Decentralized Autonomous Organizations (DAOs): Modeling and Analysis of Voting Decentralization Performance

Abstract

The development of blockchain technology and the emergence of Web3 have given rise to a new paradigm known as Decentralized Autonomous Organizations (DAOs), online communities jointly owned and managed by members working for the same interests. Voting is the primary decision-making method within DAOs aligning with the decentralization philosophy. However, existing DAO voting mechanisms often exhibit a strong tendency toward centralized control, contradicting DAOs’ pursuit of decentralization. In the absence of a decentralization standard, we define the decentralization coefficient as a novel metric to evaluate the overall decentralization performance of DAO voting mechanisms quantitatively by establishing the first stochastic process model for the DAO voting process. By analyzing and simulating four typical voting mechanisms, we uncover that quorum and voting power thresholds, often thought to improve voting performance, may negatively impact decentralization. Additionally, the study analyzes the impact of three main factors, including voting power distribution, participation rate, and voting process, on decentralization. The findings highlight that decentralization is shaped by the interplay between these factors, rather than merely by adopting specific voting rules. This study provides a quantitative benchmark for future research and offers practical guidance for DAO designers, emphasizing the need to prioritize inclusive participation over additional voting conditions.