A DAO proposal is an idea that a community or DAO member wants the DAO to consider. It’s typically a document describing an idea, how it will be implemented, and the funding requirements for executing the idea.
Proposals should be fully-formed ideas that have exited the brainstorming phase and are ready for the community to evaluate. An example of a proposal would be “Create a Treasury management core team” or “Develop a new onboarding process for new members.” Proposals typically have a funding request, meaning they’re pulling funds from the DAO’s treasury. However, some DAOs have categories for proposals that don’t include a funding ask. These non-funded proposals might include changes to things such as the governance structure, the DeFi protocol the DAO is maintaining, or elements of the DAO that don’t require funding a team to implement.
The DAO likely has a forum where they post proposals up for discussion before moving to an official vote on a voting platform. This forum is usually held on Discourse, where contributors need to create an account to be able to comment and vote on proposals. Think of the forum as the town square where ideas are discussed and debated, and the on-chain voting platform as the poll box where contributors cast their final, official vote.
You can look to other DAOs’ forums for inspiration, which we’ve linked below. You can typically find the forum the DAO uses by searching the DAO’s name + “forum” in a search engine. Not all DAOs have forums, especially early ones. But in most mature DAOs, you’ll find a forum where discussions occur.
The DAO should decide who can post proposals. Some DAOs allow anyone in the wider community to post a proposal, but some DAOs restrict proposal-posting to solely DAO members via a service like Guild.xyz.
One reason to keep proposal forums open for non-members is because the DAO may want individuals outside the community to propose partnerships or collaborations.
A proposal process includes the steps required to take a proposal from ideation to execution. It answers the questions: how does an idea go through the process of gaining support, gathering resources, finding a team, and eventually passing?
The process you choose ultimately depends on what works for you and your community. The final process will likely look like a series of steps. “Step 1, write out the idea, Step 2, share it in Discord with relevant community members, etc.” We’ll describe examples of proposal processes below.
You may want to have a living document in your documentation hub that outlines the proposal process. You will likely want to tweak your process as you learn more about what works for your DAO, so consider doing a quarterly retrospective with core DAO members to discuss how the process is going and what needs to be changed.
If your DAO is trying to move quickly, be careful to not get bogged down in bureaucracy. More steps could make it difficult for proposals to surface, and you could see innovation and experimentation stalling in your DAO. But, if you’re a large, established DAO that controls a huge treasury, it might be best to have a slower, safeguard-heavy proposal process to prevent malicious proposals. It’s important to find the right balance of speed and safeguards for your DAO.
Every DAO uses a slightly different proposal process. Because DeFi DAOs need to protect a large treasury of assets, as well as many users’ personal assets, they often have more well defined proposal processes and are great examples to learn from.
Let’s take a look:
Compound defines their proposals as “executable code, not suggestions for a team or foundation to implement.” This keeps the forum clean and the messy ideation and brainstorming to more informal channels. You may want to use this process if your DAO’s purpose is to maintain a protocol or develop a product.
Yearn defines multiple types of proposals, including improvements made directly to the protocol, delegated decision-making changes, and general signals of the community’s feelings or intent on an issue. These categories help narrow the pool of what should be posted and keeps the forum clean and organized. You may want to use this process if you want to have a pulse on the community’s sentiment and ideas on top of the more cut-and-dry protocol changes.
Aave has multiple rounds of proposal creation to ensure every change receives enough scrutiny and analysis. The first stage is the ARC (Aave Request for Comments), which is when the proposal is open to comments from the community. Next, the ARC goes to a preliminary vote, and then if it passes it becomes an AIP (Aave Improvement Proposal) which is automatically implemented when passed. You may want to use this process if you’re handling a large treasury or an already-functioning product that you can’t afford to make drastic, spur-of-the-moment changes to.
Maybe you don’t have a huge treasury to manage or a bunch of stakeholders to account for. Where do you start?
Here, we’ve outlined a simple Started Proposal Process that nearly any DAO could use.
For a great working example similar to this, check out BanklessDAO’s proposal process.
1. Flesh out the idea: Is your idea right for the DAO? The only way to find out is to talk to people! Share the idea in channels like Discord. Then, use the feedback you receive to improve your proposal.
2. Gather your team: If you need a team to execute the ideas in your proposal, start reaching out to people to see if they’d like to come on board. Oftentimes, the composition of a team can make or break the success of a proposal.
3. Post the proposal on a forum for feedback: Now, you’ll want to hear from the broader community. Post your proposal and see which comments come in. You might want to include a sentiment-gathering poll at the end, too.
4. Post a second draft of the proposal if major edits are required: If there are many requests for edits, you may want to post another draft at this time. This will assure the community that their feedback has been accounted for, even if you don’t take use every recommendation or request.
5. Post the proposal for an official vote on your DAO’s voting platform: If the proposal passes, it will send the funds into the wallet address you specified, so make sure this is the final draft. You won’t be able to revert this action.
A proposal structure is what needs to be included in the body of each proposal to be considered and voted on by the DAO. This ensures all proposals provide the information necessary for the community to make a decision.
A proposal structure looks like a fill-in-the-blank document. It includes things like Title, Summary, Team, and Financial implications.
Your DAO may already have many stakeholders involved who will want a say in how proposals are structured. So, how do you propose a proposal structure?
First, you may want to analyze the proposal structures of the DAOs that are similar to yours. Read a few proposals to see what works and what doesn’t.
Then, based on your research, develop a first proposal structure to try out. Announce to the DAO members that you’ll be using that structure for a few proposals and that you would like feedback on it.
A few questions to ask yourself: Does it feel natural while writing it? What questions do commenters have that could be answered in another category of the proposal structure? Which sections of the proposals, if any, did DAO members write the most in, and which had the least? This can help you determine which sections DAO members find most useful, which need to be added, and which should be cut.
It will be an iterative process. But, it’s important to document your work along the way. Consider building a living document on your DAO’s documentation hub, like Notion or Google Drive. Then, update as needed.
Now that you have a structure, how do you ensure everyone follows it?
The best way to standardize your structure across the DAO is to provide a copy-paste template in an easy-to-find place, such as a pinned Discourse post or a prominent Notion page. You should also encourage all the core members to use these templates. If new members notice that all the proposals follow the same format, they are likely to follow suit, too.
If you notice people are deviating from the structure, ask them why they’re choosing to leave out or add certain parts. Take this as a piece of research: it may be time to update your structure.
You may also want to assign someone to be in charge of updating the proposal document, otherwise it may be left unattended to. A core member who is deeply involved in governance could make a habit of updating the document quarterly to reflect any changes.
Index Coop makes investment products for crypto. They emphasize that each proposal must aim to solve a problem, which is why “motivation” is included as a section. Read more here.
You may want to use this format if you want to ensure every proposal has a clear motivation and rationale prior to posting. This encourages complete, well-researched, ready-to-implement proposals. The test cases also provide a unique way for voters to make their decision, but may slow down the proposal creation process if proposers need to gather cases first.
BanklessDAO incubates a variety of crypto projects, all of which must be mission and brand-aligned to be funded. This is why they place a heavy emphasis on mission alignment and brand usage in their structure. Read more here.
You may want to use this format if you have a large brand or value system that your projects need to align with. The Success Metrics also help reign in highly distributed teams and keep them on track.
ENS (Ethereum Name Service) DAO uses a much simpler proposal structure, with the addition of a timeline showing when the work will be completed. Read more here.
You may want to use this format if you want the proposals to have a clear timeline before members vote on them. The timeline can help keep teams accountable with clear deliverables.
You’ll notice that proposal structures vary across DAOs. This is just one idea for a simple proposal structure for nearly any type of DAO.
For a great resource on proposal structure, listen to this episode of On The Other Side.
Title: The primary focus of the proposal
Short description: In one or two sentences, explain the purpose of this proposal and what it seeks to achieve. Include the monetary ask here, too.
Scope/longer description: This is the meat of the proposal, where you’ll describe what you’re planning to do. Expand on the monetary ask, including a breakdown of what you’ll do with the funds. Use this space to provide research, background information, and external links, too.
If this is the final draft of your proposal that is going up on your DAO’s official voting platform, you’ll likely want to link to the original forum post or some of the key discussions had around the topic for context.
Technical Specification (if necessary): If your proposal includes changes to code or any technical details that community members will want to see, include those here.
Metrics or Key Performance Indicators: Some contributors will want to see the numbers. Add those in here.
Team description: If there’s a team behind this proposal, list who they are and their relevant experience, too.
Next steps: What happens next? Write a few bullet points of what the group plans to accomplish next. If your DAO requires a sentiment-gathering poll, add that here.
You may have to test some variations of the proposal creation process as you go. Don’t be afraid to test a few different versions of proposals as you go. After some trial and error, you’ll find a process that works for you and your DAO.
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