A list of possible solutions to DAO voter apathy

In this article, we explore several possible solutions to tackle the problem of low voting participation.

Introduction

Decentralized autonomous organizations (DAOs) have become quite popular in the ever-evolving crypto landscape and are often touted as the future of decentralized governance. Notably, DAOs have continued to flourish despite the general downturn in the crypto market. For instance, over 2,850 DAOs began governance activity between May and October 2022 amid the crypto winter.

As the name suggests, a DAO is an organization with no centralized hierarchy or leadership, intended to operate in a bottom-up manner. The entity is collectively owned and managed by the community, which also contributes to the decision-making process.

Individuals who have a stake in the DAO, typically through the ownership of a token, can create and vote on proposals, which will in turn be enforced on the blockchain based on a specific set of rules.

However, despite the decentralized nature of these entities, it has become a well-known fact that several DAOs suffer from voter apathy – a large number of token holders but little participation during governance. For example, ApeCoin’s most recent proposal (as of press time) to implement a transparency act for ecosystem fund allocation saw participation from less than 1,000 $APE holders. Comparatively, there are over 100,000 holders of $APE, suggesting that less than 1% of possible voters took part in the voting process.

Without further ado, here are some tips to help you tackle the problem of low voter participation in your DAO.

1. Incentivize participation

I’ll have to warn you that incentivizing participation can become a double-edged sword because most members will abandon ship once the incentives stop. However, incentives have been used since the early days of DAO experimentation to encourage users to participate in the governance process. This could be in the form of yield farming or airdrops (financial incentives).

To keep things robust and manage the problem of accountability that incentivizing participation introduces, Sasha Ivanov, Founder of Waves, recommends a new model where voters are assessed against certain key performance indicators (KPIs). He said:

These can involve engagement and development metrics within the DAO, and a failure to meet these KPIs can result in that user’s voting power being reduced or removed entirely. Taking this approach would encourage all entities to make decisions that are in the broader interest of the community, not just themselves.

According to David Kemmerer, the co-founder and CEO of CoinLedger, “a DAO token is top on the list of ways to encourage DAO participants [because a] DAO project can, for instance, let the DAO token holders freely participate in the platform’s decision-making.” He argues that “DAOs with an aspect of financial incentives also attract more participants than those with none.”

2. Marketing

The fact that big traditional brands like Coca-Cola spend millions of dollars on marketing to retain old customers and acquire new ones should give you a hint of how important marketing is within your DAO. Talk more about your DAO events on social media, and send emails and newsletters if you have to.

Commenting on the need for marketing, Sudhir Khatwani, the Founder of The Money Mongers, explained that “the DAO creator must market their voting event” because users need to first know about the event before thinking of participation. He said:

DAO creators should promote their voting event through their social media channels. So more and more [people] will know about it.

3. Level the playing field

You’d have to agree that the current DAO landscape is tilted in favor of big players. In other words, the opinion and stance of a whale holder carry more weight than a median investor. Cryptopher Robin from Geode Finance perfectly describes the effect of this on voter participation. He tweeted:

People feel disenfranchised & disillusioned with the voting process. After all, what's the point of voting if you have 1 vote and another person next to you has 10,000 votes? Why propose anything if it can be shot down by a single voter? That's not democracy.

Corroborating Robin’s assertions, a June 2022 report from Chainalysis revealed that less than 1% of all holders have 90% of the voting power in the ten major DAOs. This means that a high concentration of decision-making power is in the hands of a selected few in many DAOs. Voter apathy will continue to exist unless this problem is tackled.

For Robin, one way to solve this is to “include percentage caps on token holders commanding large voting power.”

4. Gamify voting

Everyone loves games and gamifying the voting process can encourage contribution-based governance. This is very much similar to incentivizing members to participate. However, the primary idea here is to make the entire process fun. After all, there are hundreds of games that do not offer any rewards. Nevertheless, rewards are still a very important part of gamification.

Aavegotchi has risen to become one of the most active DAOs by gamifying the process of participating in the DAO. Voters receive XPs (Experience Points) for all Aavegotchi NFTs held in their wallet whenever a vote reaches quorum and the vote differential requirements are met. XP can then be used to upgrade the rarity traits of an Aavegotchi NFT.

5. Simplify the process - Vulgarize proposals, better UX and notification system

People are more likely to avoid things that they do not understand. Despite being a relatively tech-savvy person, I get confused by some DAO proposals. Now imagine how a total noob feels. Although most DAOs have done a great job by adding sections for “motivation” and “benefits” on proposals, more can be done to simplify the process.

Proposals should state how they benefit the DAO and the members of the community in simple terms. In addition to this more should go into creating a better UX and notification system. It would be nice if members receive push notifications days before and on the day of voting.