Proposal tools

DAOs are member-owned and self-governing communities, often largely controlled by the organisation’s members without centralised direction. This means that the DAO governance process is quite different to other organisations and institutions like firms or states. Governance is coordinated using tokens that represent membership of the DAO and confer ownership and voting rights over its decision-making.

Propose and vote

DAOs generally engage in a two-stage ‘propose and vote’ decision-making process: (1) members openly discuss, develop, and formally submit proposals for new activities or changes to the DAO, and (2) members vote on proposals ‘on-chain’ whereby voting power is based on holdings of governance tokens.

The essence of a DAO can be difficult to pin down but proposing and voting tools would surely be on any list of essential components in the DAO infrastructure (or “technology stack”). Each DAO must develop processes for proposing and voting that are suited to its own community and its common purpose. Rules of governance are at the core of any DAO – one might go so far as to say that they define the DAO itself – along with the purpose or mission that it has been formed specifically to achieve. In fact, governance rules and voting procedures are often outlined in a founding DAO constitution. Clearly stating the initial governance protocols – comprising both decision-making rules and technology tools – is a prerequisite for a DAO to come into existence.

Often the terms of the DAO constitution, including decision-making procedures, is the very first proposal raised to be voted on and ratified by founding DAO members. Other times the decision-making procedures will be put up to individual votes early in the life of a DAO. This does not mean that the initial proposing or voting procedures or tools must be set in stone for the whole life of the DAO. Naturally, DAO members can raise proposals to change the decision-making process itself, and it’s often the case that things are iterated and experimentally evolve through time. We are still in an early discovery phase for best practices around DAO decision-making and new tools are constantly being developed and adopted by DAOs.

The DAO proposal process

So what exactly is a DAO proposal? What does a proposal process usually look like? What tools are available to facilitate this process?

In its simplest form, a proposal is just an idea that a DAO member wants the community to consider – but the idea should be well enough developed so that the community can seriously evaluate whether it should be implemented. A proposal should clearly detail the activities or changes to the DAO that are being sought as well as the funding required to achieve them. Typically, a proposal will include a funding request, but some categories of proposals don’t require funding a team to implement, such as a change to the DAO’s governance structure or the protocol it’s maintaining or product it’s offering.

Most DAOs will outline a formal proposal structure, often in a template document, to ensure that all proposals provide information to the community in a standardised and consistent format. This encourages quality, ready-to-implement proposals. Each DAO should develop its own proposal structure that’s fit for its particular purpose. While proposal structures do differ across DAOs, there are some sections that are common to many. It is a good idea to look at proposal templates from a variety of DAOs, and especially ones like yours, when thinking about what to include. This will necessarily be an iterative, trial-and-error process, as you discover what works for your community. A proposal template should be viewed as a living document that is updated as needed.

Common elements of a DAO proposal

Some common elements of a DAO proposal include:

• Title
• Preamble or background
• Overview (short description in a few sentences)
• Motivation (how it aligns with the DAO’s mission)
• Scope of work (longer description including what exactly will be done)
• Technical specifications (if applicable e.g. changes to code)
• Funding requirements or budget
• Success metrics or KPIs
• Team description
• Timeline and next steps

Communicating the process

It is also important to outline the proposal process for the DAO community – the steps required to take a proposal from its first idea through to its implementation. We have given a broad picture of this process as a two-step ‘propose and vote’ but there are likely other intermediate steps that are advisable. For example, before officially submitting a proposal, members might be encouraged to talk to each other and share ideas, then to form a team for further development of the idea (or for eventually carrying out the work), to submit multiple drafts of the proposal for feedback before it’s moved to an official vote, and so on. Much like with proposal structure documents, many DAOs maintain a living document outlining their recommended proposal development process, which is updated over time.

The proposal process should define who can submit proposals. Some DAOs restrict proposals to members of the DAO (using a tool like Guild that gates access to token holders) while others allow anyone to post proposals. Often there are different categories of proposals that might each have their own processes, such as direct changes to codebases (e.g. the DAOs code or that of a protocol or DeFi product), governance and decision-making procedures, spending on services or operations, to develop a new product, or to survey the community’s general sentiment and ideas about the DAO.

Simplicity versus security

An important question is how many steps and safeguards are placed in the proposal process. A simple process encourages adaptability and innovation but leaves the DAO relatively more open to malicious proposals designed to drain its treasury of funds without providing real benefit. Some DAOs have multiple rounds of proposals to ensure proper scrutiny and oversight before being put to a final binding vote. Ultimately, this all depends on what fits the purpose of the DAO and its community. For example, an established DeFi DAO with a huge treasury would likely opt for a different balance of speed and safeguards than a newly created Social DAO that’s yet to reach critical mass.

Proposal tools

To date, there are few DAO tools specifically for proposal generation or submission. DAO members tend to use the DAO’s communications tools for development and collaboration on proposals, such as Discord, Telegram or Discourse, and a DAO will usually maintain a website or forum where proposals can be posted for wider community consideration. It will then be up to a core member of the DAO (or the proposing member themselves) to move the proposal to an official vote, which is where specific DAO voting tools like Tally, Boardroom or Snapshot come into play. Nowadays, most DAOs have an official forum for submitting and deliberating on proposals, and an official on-chain voting platform for voting on proposals, which we turn to next.