DAO is the final form of DeFi? Miss DeFi, don’t miss DAO again

After several of the largest DeFi agreements announced that they would make huge changes, Dragonfly Capital researcher Ashwin Ramachandran and investor Haseeb Qureshi began to express their deep expectations for the Decentralized Autonomous Organization (DAO).


DAO is a decentralized community controlled by algorithms. Usually, the person with the most tokens becomes the controller and can determine how their community operates.

Last week, some token holders from the DeFi protocol Yearn Finance and Aave implemented huge changes, giving users more control over the protocol. Dragonfly, a venture capital firm that has invested in DeFi projects such as Composite, Maker and Opyn, believes that despite the call for decentralization, these agreements operate in a more similar way to centralized companies.

Ramachandran wrote that since the idea of ​​DAO came out in 2016, this encryption belief has begun to promote how these self-organized communities will “revolutionize governance” and make “governance fundamentally transparent, which is different from traditional closed-door companies.” . DAO will “eliminate the need for companies, and DAO governance will go beyond the outdated forms of traditional listed company governance.”

Compound used its COMP token to initiate community governance, which transfers protocol management rights to users. Recently, Synthetic and yearn.finance have done similar things. These tokens have accumulated value and soared rapidly; their rapid rise has brought DeFi billions of dollars in revenue.

Ramachandran and Qureshi say this is not particularly revolutionary. When transferring control to its users, the DeFi protocol is similar to “most western countries” and “most listed companies.” This is no different from asking the board to decide how the company operates.

The main difference is that some management is automated through code. They wrote:

“Blockchain improves the efficiency and coordination of these forms of governance, but blockchain did not invent them.”

The two of them came up with their own opinions. They wrote:

“Perhaps the real key is the centralized governance structure developed over thousands of years. Is this actually the best way to govern an organization?”

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