Metagovernance is when a DAO has voting power in another DAO, typically through holding their governance token. For example, if Yearn DAO holds BAL tokens, they have voting power in the Balancer DAO. And if Balancer DAO holds YFI tokens, they have voting power in Yearn DAO.
It’s important for DAOs to diversify their treasuries to withstand the ups and downs of bull and bear markets. One way to do this is holding the tokens of other DAOs, which often carry governance power. This puts the responsibility on that organization to decide how to vote in the other DAO’s proposals.
To help the DAO save time, it may choose to delegate its tokens to a person or group who can maintain context in the other DAO’s governance.
For example, Yearn DAO might choose to delegate its BAL tokens to someone actively involved in Balancer DAO, so that person can vote in Yearn DAO’s best interest without Yearn DAO needing to dedicate someone to maintain context of that DAO.
In late 2022, we worked with Wildfire DAO to properly delegate some of the tokens we could use for metagovernance. Here’s a quick look into Wildfire DAO and what our metagovernance process with them looked like.
What is Wildfire DAO?
They handle metagovernance for DAOs, so the token-holding DAO doesn’t have to maintain context in the other DAO’s governance to be able to cast educated votes.
Wildfire’s subject matter experts keep up to date on DAO governance, write proposals, participate in the forum, and cast votes on behalf of DAOs that delegate their voting power to them. They also help the DAO earn yield on its tokens through services like Hidden Hand.
Wildfire DAO’s goal is to break down governance silos by inspiring governance squads that span projects.
Not only does 🔥_🔥 want to encourage and develop a meta-governance collective, we also want to inspire and coordinate other, new governance squads.
—Introducing Wildfire DAO, published on Mirror
Wildfire works with prominent web3 organizations, such as Aave, Balancer, and Rocketpool. They specialize in four categories: DeFi, public goods, creator economy, and infrastructure and tooling.
The Aragon treasury holds tokens in multiple projects. In the Fall of 2022, Wildfire DAO noticed that Aragon was not using its Balancer DAO tokens ($BAL). Members of the two communities collaborated on a forum proposal to request that Aragon delegate it’s $BAL to Wildfire, who would use them in the bribe marketplace Hidden Hand to generate revenue.
After explaining metagovernance terminology and processes to our DAO members, the proposal passed with a 100% approval rate. The next step for Aragon was wrapping the current BAL position into veBAL, which is required to vote.
After signing the necessary transactions, the tokens were delegated to Wildfire in November 2022. After going through the metagovernance process with Wildfire DAO, we’re excited to share our learnings!
What we learned from this process
The process of delegating with Wildfire DAO was smooth other than a few hiccups from our side. Here’s what we learned:
It’s important to validate how to participate in the governance process before moving tokens or signing transactions.
We started the process too early, before we knew exactly what we needed to do. This caused more delays on our side, slowing down the governance and delegation process.
For example, we thought our multisig needed to be allowlisted by Balancer DAO. However, this was not the case. This resulted in a delay that could have been prevented if we did our due diligence before beginning the delegation process.
The steps to validate how to participate should then be shared in a communications channel, such as on the forum, to provide transparency to the community.
A dedicated metagovernance guild can maintain context better than an entire DAO.
Since we didn’t have a dedicated ecosystem or metagovernance team, the entire DAO had to maintain context, which slowed down our process.
Having a dedicated ecosystem team that manages metagovernance and token swaps in a separate multisig wallet could prevent signing delays and make the entire metagovernance process smoother.
This would protect the entire Aragon DAO from needing to maintain context on all metagovernance decisions, and speeds up the process of delegation.
As a builder of DAO infrastructure, we recognize the significance of governance and the importance of active participation. We would like to get involved in the governance of mission-aligned web3 projects where Aragon DAO holds tokens, and hence decision-making power.
Metagovernance can be a powerful tool to foster collaboration across web3 products and protocols. This sits at the core of our ecosystem-centric strategy to become a governance hyperstructure.
As we initiate more token swaps with other DAOs, we will need to make plans for delegating voting power for each of those DAOs. Since the Wildfire DAO metagovernance delegation, we’ve also completed a token swap with PrimeDAO, a project that provides tools for token launches and DAO-2-DAO token swaps.
We’ve now completed two major metagovernance actions, and are excited to continue sharing updates as we execute more!
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