As DeFi and DeFi bluechips continue to expand, their staple aspect of utilizing a DAO (a decentralized autonomous organization) for governance over their protocols have come under scrutiny. Many DeFi protocols and projects, such as Yearn, have begun to see issues surrounding their governance protocols due to a number of issues.
In The Ether’s article DAO Stands for Dictator, a number of issues are explained surrounding Yearn’s governance protocol. To summarize, large holders of $YFI can significantly influence decisions on new proposals, free-riders may hold the $YFI token without actively participating in the governance protocol, and differences in preferences related to new proposals may not be heard due to the whales and powers at be.
As best described by The Ether in their article:
Yearn and a wide swath of “De”Fi “ projects have zero respect for their communities. DeFi teams, who are literally paid by their communities, make unilateral decisions on the largest matters without the community’s input. They act more dictatorial than even the most centralized corporations.
Noticing the issues at hand, a group of developers set out to create a DAO that would combat the existing problems within DeFi governance protocols.
In comes ElasticDAO (http://elasticdao.org)
This exciting and ambitious protocol aims to essentially become the DAO of DAOs by solving for the issues found prevalent in existing governance protocols by implementing a number of strategies outlined in 0xRafi’s thread on ElasticDAO here and ElasticDAO’s own publication here.
@ElasticDAO is a platform to manage decentralised organisations and make governance fairer. Projects will be able to launch their DAOs and governance tokens through the platform, and ElasticDAO itself is the first of them all, with $EGT as its governance token.
ElasticDAO’s solution to governance achieves three main goals. It is whale proof, it is free-rider proof, and it is very much a “skin in the game” approach where token holders are directly incentivised to participate and contribute to the project’s success.
Since 0xRafi’s thread, a number of new steps in ElasticDAO’s protocol have been implemented. This includes their addition of a liquidity pool on SushiSwap’s Onsen, multiple proposals put up for vote, and confirmation projects are exploring the opportunity of utilizing ElasticDAO.
Between the implementations mentions above, a solidified roadmap, incentivized governance, and a brilliant method for implementing fair governance, ElasticDAO is a project to look out for in the coming months as they continue to strengthen their community, and add additional projects to their DAO ecosystem.
To note, you can find EGT on SushiSwap here, and learn more via their communication channels on ElasticDAO.org.