Unit 4 · Level 4 · DAOs & governance
Who holds the keys
Before trusting any protocol's governance, run a quick power audit: How concentrated are the tokens? What's the real voting turnout? Who signs the multisig? And the sharpest question of all: can anyone upgrade the smart contracts, and who? A protocol whose contracts a small team can rewrite is decentralized right up until it isn't.
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What you get asked
Run the governance power audit in order
Every step is public on-chain data. The audit takes minutes; skipping it outsources your trust to a marketing page.
A team's 3-of-5 multisig can upgrade the protocol's contracts at will. What does that really mean?
Whoever can change the code owns the protocol, whatever the governance page says. Upgrade keys are the deepest form of control.
A DAO requires 4% of its 1 billion tokens to vote for quorum. How many million tokens must show up?
4% of 1 billion = 40 million tokens. Now check real turnouts; many big DAOs struggle to clear even that bar.
The top ten delegates hold 60% of a DAO's voting power. Honest label for that?
Delegation concentrates power just like holdings do. Ten aligned voters deciding everything is a boardroom, whatever the branding says.
If insiders hold most of the tokens AND the upgrade keys, the protocol is decentralized in ___ only.
The final test of governance is always the same: could the insiders be overruled? If not, you're trusting people, not protocols, so size your risk accordingly. 🐜
The rest of this unit
Token votes, treasury raids, and finding out who really holds the keys.