Envision a future where organizations no longer operate under the control of individuals, but rather through the collective will of a community. Decisions are made collaboratively, with power distributed among members rather than concentrated in a central authority. This futuristic concept, once confined to the realms of science fiction, is now taking shape in the form of decentralized autonomous organizations (DAOs).
DAOs are internet-based organizations that harness the power of blockchain technology. They function through smart contracts, which are self-executing codes that automate decision-making based on predetermined rules. Ownership and voting rights are often tied to crypto tokens, giving members the ability to actively shape the trajectory of the DAO. This structure ensures transparency, as all transactions and decisions are permanently recorded on the blockchain for public scrutiny.
However, like any disruptive innovation, DAOs face their own set of challenges, raising 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. Due to their extensive holdings, whales can manipulate governance outcomes, undermining the collective decision-making process and compromising the fairness and legitimacy of the DAO. Research has shown that voting power in DAO governance systems is often unfair and highly centralized, with a small number of addresses having full control over most DAOs. For platforms like Compound, Fei, and Uniswap, the community delegate vote share is often as low as 10% or less.
The issue of centralization in the voting process is further exacerbated by Sybil attacks, where individuals create multiple accounts to skew outcomes. These attacks erode trust and hinder the legitimacy of a DAO’s governance. Additionally, while some participants in DAOs may be aligned with collective interests and long-term goals, investors may be driven solely by quick profits, disregarding a project’s sustainability and future. Aligning financial incentives with community interests becomes a challenge when tradeable governance tokens play a crucial role in DAO operations, particularly in optimizing a project’s growth potential over time.
To address these challenges, AirDAO, a community-governed blockchain platform, recognizes the importance of secure identity verification measures and a transparent governance system. AirDAO aims to make decentralized finance (DeFi) more accessible, fair, and user-friendly for everyone. Built on its own blockchain network, AMB-NET, AirDAO offers a suite of products to simplify complex financial operations. This suite includes 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. Through a partnership with Fractal ID, AirDAO links wallets to users using facial verification technology, creating decentralized identifiers (DIDs) that verify identities without compromising user anonymity. This reduces the ability to create multiple accounts, ensures each vote is from a unique participant, and promotes transparency and accountability. AirDAO’s governance soulbound token (SBT), AMB, is issued based on the user’s facial recognition biometric data verified by Fractal ID.
In addition, AirDAO implements impact-based governance, rewarding users with soulbound tokens (SBTs) based on their contributions to the platform, such as providing liquidity or participating in governance discussions. These SBTs determine an individual’s voting power, giving a stronger voice to those who actively contribute to the project’s success.
AirDAO understands that its success relies on the contributions of a diverse community. Whether users validate transactions, contribute their skills, or serve as Governors or Ambassadors, their efforts are recognized with governance SBTs that reflect their contributions to the ecosystem.
AirDAO’s Governance Working Group (GWG), consisting of around 30 community members with expertise in various fields, emphasizes the platform’s commitment to community governance. AirDAO envisions complete decentralization, aiming to become a fully community-governed project that fosters collective decision-making within the DeFi space. If successful, AirDAO has the potential to address key challenges in DAO governance and pave the way for a more equitable and trustworthy future for DAOs and the wider DeFi ecosystem.