DXdao surpasses three years of on-chain governance

7 min readJul 14, 2022


DXdao celebrated three years of on-chain governance, commemorating the submission of the first proposal on July 14, 2019 with a special edition POAP for DXdao community members. As one of the oldest and most active DAOs, there is a rich on-chain history of governance of DXdao and its products during bear, bull and now again bear markets.

DXdao continues to be a radical experiment in collective governance. Amidst calls of new forms of economic system, DXdao is operating with a non-capital based form of governance power and exploring the future of how work is done and institutional power is curbed.

Decentralized origins

DXdao was spawned through a collaboration between Gnosis and DAOstack, who wanted to build a DAO that was decentralized from the beginning and one that could “scale to be the largest organization in the world”. The two jointly launched dxDAO but did not want to be founders and did not set up any legal entity specific for dxDAO. Instead, governance power in DXdao (Reputation) was distributed to 399 Ethereum addresses around the world. These addresses had participated in the initial staking period either by locking up ETH or ERC20 tokens, trading on the DutchX protocol or in exchange for GEN, DAOstack’s token, which is needed for holographic consensus, DXdao’s quorum management tool.

Core tenets

Decentralization has been the driving force of DXdao since its launch and as reaffirmed in the DXdao Manifesto. This guiding light spurred the development of DXdao’s DeFi product suite, in order to ensure that new digital financial infrastructure is not owned and controlled by a plutocracy. DXdao’s decentralization ethos also drove the community to build its own governance products to remove the layers of software gatekeepers that sit between a DAO and its governance participants.

DXdao’s most unique governance feature is its use of a reputation-based governance system. This means DXdao’s governance power is non-transferable or ‘soulbound’, in contrast to the ubiquitous use of transferable tokens for on-chain governance. After the initial distribution of 1 million DXdao reputation (REP) in 2019, almost 900k additional REP has been minted and distributed to addresses that have made positive contributions to DXdao. Over this time, most REP has been earned by individual contributors. Every DXdao contributor earns 0.1667% of REP each month regardless of pay level. The community also does not issue additional REP to addresses once they have hit 4% in order to promote decentralization.

Each new address minting REP inflates the total supply of REP in DXdao, but since REP is not a financial primitive, no capital is diluted. Inflation of soulbound governance is a positive sum addition that increases decentralization.

The soulbound system of governance has enabled DXdao to expand into a multichain world. Whereas tokens can be transferred to other chains, soulbound governance power can port to other chains by simply mapping up the reputation distribution on one chain to another. DXdao launched on Ethereum in 2019, and then what-was-at-the-time xDai in February 2021 and then later launched a (experimental) base on Arbitrum One in August of last year. This has lowered operational costs for the dozens of proposals DXdao passes a month, as well as allowed its DeFi products like Swapr to expand to multiple chains (SWPR was the first airdrop on Arbitrum One just days after the Layer 2 launched).

New developments in Year 3

DXdao was born in the depths of the 2019 bear market and after a legendary DXdao hangout in person during ETHBerlin that August, members were remote as the community started to form. Then, of course, Covid struck and paralyzed the world. In March 2020, DXdao was just beginning to emerge as an on-chain collective with the DXD Bonding Curve launching in May 2020 and greatly increasing interest (as well as resources).

Like the rest of the world, DXdao contributors were self-isolated for 2020 and into 2021 even as the number of full-time contributors grew from 4 to 20. Then the world slowly began to open in 2021 and the Ethereum and crypto community returned to its slew of conferences around the world. The DXdao community began a new era of in person community building as well as spreading the gospel of decentralization to potential converts. The DXdao community met at EthCC in Paris, and then hosted a retreat in Lisbon last October. In February, DXdao community traveled to warm and sunny Colorado for ETHDenver, and most recently a gathering in Amsterdam during DevConnect.

Year 3 also saw the beginning of the fractionalization of DXdao. When still small, the DXdao community focused on one or two governance or product initiatives, but the community has grown so now contributors are more specialized. The DXvoice squad has emerged, leading all marketing and community efforts and was one of the first squads to manage an external budget. The DXgov squad, meanwhile, was formed in the summer of 2021 to build governance tools for DXdao as well as other DAOs. There’s also been new product development, like Carrot, the KPI-token incentive platform. The Swapr squad took the greatest steps towards semi-autonomy with the launch of the SWPR token and (coming soon) SWPR guild — built by DXgov.

Pioneering new coordination principles

Without a strong central entity, DXdao governance and squads must find consensus on how to allocate resources to product development, make decisions about a $50m treasury or come up with guerilla marketing campaigns.

By necessity, DXdao governance operates out in the open. Blockchains are public ledgers for all to see. With all governance and operations occurring on-chain, every payment DXdao makes is transparent for all to see. This bleeds into everything else DXdao does. DXdao has been hosting daily public calls for anyone to join (or watch as a recording later) for more than two years, and the online forum remains the primary venue for DXdao to share thoughts & discuss initiatives and proposals. This transparency is a natural check on the power of DXdao. Any action to be undertaken will be widely known and voted on prior to execution.

As it passes three years of operation, DXdao has expanded to almost 30 full-time contributors spread all around the world. These contributors all have a non-coercive working relationship with DXdao. The community can give feedback on contributors’ scope of work or level, but ultimately contributors must write and submit their own proposals. The lack of a formal hierarchy empowers contributors to be independent and held accountable by their own worker proposals. This feedback loop can be inefficient at times, but because it plays out in a transparent governance process, it ultimately yields a more resilient ecosystem of autonomous stakeholders incentivized to drive DXdao forward.

Building sustainable sovereignty

Governance boils down to power, or who controls what’s valuable. All of DXdao’s most valuable assets are stored on-chain in the treasury, which can only be moved with a successful on-chain proposal. Oftentimes, projects have valuable assets that live outside of governance control, or worse token holders actually have no direct control over these assets, just a Snapshot vote to nudge the multi-sig signers, which are actually in control.

DXdao prides itself on removing as many gatekeepers as possible between REP holders and governance. One of the best examples is the use of ENS for all of its products’ front-end. DXdao’s products are not hosted on AWS and owned by some LLC in New York. Each product front-end is hosted on ENS and any changes must go through on-chain governance. DXdao has also been a trailblazer in the sovereignty of its treasury. Its use of relayer contracts to place limit orders and provision liquidity through on-chain proposals ensures that the only dependency is DXdao governance.

At the moment, there are still too many limits to DAO sovereignty. There is no way for DXdao to be sovereign over a Twitter account or a slew of other off-chain dependencies.

DXD, Gov 2.0 and the future

DXdao enters year four of its existence in a downtrodden crypto market, but thanks to shrewd diversification of its treasury in 2021, it is well-positioned to continue to build through any market condition. The on-chain treasury has almost $12m in stablecoins with around a $275k monthly burn, enabling DXdao to build and expand in whatever market environment.

DXD, the native financial token for DXdao, has had an interesting year. Just over a year ago, REP holders passed the DXD Buyback Program to purchase undervalued DXD. This has continued with more than 14,000 DXD purchased and led to a more than tripling of the DXD price in ETH terms over the last year. This has led to a still ongoing discussion about how to automate and configure DXD value accrual.

DXD also has a central role in the future of DXdao governance. While the DXD Buyback Program aligned interests of REP holders and DXD holders, it is only a short-term solution. In March 2021, DXdao governance approved a new governance framework, dubbed Governance 2.0, which provides unified reputation and token-based governance. While many DAOs today struggle with dysfunction and a disconnect between those with governance power and those participating in governance, DXdao’s new Governance 2.0 system ensures a stakeholder set consisting of both capital with skin in the game, everyday contributors and governance stakeholders.

About DXdao: DXdao is a decentralized collective that builds, owns, and governs DeFi and governance products. Reputation (REP) is voting power in DXdao, and DXD is the financial token with a claim on profit from DXdao products.

DXdao products include Omen (prediction markets), Carrot (programmable incentives), DXgov (governance framework), and Swapr (governance-enabled AMM). DXdao believes in governance and decentralization.

Connect with DXdao: Discord | Twitter | Telegram | Keybase | DAOtalk Forum




The DXdao is a decentralized organization, owned and operated by the community. It develops, governs, and grows DeFi protocols and products.