Original article: "DAO Tools and DAO Governance | Comparative Analysis of DAOLens, Aragon, and Tally"
Author: Jialin
This research report focuses on the relationship between DAO tools and DAO governance, specifically involving:
On-chain/off-chain governance, and comparison of governance models Introduction to DAO Tools Selection of DAO Tools Future evolution of DAO Tools
PART 1. About DAO Governance 1.1. On-chain Governance
On-chain governance refers to the decentralized governance process carried out in a blockchain network. It involves a way for participants in the network to reach consensus on issues such as protocol parameters, software upgrades, and resource allocation. The goal of on-chain governance is to achieve a fair, transparent network that is not controlled by a single entity. On-chain governance is generally achieved through the Governor governance contract.
The Governor smart contract is a commonly used open source governance contract that allows token holders to control the DAO using voting based entirely on-chain. Smart contracts can be designed to automatically execute proposals based on the results of on-chain voting, eliminating the need for a trusted third party or core team to enact voting results. Proposals can do anything on-chain:
Send funds from the Treasury Update the parameters of the DeFi protocol Change the permissions of the child DAO Mint NFTs or modify the rules of the Governor itself
Decentralized protocols are in constant evolution from the moment they are publicly released. Typically, the initial team retains control of this evolution in the initial stages, but eventually delegates it to the community of stakeholders. This process of community decision-making is called on-chain governance, and it has become a core component of decentralized protocols, driving a variety of decisions such as parameter adjustments, smart contract upgrades, integration with other protocols, financial management, grants, etc.
1.2 Off-chain governance
Off-chain governance refers to the governance process that takes place outside the blockchain network. It usually involves community members, project teams, core developers, etc. discussing and reaching consensus on non-blockchain platforms.
The main features and advantages of off-chain governance include:
More flexibility: Off-chain governance is not restricted by blockchain technology and can flexibly discuss, negotiate and make decisions, facilitating manual intervention and rapid response. Diverse participants: The participation methods of off-chain governance are more diverse and can include different stakeholders such as community members, project teams, core developers, etc. Multi-channel communication: Off-chain governance may involve offline communication, forum discussions, discord, telegram and other communication methods, which helps to collect more opinions and suggestions.
However, off-chain governance also has some disadvantages:
Low transparency: The off-chain governance process may not be transparent enough, making it difficult to track and audit in real time. Easily affected by centralization: The decision-making process of off-chain governance is easily influenced by centralized entities such as project teams and core developers, which may lead to abuse of power and profit transfer. Governance decisions may not be executed according to proposals and consensus: The decision-making results of off-chain governance need to be implemented manually, and the execution process is less controllable and reliable, and is easily affected by human factors. 1.3. Comparison of governance models
Governance is not about the higher the degree of on-chain, the better. Governance is a means, not an end. DAO should choose the appropriate governance model based on actual conditions.
On-chain governance and off-chain governance each have their own advantages and disadvantages. On-chain governance is characterized by high transparency, automatic execution, and broad participation, but may face challenges such as low participation and insufficient incentives. Off-chain governance provides more flexibility and facilitates manual intervention and rapid response, but its decision-making process may not be transparent enough and may be susceptible to centralization.
In fact, many blockchain projects and decentralized applications adopt a combination of on-chain governance and off-chain governance to achieve more efficient, fair and sustainable governance. For example, some projects make core decisions on the chain, while leaving the specific implementation and detailed discussions to the off-chain environment. Such a hybrid governance model makes full use of the advantages of on-chain and off-chain governance, ensuring transparency and broad participation in the governance process while retaining a certain degree of flexibility and human intervention capabilities.
PART 2. Comprehensive DAO Tools Introduction 2.1
Tally (On-chain Governance)
2.1.1 Positioning: On-chain governance dashboard
Tally includes a voting dashboard, a proposal creation wizard, real-time research and analysis, and educational content. Users can see what is happening on Tally, then proxy voting rights, create or pass proposals to spend DAO funds, manage protocols, or upgrade smart contracts. All operations are done on-chain. The Tally team believes that governance should be like building Lego. In standard shapes and sizes, there are unlimited possibilities for construction.
2.1.2 Functions and features
Tally is a front-end to the Governor contract, a commonly used open source governance contract that allows token holders to control a DAO using fully on-chain voting. Token holders use Governor to make, pass, and execute proposals. Proposals can do anything on-chain: send funds from a treasury, update the parameters of a DeFi protocol, change the permissions of a child DAO, mint NFTs, or modify the rules of the Governor itself.
Special feature:
Tally API: Makes it easy to query on-chain data about the Governor DAO. List governors, on-chain proposals, and delegated accounts. Use the API to build notifications, mine voter data, or build governance into your game or application.
2.1.3 Compatibility and adaptability
Tally has good compatibility and supports DAO governance contracts on Ethereum, Polygon, Optimism, Arbitrum, Avalanche, BSC, Gnosis and various test networks.
Tally is more suitable for on-chain governance of mature business modules. You need to first deploy the governance contract using the OpenZeppelin governance contract module, and then import tally, which is not friendly to non-professional technical personnel.
2.1.4 Financing and adoption
Financing status: In March 2021, it received $1.5M in financing, led by lemniscap & 1kx. In August 2021, Tally announced a $6 million financing, led by Blockchain Capital and Placeholder. About 25% of the funds came from DAO organizations such as The LAO, MetaCartel Ventures, Fire Eyes DAO, and angel investors associated with DAO (including Bankless founder Ryan Sean Adams).
Tally has been adopted by many large projects, most of which are large projects with relatively mature businesses, including arbitrum, sudoswap, nouns, op, uniswap, gitcoin, ens, hop, fei, etc. In the past few months, the WEB3 30 selection initiated by Alchemy, after thousands of nominations and votes from web3 enthusiasts around the world, 2023 Web3 30 selection on DAO and DAO tools, Tally won the top three, namely: Guild, Snapshot and Tally.
2.2. Aragon (on-chain governance) 2.2.1 Positioning: One-stop on-chain DAO Tool
Launch on-chain DAO governance and plug-in DAO OS without coding.
2.2.2 Functions and features
Aragon App: A user-friendly application for launching on-chain DAO governance without coding. The app provides your community with a simple, easy-to-use on-chain homepage for creating proposals, voting, and onboarding new members.
Aragon OSx: Through lean design, our smart contracts lay the foundation for organizations we can’t imagine today. Plugins make it easy to customize your governance. Use our governance plugins to build a DAO, dApp, or anything you can imagine on the Aragon OSx protocol. Governance functions are plug-in-based, a one-stop DAO governance operating system!
1) Build and manage a DAO
Deploy and run custom DAOs programmatically directly in your dApp.
2) Customize your organization
Expand the functionality a DAO can perform using governance plugins (not yet available).
3) Evolution and adaptation
Our permissions management system grants and revokes permissions so your organization can grow with your needs.
2.2.3 Compatibility and adaptability
Aragon is an old project from the ICO era. There have been many changes in the intermediate product exploration and routes. Currently, the new version of the product (Aragon App and Aragon OSx) is only compatible with Ethereum, Polygon mainnet and Polygon/goerli testnet.
Also an on-chain governance tool, Aragon is a comprehensive and easy-to-use on-chain governance tool that is suitable for both novices and professionals.
2.2.4 Financing and adoption
Aragon conducted an ICO token sale in May 2017, raising 275,000 ETH (worth about $500 million at the current Ethereum price). Therefore, Aragon has always had ample funds and has the time and money to try various products and routes.
According to Aragon’s official website, it claims:
5,000 DAOs Created；
+300,000 Community Members；
+$6B In Aragon DAOs；
+$200M in Aragon Treasury……
However, the actual adoption of the new version of the system is relatively small, probably because it will not be launched until February or March 2023.
2.3. DAOlens (off-chain governance) 2.3.1 Positioning: One-stop off-chain DAO Tool
Founded in January 2022, it aims to simplify the operation process of DAO by helping enterprises with onboarding, contribution management, etc. B2B commercial company, Indian team.
Founded by Vikram Aditya and Apoorv Nandan in January 2022, DAOLens aims to simplify the operational process of DAOs by helping companies with onboarding, contribution management, and more.
2.3.2 Functions and features
DAO Manager is the product name of DAOLens, which has a complete off-chain governance infrastructure such as snapshot, bounty, proposal, events, library, space, etc. It can connect to discord, wallet, permission management, encrypted payment, etc.; it has token and nft gating, etc.
In order to attract as many users as possible in the initial stage, DAOs can ignore the existing functions of DAO Manager and design their own requirements and hand them over to DAOLens, who will customize and implement them in DAO Manager. The basic version of DAO Manager is free, and in the future, revenue will be generated through AI services and full solutions including consulting.
2.3.3 Compatibility and adaptability
Because DAOLens is an off-chain comprehensive governance tool and a relatively centralized system that can be connected to various governance gadgets, it has great flexibility and can support various on-chain tokens and NFTs for off-chain assisted governance. It is suitable for novices and professionals. Compared with on-chain comprehensive governance tools, it is simpler and more friendly, has strong applicability, and is suitable for various community organizations and non-chain governance DAO organizations.
2.3.4 Financing and adoption
Web3 startup DAOLens announced that it has completed a $5 million financing round, led by Nexus Venture Partners, Better Ventures, and iSeed II, with participation from Coinbase board member Gokul Rajaram, Polygon co-founder Sandeep Nailwal, Solana co-founder Raj Gokal, Animoca Brands vice president Simon Doherty, and Tribe Capital co-founder Arjun Sethi. The funds raised will be used for product development, talent introduction, and to promote the subsequent launch of its tool stack.
DAOLens is a B2B commercial company with strong business development capabilities. The DAOLens team will first take over almost all projects involving Indians and let them enter DAO Manager. Including the Polygon Foundation, which has already settled in Polygon DAO and will also support the projects invested by the foundation to settle in; Solona Foundation has also been negotiated.
The DAOLens team is also lobbying BanklessDAO (the core members of BanklessDAO are almost the same group of people as Polygon DAO).
Due to its late start, there are not many famous projects using it yet. However, DAOLens has a wide range of applications and its commercial prospects are promising.
2.4. Zora (on-chain governance) 2.4.1 Positioning: A one-stop on-chain governance tool serving Nouns DAO
Zora is a decentralized protocol that allows anyone to buy, sell, and create without permission. A range of tools have been created to make it easy to start building. Zora is a governance tool for Nouns DAOs, allowing users to create their own style of Nouns DAOs. Nouns-style DAOs have features such as distributed governance, composability and upgradability, and continuous financing.
2.4.2 Features and products
1) Zora Stack
Nouns Builder: Deploy custom DAOs in minutes Create: Easy to deploy contracts for NFT projects API: Retrieve NFT metadata and market data on any ERC-721 Zora V3: ZORA’s on-chain marketplace functionality ZDK: Development toolkit for interacting with ZORA’s API NFT Hooks: The easiest way to interact with ZORA’s API NFT Rendering: Tool to easily display NFT data
2) Modular architecture
ZORA V3 uses an architecture that allows the Zora DAO to deploy new market types and updated versions. Each deployed version of a market module is permissionless and can never be changed, but the DAO can deploy modules into Zora’s approval space. This helps developers choose the modules they use and easily use new versions without having to fully migrate (like we did from V2 to V3), and reduces the total gas that needs to be spent.
3) Create a DAO with Nouns style through Zora
Distribution Mechanism: Creating NFTs at consistent intervals allows communities to form at a healthy pace, rather than distributing governance through airdrops.
Composable and Upgradeable: All contracts can be upgraded individually, meaning that a DAO is not static but evolves over time.
Ongoing Funding: The DAO creates sustainable funding by continuously issuing new NFTs over time.
2.4.3 Compatibility and adaptability
Zora is currently only compatible with the Ethereum mainnet and the Goerli testnet. Zora is a governance tool serving Nouns DAO and has a narrow scope of application.
2.4.4 Financing and adoption
NFT trading market Zora has completed a $50 million financing with a valuation of $600 million, led by Haun Ventures. Zora founder Katie Haun was the first female general partner of a16z. Zora has previously conducted auctions including TikTok-related NFTs and Andy Warhol Art Foundation NFTs.
Since its launch, the Zora platform has gained a certain influence in the NFT field. Many artists, creators and collectors publish and trade NFTs on Zora.
Zora’s new no-code tool makes it easier to create DAOs funded by NFT auctions, following the model established by popular project Nouns. Making it easier for creators to use it without requiring engineers to fork and modify existing code enables nearly anyone to create an NFT-powered DAO for nearly any project. Purchasing an NFT lets each owner become a member of a DAO, or decentralized autonomous organization, essentially a tokenized community with a shared vault. Over time, Nouns has shifted its larger focus to advancing open source intellectual property, using its ample funding to put Nouns imagery in Bud Light commercials and independent films, for example, among other community-approved initiatives.
2.5 DAO Tools Summary
In this report, we analyze four major on-chain and off-chain governance tools: Tally, Aragon, DAOLens, and Zora. Each tool has its unique advantages and applicable scenarios. It is crucial to choose the right governance tool based on the needs of your organization or project.
Tally is suitable for those who need a mature on-chain governance tool that supports multiple blockchain networks, but it may not be friendly enough for non-professionals. Aragon is a comprehensive and easy-to-use on-chain governance tool that is highly customizable, but it still needs further promotion and application. DAOLens provides a rich off-chain governance infrastructure and integrates with a variety of tools, but there is currently no well-known DAO or community adoption. Zora is a governance tool serving Nouns DAO with an innovative governance model and strong upgradeability, but is limited by the Nouns DAO style and network support.
It is recommended that when selecting a governance tool, full consideration be given to the actual needs and goals of the project to ensure that the selected tool can bring the greatest value to the project.
PART 3. Selection of DAO Tools 3.1. DAO Tools for different types of DAOs
Adaptability
3.2. References of other DAO Tools to SeeDAO OS
1) Governance function plug-in (reference: aragon)
2) Governance Dashboard Visualization (Reference: tally)
3) Functional modules involving non-conventional users are hidden as much as possible to improve interaction friendliness (reference: DAOLens)
PART 4. Future prospects of DAO Tools
1) Large DAOs will choose to develop their own DAO Tools, while small DAOs will choose more general DAO Tools
As the DAO ecosystem develops, large DAOs will customize and develop governance tools based on their own needs to meet their specific business processes and governance models. In contrast, small DAOs will tend to use general DAO tools to reduce development costs and improve efficiency.
2) A variety of plug-in DAO Tools for specific applications will emerge in the market for all parties to integrate
In the future, there will be more plug-in DAO tools for specific applications to meet the needs of different types of DAOs. These plug-in tools will facilitate integration among all parties and enhance the overall flexibility and customizability of DAO Tool.
3) Large DAO Tool will integrate more external DAO Tool plug-ins
As the DAO ecosystem continues to expand, large-scale DAO tools will integrate more external plug-ins to provide richer functionality. Large-scale DAO tools will provide users with a more complete governance experience.
4) The proportion of on-chain governance will become higher and higher, and the hybrid governance model will become more and more popular. With the advancement of blockchain technology, the proportion of on-chain governance will gradually increase.
At the same time, the hybrid governance model, that is, a combination of on-chain and off-chain governance, will become the choice of more and more DAOs to improve the effectiveness and adaptability of governance.
5) The increase in on-chain governance data will drive the emergence of more DAO Tools that study and analyze on-chain data.
With the rapid growth of on-chain governance data, more DAO tools for on-chain data research and analysis will be spawned. These tools will help DAOs better understand the data in the governance process and provide strong support for decision-making.
6) The composability of on-chain DAO Tools will promote the integration of user identity and reputation in different projects, ecosystems, and organizations.
In the future, the composability of on-chain DAO tools will promote the unification of user identities and reputations across different projects, ecosystems, and organizations. This trend will drive the development of decentralized identity (DID), providing a more efficient, secure, and reliable way of identity authentication and management for the entire blockchain ecosystem.
Source: DAO Tools Frontier Research Group
Author: Jialin
Typesetting: Huizi
Auditor: SuanNai