In a recent report, Chainalysis says that by analyzing the distribution of ten major DAOs’ governance tokens, it has discovered that across several major DAOs, less than 1% of all holders have 90% of voting power.
This has meaningful implications for DAO governance. For example, if just a small portion of the top 1% of holders worked together, they could theoretically outvote the remaining 99% on any decision.
Across several major DAOs, less than 1% of all holders have 90% of the voting power pic.twitter.com/ME6vTkMz7F— BitKE (@BitcoinKE) October 2, 2022
This concentration of decision-making power was evident with the Solana (SOL)-based lending DAO, Solend. The Solend team tried to take over a whale’s account and liquidate it themselves via over-the-counter (OTC) desks to avoid cascading liquidations across the DEX books.
The proposal to take over was passed with 1.1 million ‘yes’ votes against 30,000 ‘no’ votes, however, out of these total ‘yes’ votes, 1 million came from a single user holding large amounts of governance tokens. The vote was later overturned after a heavy lash back.
While all token holders can vote, the right to make a new proposal for the community and to pass it is not very easy for everyone, given the number of tokens required to do so.
85% of DAOs’ on-chain treasuries are stored in a single asset, and that asset is a stablecoin in only 23% of the DAOs. pic.twitter.com/1C9o0kCWfi— BitKE (@BitcoinKE) October 2, 2022
Based on 10 DAOs’ proposal requirements verticals, Chainalysis found that:
- A user must hold between 0.1% and 1% of the outstanding token supply to create a proposal
- Auser must hold between 1% and 4% to pass it
Using these ranges as lower and upper bounds, the researchers found that between one in 1,000 and one in 10,000 of these 10 DAOs’ holders have enough tokens to create a proposal. When it comes to single-handedly passing a proposal, between one in 10,000 and one in 30,000 holders have enough tokens to do so.
The report however finds that DAOs span the entire length of Web3. However, they are more popular within the following verticals (in order of popularity):
- Venture Capital
DeFi-related DAOs have a giant lead accounting for:
- 83% of all DAO treasury value
- 33% of all of the DAOs by count
In terms of origin of funds, only 17.9% of DAO treasury funds came from centralized services, while the remaining 82.1% originated from decentralized services. This suggests that most DAO contributors also engage with DeFi platforms and likely self-host their cryptocurrency.
Where DAO (Decentralized Autonomous Organization) contributions come from pic.twitter.com/eObzfJtWw0— BitKE (@BitcoinKE) October 2, 2022