The Philosophy of Derify DAO
“A decentralized autonomous organization (DAO) is an entity with no central leadership. Decisions get made from the bottom-up, governed by a community organized around a specific set of rules enforced on a blockchain. DAOs are internet-native organizations collectively owned and managed by their members”. When you type in Google and search what DAO is, you may find a definition as above.
As blockchain development and Web 3.0 has exploded, thousands of projects came out and faded away. Many of the projects use the word “DAO” as their governance principles, which tells the community how decentralized, transparent and trustworthy they are. However, as time passed, people realized that the term “Decentralization” seems like a Utopia dream. Few riches own the majority of the tokens in most of the projects or own the majority of the hash power in the public chain as validators. Even though many projects follow the procedure of DAO and give proposals for the community to vote on, few powerful riches are the ones who determine the final “Yes” or “No”.
Recall the recent incident of serial liquidation caused by the fall of Luna and Three Arrow. Many projects gave out proposals regarding their liquidations and withdrawals that cannot represent the will of the majority. Most of DeFi users were disappointed with the fact that they had no cards to bargain with the riches. In my opinion, the most important element in DAO is “Decentralized”. If DAO(s) cannot represent the benefits of the majority, it is simply the autocracy wearing the mask of democracy.
Derify Lab has spent a lot of time discussing internally regarding the governance philosophy of our DAO. After comprehensive market research and deep thinking, we decide to leverage the power of the community majorities. As you are aware that staking DRF can earn you eDRF on a 1:1 ratio on a daily basis. This cannot change the dilemma many projects face that minorities still own the majority of the tokens (the majority of the votes). It is a hard-truth that DAO cannot solve the 80–20 phenomenon, 20% of the people having 80% of the wealth. However, we passed Proposal 001 that staked 2 million DRF to produce eDRF. Derify Lab will give away those newly produced eDRF to all community members who wish to participate in our governance but are constrained with financial budget.
Give a quick example, if many voting members who can get 10,000 eDRF afterwards, they can vote on the opposite than few riches do. People can combine their wills and strengths that guide Derify protocols to a more decentralized direction. I would not say this can 100% solve the issue of whale dominance, but I’m sure that it will definitely change the situation to a certain extent. Derify Lab wishes to fulfill our promise since Day 1 that the protocol will eventually be managed, governed and owned by the community.
We’re still at the early stage, but we understand that every Derifier’s voice matters. You are encouraged to discuss the governance philosophy or ideas in our Discord channels. For those early DAO participants, We thank you for your support, time and wisdom. We’ll reward your contributions as our protocol gets matured and well-developed.
Together, we build a better DeFi world.
Important Links & Docs:
Audit Report: https://www.certik.com/projects/derify-protocol
Testnet Website: https://derify.exchange/