Delegated governance

Members can delegate governance tokens to any member of their DAO. It lets them transfer decision-making power to other DAO members or experts, allowing them to withdraw their tokens anytime. When delegating, tokens are locked in a smart contract, and only their owner can revoke them.

For delegated tokens, the voting power is recalculated according to the formulas of those to whom they are delegated. For instance, if a nonlinear function is used, ordinary DAO members and experts may have different calculations for voting power. In this case, DAO members can delegate their tokens to experts with higher voting power coefficients to use them more effectively.

At the same time, users can withdraw their tokens at any moment, even during active voting in which the delegated tokens are participating. The voting results will be automatically recalculated. However, withdrawing tokens during active voting can increase gas fees since the results must be recalculated.

The delegation system allows you to save time and gas costs by transferring your voting power to a trusted DAO member or expert. The DAO can also delegate tokens from its Treasury, which allows more tokens to be used in actual governance and attracts authoritative and competent parties to the organization. This feature is essential in the design of next-generation DAOs, as it can significantly increase the base quorums for decision-making.

Currently, most DAOs use low quorums that a group of large stakeholders, such as the team or investors, easily achieves. At the same time, a significant portion of tokens remains inactive in the Treasury. It undermines the original essence of DAOs as decentralized organizations and demotivates ordinary DAO members, as they feel they need direct support from major stakeholders to influence voting outcomes.

Thanks to the DeXe Protocol's transparent delegation tool, DAOs can distribute some of the Treasury tokens among competent experts, advisors, or other friendly DAOs. It can increase quorums from the current nominal 5% to a fair 50+%. With such quorums, the organization's activity can become truly decentralized, unbiased, and transparent. In combination with precise incentive mechanisms, such structures can achieve much greater efficiency in their operations.