Governance

A Decentralized Autonomous Organization (DAO) is an organization that operates on blockchain technology and uses smart contracts to enforce rules and decisions transparently and automatically. DAOs are often used for managing funds, making collective decisions, and achieving shared goals without the need for a central authority.

What is Governance in a DAO?

Governance refers to the process and mechanisms by which decisions are made and executed within the DAO. It is a key component of how DAOs operate, as it replaces traditional management structures. Here's how governance typically works:

Proposal System:

• Any member can create a proposal to suggest an action or change (e.g., funding a project, changing a rule, or hiring a contributor).

• Proposals are usually written clearly and submitted to the DAO’s governance platform (e.g., Snapshot).

Voting:

• Members vote on proposals using their voting power.

• Votes can be weighted based on token holdings or other criteria, such as reputation within the DAO. At VELA DAO, each member’s vote weights one.

Consensus Mechanisms:

• Different DAOs use different thresholds for decision-making, such as majority voting, quorum requirements, or delegated voting. At VELA DAO the quorum is 60% of active voting members. E.g. the DAO might have 20 members, but if only 7 are active voting members, then the quorum to pass a proposal is 4 votes (4 members voting).

Transparency:

• All governance decisions and votes are recorded on the blockchain, ensuring they are tamper-proof and viewable by anyone. You can check our proposals on Snapshot, here.