Governance thresholds for minimum participation, approval threshold, and vote duration are levers that need to be adjusted for your DAO’s specific needs. There is no “one size fits all” approach. This guide outlines the concepts and main considerations as a starting point for you to experiment and iterate from.
Minimum participation, or quorum, is the minimum level of participation required for a vote to be valid. For example, in the case of wallet-based voting, imagine the quorum required 5% of the total voting power to participate. Say there’s a vote where 100% of people who participated voted “yes,” but only 2% of all wallets in the DAO voted. In this case, the vote would not be valid. The higher the quorum, the harder it is for votes to pass. In the case of token-weighted voting, quorum percentage refers to the percentage of the total supply of tokens that need to participate.
Note that this threshold has different implications if you have token-based (1 token = 1 vote) or wallet-based (1 wallet = 1 vote) voting. In token-based voting, you could have 10% of tokens voting, but this might be less than 10% of of the people (or wallets) in the community.
When setting quorum, you may want to consider:
The pass rate is the percentage of votes cast that need to be in favor for the proposal to be accepted.
The most typical pass rate to set is 50%, meaning a simple majority is needed when there is a yes/no vote. Or, if you want more community buy-in for votes to pass, a 2/3rd pass rate is a good level.
The voting period is how long the vote is active.
While there is no magic number for how long your vote should last, the most common period is 7 days. Anything between 3-14 days is typical.
The primary considerations for setting your voting period are:
Here are a few examples of active DAOs’ thresholds:
One of the best ways to start is to experiment with what works for your context. You can do this with low stakes decisions, starting with low thresholds, and moving them up if necessary. For example, Lido was founded in early 2021, and didn’t implement their 12-24 hour time lock voting period until over 16 months after their formation. Safe experimentation, even later in the DAO’s life, is essential.
While experimentation and iteration can be your best guide, you can also apply lessons from general cases:
The best way to set governance thresholds is to research what current DAOs are doing and compare that to your community’s needs. Small experiments and incremental changes can be good ways to ensure you’re testing the right thresholds without putting your DAO at risk.
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