Table of Contents
- Key Takeaways
- 1. Background - Taiko DAO and Taiko’s Pursuit of Decentralization
- 1.1 Structure of Taiko DAO
- 2. Takeaway - Expectations and Concerns About Taiko DAO
- 2.1 Expectations from the Introduction of Optimistic Governance
- 2.2 Is Taiko DAO’s Governance as Decentralized as Its Based Rollup?
- 2.3 Now Is the Time for Taiko DAO to Prove Its Decentralization Through Operations
- 3. Resource
Researcher
Related Projects
Key Takeaways
Taiko considers decentralization as its core value and has implemented a based rollup to achieve sequencer decentralization. However, recognizing the need for community decentralization in an already decentralized system, it launched the Taiko DAO to address this issue.
Taiko DAO operates based on an optimistic governance model and a security council. The optimistic governance model allows proposals to pass by default unless there are objections, reducing the burden on participants. The security council is responsible for proposing and approving proposals, with the ability to make rapid decisions through a supermajority vote in urgent situations.
Taiko DAO is set to be officially operational in 2025, and incorporating community feedback through real-world operation is crucial. If transparency in the security council’s authority and proposal process is not emphasized, it may conflict with Taiko’s original decentralization philosophy.
1. Background - Taiko DAO and Taiko’s Pursuit of Decentralization
Taiko is an Ethereum Layer 2 (L2) project based on a based rollup. There are several reasons why Taiko chose this blockchain approach, with the most important being that based rollups allow many participants involved in Ethereum block production to become sequencers, achieving sequencer decentralization. The real-time processing and decentralization that stem from this are key benefits Taiko gains from implementing a based rollup.
Taiko has continued to grow since launching its mainnet, Alethia, which is equipped with a based rollup, building an ecosystem valued at approximately $200 million. In particular, it stands out in the Ethereum L2 space for implementing decentralization using a based rollup.
However, Taiko still has another area to decentralize—its community.
If a community is not decentralized, several issues can arise. The most critical problem is that a small group of individuals could dictate the project's direction. For instance, if project executives or developers disregard the opinions of contributors and act independently, it could weaken the project's competitiveness and, in extreme cases, lead to a rug pull.
Another issue is the potential inconsistency in Taiko’s vision. Without community decentralization, the project's narrative and legitimacy could be undermined.
Was Taiko aware of this all along? With the recent announcement of Taiko DAO, the project has taken its first steps toward decentralizing its community.
To achieve this, Taiko partnered with Aragon, a platform that modularizes DAO services, to establish Taiko DAO. Currently, Taiko DAO is undergoing operational testing on the Hekla testnet.
1.1 Structure of Taiko DAO
Taiko’s governance operates based on two core structures.
The first is the Optimistic Governance model. Unlike traditional voting processes where each proposal undergoes thorough review and a vote, the optimistic governance model assumes a default approval stance. Participants only need to raise objections if they disagree with a proposal.
In this model, $TAIKO holders and voting delegates are not just passive governance participants but play a crucial role as active objectors when necessary. Anyone can become a voting delegate by staking a certain amount of $TAIKO.
Since proposals do not require mandatory voting unless contested, the community does not have to engage in every decision. Instead, they can efficiently participate only in critical matters, maintaining sufficient control without excessive involvement.
The second is the Security Council. This council is responsible for creating and approving proposals within Taiko DAO. It consists of multiple members, and at least one security council member must be involved in creating a proposal, while the number of approvals required varies depending on the situation.
Additionally, in the event of an emergency, the Security Council can activate an emergency multi-signature system to take immediate action when necessary.
This structure functions differently depending on whether the situation is normal or urgent.
In a regular process, a Security Council member submits a proposal, which then awaits approval from the council. The approval follows a standard multi-signature model.
One notable aspect is that users who are not part of the Security Council cannot submit proposals directly. Instead, they must collaborate with at least one Security Council member to submit a proposal.
Once a proposal receives Security Council approval, it enters the Optimistic Governance process. $TAIKO holders and voting delegates can review the proposal and, if they find any issues, raise objections during the objection period.
If no objections are raised during this period, the proposal proceeds to a 7-day timelock. This phase allows any dissatisfied participants to exit Taiko DAO if they disagree with the approved proposal. After this period ends, the proposal is automatically executed.
In emergency situations, the Security Council handles proposals through an emergency multi-signature model, and only Security Council members can submit proposals.
Since these proposals deal with critical matters, they require supermajority approval, meaning a higher number of Security Council members must agree compared to normal situations. Unlike the standard process, emergency proposals do not go through the Optimistic Governance voting phase and are executed immediately without a timelock.
All details of executed emergency proposals are encrypted and stored to prevent potential exploitation, particularly in cases where they address security vulnerabilities or critical upgrades. However, once the proposal is executed, its details are made publicly available to ensure transparency.
Through this structure, Taiko DAO seeks to strike a balance between efficiency and security, integrating Optimistic Governance with both standard and emergency decision-making processes within the Security Council.
2. Takeaway - Expectations and Concerns About Taiko DAO
2.1 Expectations from the Introduction of Optimistic Governance
Taiko DAO’s decision to adopt the Optimistic Governance model instead of the traditional yes-or-no voting system used by most governance structures seems to be driven by two key reasons.
One reason is to reduce voter fatigue among $TAIKO holders and voting delegates, which can arise due to the high volume of proposals. By minimizing this fatigue, the voting energy that would have otherwise been wasted can be fully redirected into governance participation. As a result, the gap between the decisions made by voters and the overall community sentiment can be narrowed, allowing for a healthier governance system.
Another reason is that voting outcomes are not dependent on voter turnout, which means that Taiko DAO does not need to take additional measures to increase participation.
For instance, a common issue in traditional governance models is the quorum requirement, where proposals can be discarded simply because the minimum participation threshold was not met, regardless of their quality. This becomes especially problematic when dealing with governance-critical proposals. If the quorum is not reached before the voting deadline, additional promotional efforts are required to encourage participation. By adopting Optimistic Governance, Taiko DAO significantly reduces the operational and management burden associated with these challenges.
Since Optimistic Governance is still relatively uncommon, it will be interesting to see what positive effects this approach can bring to Taiko DAO’s governance structure.
2.2 Is Taiko DAO’s Governance as Decentralized as Its Based Rollup?
One notable aspect of Taiko DAO’s structure is that proposals can only be submitted if they are linked to at least one member of the Security Council. This restriction exists because only Security Council members have the authority to submit proposals.
To understand the implications of this, it is helpful to look at how Taiko’s based rollup operates. In a based rollup, anyone involved in Ethereum’s block production can become a sequencer, and the key principle here is that there are no restrictions on who can participate.
However, Taiko DAO’s current structure does not allow just anyone to submit proposals. While requiring Security Council approval for proposal submissions may serve as a safeguard to ensure a minimum level of review and security, it also inherently diminishes decentralization by creating a bottleneck.
Source: https://community.taiko.xyz/
At present, over 140 community proposals have been posted on Taiko’s community platform. Yet, only proposals that manage to connect with a Security Council member can move forward to the voting stage. If a contributor lacks connections within the Security Council or if a council member deliberately ignores certain proposals, the very purpose of governance could be undermined.
Source: Taiko DAO
Currently, the Security Council has not been officially established. The existing council on the Hekla testnet consists of members selected temporarily for testing purposes, and a formal Security Council will be appointed once Taiko transitions to the Alethia mainnet. However, if Taiko DAO fails to provide a clear and compelling explanation of how the Security Council will be formed and how its members will exercise their authority, it may struggle to avoid criticism regarding its governance structure.
2.3 Now Is the Time for Taiko DAO to Prove Its Decentralization Through Operations
With both anticipation and concerns surrounding it, Taiko DAO is set to begin official operations in 2025. While the initial launch of its governance is undoubtedly important, I believe that what matters even more is how it continues to operate, engage with the community, and build a more advanced ecosystem based on that feedback.
If Taiko DAO can address criticisms through thorough discussions within the community, proposal submissions, and governance-based resolutions, it will gradually demonstrate its ability to evolve. This process alone would solidify the significance of Taiko DAO's existence. From this perspective, the official launch of Taiko DAO this year and its future operations will be key areas to watch.
3. Resource
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