Examining the Overall DAO Ecosystem

3 min readNov 10, 2021

While running the Beta test platform for STP 2.0 for the last several months, we have also been heavily researching how to better STP DAO and its community governance. After looking into the DAO ecosystem, we can see the potential and importance of DAOs in Web 3.0 and therefore STP. We also believe that there is room for improvement to pioneer and transform the structure and ecosystem for DAOs that will propel their development and growth in the coming years.

Current State of Layer 1 Blockchains

The scalability problem for mainnet blockchains is accentuated more than ever before. To highlight a few striking issues, the unsustainable gas costs and slow transaction speed create friction for dApps leading to an inefficient, centralized and unscalable ecosystem. Moreover, the ecosystem is still limited in the number of dApps using developer tools (EVM) despite its recent growth. Most importantly to us, the L1 ecosystems do not satisfy the requirements of the revolutionizing demand for DAOs. L1 governance structures and models are deficient in complexity and creativity for the fast-innovating DAO concept.

Current State of the DAO Ecosystem

DAO Users:

To combat L1 complexity and scalability issues, there are several current market solutions like Snapshot that build side chains to optimize for governance activities or voting platforms like Tally and Aragon (Beta) that make it easier for users to stake and vote in their DAOS. However, each of them have shortcomings whether it be instability due to centralization of verification, absence of on-chain voting and activities and overall underwhelming DAO capabilities. More importantly, there is a lack of interaction and discussion other than voting and also limited or no incentives for participation or engagement. As a result, current DAO participation and engagement is severely limited and low on these platforms.

DAO Projects & Organizations:

Management solutions such as Aragon, Boardroom and Alchemy (DAOstack) make it easy for companies and organizations to create, manage and participate in DAOs but they fall short in several ways. There are high cost and limited DAO developer tools for Layer 1 and Layer 2 blockchains. Additionally, there are limitations on the DAO structure and creation with no tracking system to use platform data as input for additional initiatives.

Overall, there still remains the following gaps and inefficiencies in the current marketplace for both users and projects & organizations:

  • Governance activities such as DAO setup, voting and delegation can be unnecessarily expensive to perform
  • Low engagement, participation and incentives outside of voting for DAOs
  • Various governance use-cases are inefficient with current transaction times on the main chain
  • Updates to governance scalability should not be at the expense of main chain decentralization or security

The STP team recognizes several of these issues that are limiting the overall DAO ecosystem and is constantly thinking of ways to improve upon our community and our own DAO. We will have more exciting updates soon.

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