DAO grant programs : governance approaches and decision-making

Abstract

This study investigates the governance and decision-making challenges in decentralised autonomous organisation (DAO) grant programs, focusing on selection methods for grant reviewers and the broader decision-making processes within DAO ecosystems. DAOs operate without traditional hierarchical structures, and their community-driven approach to grant allocation poses unique governance challenges, especially in terms of accountability, transparency, and effective fund distribution. This study explores how DAOs can adopt best practices from traditional governance systems such as the public, private, and cooperative sectors, while embracing innovative decentralised solutions to enhance grant program efficacy. The research draws on qualitative data from web-based questionnaires distributed to current and former DAO grant reviewers, advisors, and program managers, aiming to identify strategies that DAOs can leverage to refine their grant processes. Findings reveal that appointing grant reviewers provide stability in early stages, while elections enhance inclusivity in mature programs but may introduce popularity biases. A hybrid model combining both was deemed the most balanced, with delegates playing a positive yet sometimes overly influential role. While structured rubrics support consistency in grant evaluations, their rigidity may hinder innovation. Issues around confidentiality, preparation, and KPI in applications highlight the need for structured oversight, conflict of interest policies and increased transparency. Traditional governance models contribute valuable insights, such as robust documentation and conflict resolution mechanisms, which can enhance DAO accountability and sustainability. The study recommends a hybrid reviewer model blending expertise with community representation, shielded-ranked voting for fairer elections, and voter fatigue mitigation. Further recommendations include adopting flexible rubrics, leveraging emerging tools, and instituting post-mortem evaluation after each funding cycle. This research underscores how DAOs can strengthen their governance frameworks by combining decentralised innovations with traditional governance practices, ultimately supporting more effective and sustainable grant management in the evolving digital landscape.