Custom Module for Governance - Introducing SubDAOs

Custom Module for Governance - Introducing SubDAOs


Hey everyone! I’m Shine, Head of Operations at Band Protocol. Currently, we’re working on implementing SubDAOs at the code level. I’d like to discuss an exciting concept called SubDAOs, which can address various challenges faced by decentralized autonomous organizations (DAOs). DAOs have become an integral part of decentralized projects, but they often encounter several pain points. SubDAOs offer a potential solution to these issues and can bring about significant improvements within the DAO ecosystem. Let’s explore some of the pain points that SubDAOs can help resolve:

  1. Complexity Management: As DAOs grow in size and complexity, it becomes increasingly challenging to manage all operations and decision-making within a single organizational level. SubDAOs offer a way to divide responsibilities and tasks into smaller, more manageable units. This helps in organizing and coordinating operations more effectively within the DAO ecosystem.
  2. Efficient Resource Allocation: DAOs often have limited resources, including funding and human capital. SubDAOs allow for more targeted resource allocation by focusing on specific tasks or functions. This ensures that resources are allocated efficiently and effectively, avoiding duplication of efforts or misallocation.
  3. Specialized Expertise: DAOs can greatly benefit from specialized expertise in various areas such as development, marketing, governance, or community management. By creating SubDAOs, DAOs can tap into the knowledge and skills of participants who possess expertise in specific domains. This enables better decision-making and execution within those specialized areas.
  4. Flexibility and Experimentation: For DAOs to thrive in a rapidly evolving environment, they need to be adaptable and open to experimentation. SubDAOs provide a framework for experimenting with different approaches and strategies within the DAO ecosystem. They allow for testing new ideas, governance models, or incentive mechanisms without impacting the entire organization.
  5. Inclusivity and Participation: DAOs aim to foster inclusivity and active participation among community members. However, in large DAOs, it can be challenging for every participant to have a direct say in all decision-making processes. SubDAOs enable greater participation by providing avenues for individuals to contribute to specific areas of interest or expertise. This encourages active involvement and ownership within the DAO community.
  6. Scalability: As DAOs grow, scaling operations becomes crucial. SubDAOs allow for the delegation of responsibilities to different teams or individuals, making it easier to handle a larger number of participants and tasks. This scalability helps DAOs grow and expand their operations while maintaining efficiency.

Who Controls Each SubDAO?

The control and governance structure of SubDAOs within a decentralized autonomous organization (DAO) can vary depending on the specific design and implementation. Generally, SubDAOs are governed by the participants or stakeholders who are directly involved in the operations and decision-making of that specific SubDAO.

One common approach to governing SubDAOs is through the use of councils or committees. These councils are typically composed of elected or appointed members who represent the interests and expertise of the participants within the SubDAO. Council members may be chosen based on their contributions, reputation, or expertise in the respective area. Initially, the selection can be made by the community based on these criteria, and subsequently, elections can be conducted to ensure community representation. Council members can also be voted out by the community through proposals.

Transforming the Cosmos Group Module into Councils

The Cosmos Group module, which is part of the Cosmos SDK blockchain development framework, can be transformed into councils to enhance its functionality. This module enables the creation and management of groups of accounts within a Cosmos network, similar to a multi-sig wallet on the EVM chain. It offers flexibility in assigning policies to each council.

To better understand this concept, let’s consider three example councils and their corresponding policies:

  • The Treasury Council is responsible for initiating proposals to transfer assets from the treasury to various decentralized autonomous organizations (DAOs).
  • The Grants Council is responsible for initiating and voting on Grant Proposals, which involve approving grant applications. They also oversee the allocation of funds from the grant treasury to support grant contributors.
  • The Tech Council is responsible for initiating and voting on Improvement Proposals, which involve implementing changes on the blockchain.

These policies are designed to be clear and direct, allowing council members to utilize their expertise and knowledge within their specific areas of responsibility, enabling them to fulfill their duties effectively.

Responsibilities of Delegators and Validators in this Governance System

The proposed system enables individuals to participate in a democratic voting process. Validators and delegators have the opportunity to initiate Veto proposals and cast their votes against council decisions. The rules and parameters of the system will follow the same principles as Cosmos Governance, with the exception of a shorter voting period, reduced to 7 days.

The New Governance Framework

In this system, each person who delegates their voting power will have it divided for two specific purposes:

  1. Elections:
  • Delegators can assign their voting power to candidates who volunteer to be council members.
  • The tokens used for voting will be locked for a period of three months until the next election cycle begins.
  • The longer the tokens remain locked, the greater the multiplier applied to the voting power and delegated rewards.
  1. Veto Proposals:
  • Delegators can initiate Veto proposals by using 1000 native tokens and utilize their delegated voting power to vote against decisions made by the council.
  • Delegators will receive rewards similar to those in the existing Cosmos Governance system, but the amount will be adjusted proportionally.

Proposal Process

Here’s an overview of the proposal process:

  • Once an agreement has been reached through a vote in an off-chain forum, a council member will act as the proposer and open a proposal on the blockchain.
  • The voting period commences and lasts for a duration of 3 days.
  • Council members utilize quadratic voting to cast their votes on the proposals, where the voting power is determined by the amount delegated by the delegators during the election. If the number of “YES” votes surpasses 50%, the proposal will be approved.
  • Following the voting period, there is a waiting period of 4 days during which delegators or validators have the opportunity to initiate Veto proposals.
  • If no Veto proposal is initiated and the 7-day veto period comes to an end, the proposal will be implemented. However, if the Veto proposal is approved during that period, the proposal will be rejected.


In my opinion, the proposed subDAO treasury system has tremendous potential to bring significant benefits to projects looking to implement SubDAOs/Council systems. It would foster faster and more efficient growth within the ecosystem, addressing the current challenges in governance. One of the great things about this system is its emphasis on transparency, allowing everyone to easily track actions and have a say in proposed changes, promoting a democratic decision-making process.

Moreover, this system encourages active participation from delegators, making them essential contributors to the success of the community. By getting more involved, they can have a direct impact on the development and progress of the ecosystem.

Additionally, the system provides incentives for grant contributors to unleash their creativity and come up with exciting innovations and use cases. With streamlined and efficient processes, ideas can be implemented more quickly, driving the ecosystem forward.

By implementing this subDAO/council system, we can anticipate remarkable growth with fresh ideas and increased speed, all while maintaining the core principle of decentralization that we hold dear.

I’m excited to hear your thoughts and start a conversation about how we can further improve governance within the subDAO/council framework. Let’s discuss the next steps together and work towards enhancing the system’s effectiveness and efficiency.

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Nice. Why not just do this: DAO = consumer chain

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I do no think all ideas can be fit to consumer chain concept.

Why should subDAO become a consumer chain?

DAOs seem lazy. what about installing another centralized bureaucratic governance model is appealing to anyone other than those in a position to profit from directing public funds without resistance?

The innovation is in automating away central governance, not copy&pasting the broken system we already have.

Thank you for the feedback. Could you please provide further clarification on the concept of “DAO acting as a consumer chain”?

Not cool. You’re taking Governance discussion OFF CHAIN. Then implementing agreements in a rushed process which where you are well aware you will not be encouraging delegators to participate in the discussion and growth of the community. 99% of them will not even know this structure exists or what you all are doing. They won’t have a frame of reference to know this is not the way chains were governed before.

You’re just simply removing the retail or non-blockchain developers from the discussions. Nothing I can do about it, and that is the same way most of your chain will feel. Although the current governance model is clunky, we should not be appointing people we don’t know exist to smaller even more concentrated sub”Power” groups where you guys discuss tresury or grant issues off chain and then after you get it done behind closed doors, oh let’s just rush it through governance, and be done.

This will inevitably lead to a net loss in community, but Ok.

In short:

  • Protected treasury
  • Security for contracts
  • A higher level of sovereignty
  • Native tokens
  • A million possibilities
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Why does a DAO need native token?

Do you mean a token for voting weight, or is there any utility for the token?

The native token will serve as a governance token that can be delegated to validators. Delegators will then receive voting power for two purposes:

  1. Electing council members for each council.
  2. Voting on Veto Proposals to oppose proposals that have already been approved by the council.
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Precisely. Thanks for that answer

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Thanks for the feedback!

I agree with some of the points you raised. However, the off-chain discussion plays a crucial role in facilitating communication to ensure that all proposals going on-chain are adequately registered.

Numerous decentralized protocols have faced challenges with governance voting, where token holders voted without fully understanding the protocol. As you mentioned, the majority, around 99%, are unaware of this structure. Therefore, transparency and communication become essential in enabling non-technical individuals to comprehend what is happening and providing them with a platform to stay informed using non-technical language.

Regarding the acceleration of processes, I believe that faster processes lead to increased innovation and the growth of the ecosystem.

I had posters about this exact topic multiple months ago, and I still believe the idea of SubDAOs will be necessary for the Hub. I believe SubDAOs will be at a minimum, a necessity going forward, for the Hub treasury to efficiently allocate capital. They can be created in best practice, to encourage decentralization, however, they will allow for some level of accountability, which the current treasury lacks.

Here is the link to my previous forum post: SubDAO Treasury System for the Hub


how do subDAOs increase accountability? Until there are enforceable penalties and remidies for malicious actions there is no accountability. SubDAOs would need a mechanism similar to slashing that allows for more than voting in a different person after the fact.

I have just finished reading your post, and I truly think that the SubDAOs concept has the potential to address numerous challenges faced by DAOs. I appreciate you bringing this topic up here!

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I think the opposite is the case here.

For example lets take a Grants Program.
Grants Programs are often established through central entities offering their service to host a grants program for a chain. The chain agrees or denies their governance proposal. If it succeeds they get X stake that they can freely distribute without further restrictions.

The Grants Council would improve this concept through:

  • dezentralization of the committee (no central entity is needed to host the program)
  • committee members can be changed if the community isnt happy with them any more
  • every grant will be voted on chain through the committee
  • every grant voting of the committee can be overruled through a chain governance veto

I think SubDAOs are a good Compromise of voting everything of chain and centralized entities.

@pzshine Please correct me if iam wrong with any of my assumptions