Our project is moving towards full decentralization. We need a way to let token holders vote on treasury spending. What are the common pitfalls of Web3 & Blockchain governance? We are worried about "whale" dominance and low voter participation. Should we consider quadratic voting or stay with simple token-weighted voting?
3 answers
Whale dominance is the silent killer of many promising DAOs. In late 2023, I saw several projects pivot toward "Optimistic Governance," where the core team proposes actions that automatically pass unless someone vetoes them. This helps with low participation. For a true Web3 & Blockchain spirit, quadratic voting is great because it makes each additional vote from the same person exponentially more expensive, giving smaller holders a louder voice. However, be careful as it is susceptible to "Sybil attacks" where one person creates multiple wallets to game the system.
Have you looked into soulbound tokens for voting power, which would ensure that only active contributors—rather than just wealthy speculators—get a say in the direction?
Use Tally or Snapshot for the actual voting. Don't build your own dashboard from scratch; these tools are already well-integrated and trusted by the community.
Andrew is right; using established tools like Snapshot allows for gasless voting, which significantly increases the participation rates among smaller token holders.
Justin, we have discussed soulbound tokens, but we’re worried it might limit the "liquidity" and growth of our ecosystem. If people can’t trade their voting power, they might be less inclined to invest in the project early on. We are trying to find a middle ground, perhaps a hybrid system where long-term stakers get a "multiplier" on their voting power. This rewards loyalty and skin in the game without completely locking people out of the market if they need to exit.