decision-making in Web3? How can a voting system be fairer? What’s the role of privacy in voting? These are some of the questions we’re discussing below, exploring concepts like identity, quadratic voting, and Sybil resistance.

What are DAOs?

Well, let’s start from the beginning. What’s a DAO? A Decentralized Autonomous Organization (DAO) allows multiple people and entities to coordinate on matters which can be enforced by a blockchain, such as the management of digital asset portfolios. In a DAO, there is no central authority in power. The rules of the DAO define how decisions are taken by its members.

As DAOs on public blockchains span beyond national borders and jurisdictions, nowadays they are often used for regulatory arbitrage. However, there are examples of DAOs that chose to fit legal frameworks such as the Swiss association, DAA.

Today, DAOs are almost exclusively used to invest or spend tokens with joint decision-making. They can cover virtually anything, from a jazz foundation to a European-based institution linked to delivering. These are real cases, by the way: Jazz DAO is a Lisbon-based project built on the blockchain protocol NEAR. Their main task is to educate people on jazz and organize performances in the city. Voting on different matters is done on-chain and everything is public.

The European Union is also invested in deploying blockchain for a series of matters via the Sandbox project. Several institutions linked to the EU are using smart contracts to facilitate supply chain management, and decide on, fund, and send relief support to areas in need, for example. Although several governments and leaders — like the Finnish Communications Minister, Timo Harakka — have been asking for it, the EU hasn’t yet created a legal framework regarding DAOs.

The US Government Accountability Office (GAO) has also shown interest in experimenting with DAOs. However, GAO has some concerns regarding blockchain-based projects, arguing they can be prejudicial due to lack of regulation: “(…) blockchain-based financial applications can facilitate illicit activity, may reduce consumer and investor protections compared to traditional finance, and, in some cases, are subject to unclear and complex rules.” — voting, organizational structure, and ID management are some of the areas where GAO feels these organizations can be useful. You can read the full report on the subject here. The paper is a great read, as it sheds light on the benefits and downsides of DAOs.

One Token, One Vote

The most common form of decision-making in a DAO is token voting: The weight of your vote corresponds to the number of tokens you commit to a DAO. The obvious advantage of token voting is that anyone can be allowed to join such a DAO and their voting power will correspond to their “skin in the game”. While such a plutocratic design may be suitable for an investment fund, it is a very bad choice if governance participation and democracy is the goal.

Vitalik Buterin sheds some light on the issue in this article. The subject has been heavily discussed and several new ideas for different voting systems are rising, but traditional coin voting is still the most common one. Buterin mentions proof of personhood, proof of participation, and quadratic voting as possible avenues to be implemented in DAOs.

Combining Decentralized Identity & Quadratic voting

Moving beyond pure token voting isn’t trivial. If egalitarian decision-making is the goal, then a democratic one-person-one-vote would be the most desirable solution. But there are very tricky problems to solve. First, we need to make sure that every person can only vote once: The governance system must be Sybil-resilient. Secondly, there has to be a way to define who is allowed to vote and who isn’t — it is not legitimate to let every human vote on matters that only affect a few. Such a system would likely fall prey to vote-buying or hostile takeover and in turn, give more power to those who can afford to buy votes. Whitelisting voters, on the other hand, is inevitably an act of centralization and undesirable for a DAO.

A middle ground between plutocracy and democracy would be quadratic voting: every human gets a vote which is weighted by the square root of tokens they commit to the vote. Therefore, if you want to double your voting power, you’d need to commit 4x the number of tokens. The advantages of quadratic voting are that it shifts power from capital to personhood but it still requires voters to have “skin in the game” (be affected by decisions). It is important to note, however, that quadratic voting can only work with Sybil-resilience — otherwise, a whale token holder could split their capital into many accounts to gain more voting power.

Enter Personhood Verification

One of the most common Sybil resistance systems is identity verification. However, there are several issues regarding the latter, the first being the fact that this verification usually involves third-party organizations or nation-states, centralizing the process — which isn’t favorable in the case of Web3 governance as one of its core values is decentralization.

One of the established DAOs using quadratic voting is gitcoin which focuses on funding common good open source software and uses gitcoin passport for Sybil-resilience: an aggregator of various profiles which need some effort to maintain: Twitter, Facebook, GitHub, BrightId, and others. Encointer is an even more decentralized protocol for Sybil-resilience based on in-person mutual attestation which doesn’t rely on identity verification at all. Combining quadratic voting with a Sybil-resistance logic might be one way to establish a more democratic voting system in DAOs.

Private Voting

However, we would still be struggling with the issue of privacy — or lack thereof. Whether or not you use token-voting or quadratic voting, your vote is linkable to a pseudonym (your voting wallet address) and therefore your voting behavior may sooner or later be associated with your identity.

Why is privacy a paramount aspect in the act of voting and decision-making?

If voting is not private, people tend to vote how they think others expect them to. That leads to very undesirable behavior of conformity, obedience and submission. In contrast, what I’d like to see in our ecosystem is: creativity, exploration and dissent.

Alain Brenzikofer | Integritee’s CTO in Private Voting on Referenda

There are more problems with public voting: If you can prove to another party how you voted without any doubt (if your voting system isn’t receipt-free), that opens the door to various forms of coercion and vote-buying.

Unfortunately, Sybil-resilience protocols often expose even more privacy risks. But that doesn’t have to be the case.

(…) Solving it [Sybil attacks], need not and should not force us to give up our privacy.

Bryan Ford | Decentralized/Distributed Systems (DEDIS) lab, Swiss Federal Institute of Technology

Various projects are already tackling the privacy issue on public blockchains, and Integritee offers a solution with unique properties. Integritee can bring the voting process of any DAO from a public and transparent L1 blockchain to a confidential L2 sidechain, where any form of voting can be performed privately and receipt-free. Privacy is protected by trusted execution environments which can be generically programmed to apply various voting schemes and Sybil-resilience systems. Thanks to Integritee’s public auditability features, the process is entirely transparent as anyone can verify that the correct code has been executed on a genuine TEE — check more info here.

Accountability vs Privacy

The challenges don’t end here, however. Accountability is important for a governance system as well. If a person or entity has a substantial voting weight in a DAO, be it through capital or delegation, it is in the interest of a DAO that they can be kept accountable for their voting behavior. Otherwise, they can manipulate the DAO without the risk of being exposed.

Fortunately, TEEs offer a solution here as well, because we don’t need to decide between absolute privacy or none at all. With Integritee, a DAO could be designed such that voters with a weight above a specified threshold are exposed publicly (or to other voters only). Other privacy technologies, like cryptographic zero-knowledge proofs — which reveal nothing but the fact that a certain statement is true — don’t offer this flexibility.

There will probably never be one preferred voting system that pleases everyone, but that doesn’t mean we shouldn’t keep working on building a fairer system that harnesses the benefits of different structures and helps balance the scale.

You Might Also Like

New image
Project UpdateNovember 24, 2023

Bear With Us: Blockchain Technology is Still Relevant, Even when Crypto Declines

New image
Project UpdateNovember 21, 2023

Series 2 – The Integritee Network | Episode 4 – Integritee Sidechains

New image
Project UpdateNovember 14, 2023

The Imperative for Privacy in Blockchain: TEEs & Privacy-Preserving Software

New image
Project UpdateNovember 09, 2023

Series 2 – The Integritee Network | Episode 3 – Integritee Technology

New image
Project UpdateNovember 06, 2023

Monthly Wrap-Up October 2023: Joining an Accelerator Program, Launching the New Website, Educational Content & More!

New image
Project UpdateOctober 27, 2023

Series 2 – The Integritee Network | Episode 2 – Integritee Architecture & Components

New image
Project UpdateOctober 25, 2023

How Blockchain is Benefiting Numerous Industries: From Sustainability to Brand Quality Control

New image
Project UpdateOctober 17, 2023

KYC in Web3: How DiD is Saving the Day for Projects & Companies

New image
Project UpdateOctober 12, 2023

Series 2 – The Integritee Network | Episode 1 – Introducing Integritee

New image
Project UpdateOctober 06, 2023

Monthly Wrap-Up September 2023: Winning an Award, Talking at Sub0, Partnering with OVH & More!

New image
Project UpdateSeptember 29, 2023

Series 1 – All you need to know about TEEs | Episode 6 – TEE Limitations

New image
Project UpdateSeptember 27, 2023

OVH Releases Whitepaper on How Integritee Is Re-Inventing Blockchain Security & Confidentiality Using Intel SGX Technology & OVHcloud

New image
Project UpdateSeptember 14, 2023

Series 1 – All you need to know about TEEs | Episode 5 – TEE Principles & Threat Models

New image
Project UpdateSeptember 04, 2023

Monthly Wrap-Up August 2023: Launching the Attesteer, Encointer’s PoP Badge & More

New image
Project UpdateSeptember 01, 2023

Series 1 – All you need to know about TEEs | Episode 4 – TEE Application Development

New image
Project UpdateAugust 30, 2023

Launching Integritee’s Attesteer

New image
Industry InsightsAugust 17, 2023

Series 1 – All you need to know about TEEs | Episode 3 – TEE Technologies

New image
Project UpdateAugust 08, 2023

Monthly Wrap-Up July 2023: Video Releases, Tech Updates & More

New image
Industry InsightsAugust 03, 2023

Series 1 – All you need to know about TEEs | Episode 2 – TEE Use Cases

New image
Project UpdateJuly 06, 2023

Monthly Wrap-Up June 2023: Polkadot Decoded, New Add-Ons and More

New image
Project UpdateJune 20, 2023

Integritee’s Teeracle Available on the Securitee Platform as an Add-On

New image
Project UpdateJune 06, 2023

Monthly Wrap-Up May 2023: Governance Platform Launch, New Environments and More

New image
NewsMay 09, 2023

Integritee Launches New Governance Platform with Polkassembly

New image
Project UpdateMay 04, 2023

Monthly Wrap-Up April 2023: Tech Upgrades, Partnerships & Upcoming News

New image
Project UpdateApril 06, 2023

Monthly Wrap-Up March 2023: Product Releases, a Privacy Sidechain & More

New image
Project UpdateApril 04, 2023

Securitee & enclaive Team Up to Offer Ready-To-Use TEE-Secured Solutions

New image
Project UpdateMarch 30, 2023

Securitee Launches Confidential Computing Platform to Protect Data in Use

New image
Project UpdateMarch 23, 2023

Introducing Integritee’s Teeracle: A Framework to Build TEE-Based Oracles

New image
Project UpdateMarch 21, 2023

A Privacy Sidechain for All Polkadot & Kusama Chains

New image
Project UpdateMarch 06, 2023

Monthly Wrap-Up February 2023: Launching Roadmap, Partnerships and More!

New image
NewsMarch 03, 2023

SDK v0.11.0: Increased Performance and Faster Processes

New image
NewsFebruary 21, 2023

OLI Systems Develops Innovative Energy Market Place by Building on Integritee

New image
Project UpdateFebruary 09, 2023

Integritee Network: Roadmap 2023

New image
Project UpdateFebruary 06, 2023

Monthly Wrap-Up January 2023: Slot Swap, Davos Touchdown and Much More

New image
Project UpdateJanuary 03, 2023

Community Updates: Discord, Twitter Raids & More

New image
Project UpdateJanuary 03, 2023

2022 at Integritee: Winning Parachains, Hosting Events, Integrating with Projects & Much More

New image
Project UpdateDecember 01, 2022

Monthly Wrap-Up November 2022: Lisbon Happenings, Bifrost Integration & More

New image
Project UpdateNovember 16, 2022

XCM Integration of Integritee and Bifrost Completed

New image
Project UpdateNovember 14, 2022

Integritee Welcomes Sergei Medvedev as New Advisory Board Member

New image
Project UpdateNovember 10, 2022

Monthly Wrap-Up October 2022: Travels, Interviews, Tech Updates & More

New image
Project UpdateOctober 06, 2022

Monthly Wrap-Up September 2022: Integritee SDK Release, Token2049 & More

New image
Project UpdateSeptember 20, 2022

Integritee & Securitee: Connecting the Dots

New image
Project UpdateSeptember 08, 2022

Integritee’s SDK: A New Era of Web3 Application Building

New image
Project UpdateSeptember 05, 2022

Monthly Wrap-Up August 2022

New image
Project UpdateAugust 30, 2022

Integritee Sidechain Performance Benchmark

New image
Project UpdateAugust 24, 2022

Integritee & Crust Team Up for Publicly Verifiable Decentralized Content Storage

New image
Project UpdateAugust 23, 2022

Integritee’s Polkadot Crowdloan

New image
Project UpdateAugust 03, 2022

Monthly Wrap-Up July 2022: Winning a Slot on Polkadot, Integrating with Karura & Much More

New image
Industry InsightsJuly 27, 2022

From Web 2.0 to Web3: A Step Forward

New image
Project UpdateJuly 18, 2022

Polkadot: The Next Step in Integritee’s Growth and Development

New image
Project UpdateJuly 13, 2022

Integritee Rewards Structure: Early Birds, Loyal Followers, Family, Friends, and More!

New image
Project UpdateJuly 11, 2022

The Integritee Polkadot Crowdloan Campaign Starts Today!

New image
Industry InsightsJuly 07, 2022

XCM Integration: What Is It and How Does It Work?

New image
Project UpdateJuly 05, 2022

Monthly Wrap-Up June 2022: Kraken listing, Talking at Polkadot Decoded & More!

New image
Project UpdateJuly 01, 2022

XCM integration of Integritee & Moonriver Completed

New image
Industry InsightsJune 20, 2022

Here’s What You Need to Know About XCM Integration on Polkadot

New image
Project UpdateJune 09, 2022

Integritee Completes 2 Key Milestones Towards Decentralization

New image
Project UpdateJune 03, 2022

Monthly Wrap-Up May 2022: Decentralization, International Events, Virtual Worlds & Much More

New image
Project UpdateMay 26, 2022

The Complete Guide to TEER Tokens

New image
Industry InsightsMay 16, 2022

How Integritee combines the benefits of Web2 and Web3 technologies

New image
Project UpdateMay 11, 2022

Sidechain 101: What are sidechains and why do we need them on Polkadot?

New image
Project UpdateMay 03, 2022

Monthly Wrap-Up April 2022: Networking, Technical Updates and Business Growth

New image
Project UpdateApril 07, 2022

Monthly Wrap-Up March 2022: Migrating to Kusama & Building Our Community

New image
Project UpdateApril 05, 2022

Update On Integritee Parachain Migration

New image
Project UpdateApril 01, 2022

What Should Integritee Present at Polkadot Decoded 2022? You Decide.

New image
Project UpdateMarch 22, 2022

TEE Time with Integritee

New image
Project UpdateMarch 17, 2022

A Healthier Approach to Wearables

New image
Industry InsightsMarch 08, 2022

Event Series: Learn How Integritee Is Taking Gaming to the Next Level With Ajuna

New image
Project UpdateMarch 02, 2022

Monthly Wrap-Up February 2022: A New Listing, Sidechains & Other Updates

New image
Industry InsightsFebruary 23, 2022

TEE 101: How Intel SGX works and why we use it at Integritee

New image
Project UpdateFebruary 17, 2022

After the Crowdloan: What’s Happening Next

New image
Project UpdateFebruary 10, 2022

Integritee Achieves Feature-Complete Sidechains

New image
Project UpdateFebruary 02, 2022

Enterprise-Focused Securitee Expands Integritee’s Ecosystem

New image
Project UpdateJanuary 18, 2022

Kusama Parachain Bid – And the Slot Goes to   Integritee!

New image
Project UpdateDecember 31, 2021

Integritee Year in Review 2021: Milestones Reached, Partnerships Forged

New image
Project UpdateDecember 23, 2021

Integritee Launches its First Web3 Oracle

New image
Project UpdateDecember 15, 2021

Introducing the Integritee Ambassador Program

New image
Project UpdateNovember 24, 2021

The Integritee Mainnet is Live!

New image
Project UpdateNovember 22, 2021

All Systems Go: Mainnet, Token Sale and TEER Giveaway!

New image
Project UpdateNovember 01, 2021

How Decentralized Networks Can Cure the Privacy Pandemic

New image
Project UpdateOctober 22, 2021

Integritee and Fractal Team Up for Fair Data Exchange

New image
Project UpdateOctober 18, 2021

Integritee to Collaborate with KILT Protocol for SocialKYC Authentication

New image
Project UpdateOctober 15, 2021

Integritee Partners with Decentralized Gaming Platform Ajuna

New image
Industry InsightsOctober 14, 2021

Confidential Computing Will Secure Our Secrets in Web3

New image
Project UpdateSeptember 17, 2021

The How, Why and What of the Kusama Crowdlending

Lines