Picture a future where organizations no longer operate under the control of individuals, but instead, decisions are made collectively by a community. This concept, once confined to the realm of science fiction, is now becoming a reality through decentralized autonomous organizations (DAOs).
DAOs are internet-based organizations powered by blockchain technology. They operate through smart contracts, which are self-executing codes that automate decision-making based on established rules. Ownership and voting rights are often tied to crypto tokens, allowing members to actively shape the trajectory of the DAO. This structure promotes transparency, as all transactions and decisions are permanently recorded on the blockchain and accessible for public scrutiny.
However, like any disruptive innovation, DAOs face challenges that raise the question of whether they can truly revolutionize governance or if they will remain an intriguing experiment. One significant challenge is the potential for large tokenholders, known as whales, to influence voting outcomes in their favor. These whales, due to their extensive holdings, can manipulate governance outcomes, undermining the collective decision-making process and compromising the fairness and legitimacy of the DAO. Research shows that the voting power in DAO governance systems is highly centralized, with only a few addresses having full control over most DAOs. Additionally, Sybil attacks, where individuals create multiple accounts to skew outcomes, further exacerbate the centralization issue in voting and erode trust in a DAO’s governance.
Another challenge lies in aligning financial incentives with community interests. While some participants may have collective interests and long-term goals in mind, investors may be driven solely by quick profits, disregarding a project’s sustainability and future. Balancing financial incentives and community interests becomes particularly challenging when tradable governance tokens play a vital role in DAO operations.
To address these challenges, AirDAO, a community-governed blockchain, aims to make decentralized finance (DeFi) more accessible, fair, and user-friendly. AirDAO operates on its own blockchain network called AMB-NET and offers a suite of products to simplify complex financial operations. These products include cross-chain bridging to Ethereum and BNB Smart Chain, a staking platform, a multichain network explorer, and FirepotSwap, a native decentralized exchange developed in partnership with Firepot Finance.
AirDAO has implemented solutions to foster a fairer and more inclusive decision-making process. They have partnered with Fractal ID, a provider of Web3 identity solutions, to link wallets to users through facial verification technology. This integration creates decentralized identifiers (DIDs) that verify identities without compromising user anonymity or disclosing personal information. Facial verification reduces the ability to create multiple accounts, ensures each vote comes from a unique participant, and promotes transparency and accountability. AirDAO’s governance token, called soulbound token (SBT), is issued based on the user’s facial recognition biometric data verified by Fractal ID.
Furthermore, AirDAO implements impact-based governance, where users are rewarded with SBTs based on their contributions to the platform. These contributions can include providing liquidity or participating in governance discussions. SBTs determine an individual’s voting power, giving a stronger voice to those who actively contribute to the project’s success.
AirDAO recognizes that its success relies on the contributions of a diverse community. Whether users validate transactions, contribute their skills, or advocate for AirDAO as a Governor or Ambassador, their efforts are rewarded with governance SBTs that reflect their contributions to the ecosystem.
The Governance Working Group (GWG) of AirDAO, consisting of around 30 community members with expertise in various fields, underscores the platform’s commitment to community governance. AirDAO’s vision is to achieve complete decentralization and become a fully community-governed project that fosters collective decision-making within the DeFi space. If successful, AirDAO could pave the way for a more equitable and trustworthy future for DAOs and the wider DeFi ecosystem.
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