"rage-quit": A Key Mechanism in DAO Governance

In the development of decentralized autonomous organizations (DAO), the concept of "rage-quit" has gradually attracted widespread attention. As more and more DAOs face splits, founders leaving, and even liquidation, this term has begun to appear frequently in related reports. However, there are many misconceptions about the understanding of "rage-quit" both inside and outside the industry, and even some professional media often misuse this concept.

The Origin of "rage-quit"

In 2019, at the Ethereum Denver conference, a protocol for creating donation-based DAOs—Moloch v1—was first introduced. Compared to other complex DAO operating systems, the Moloch v1 protocol is known for its simplicity and ease of use, achieving core functionality in just over 400 lines of code. This protocol enables people to easily pool funds and manage them collaboratively.

In the governance of a DAO, minority opinions are hard to avoid. Generally, decision-making and execution follow the principle of "the minority obeys the majority." However, this also brings a potential risk: the majority may abuse their power and harm the interests of the minority. To address this risk, the Moloch protocol introduces the "rage-quit" mechanism.

The Specific Implementation of "rage-quit"

When a member opposes a proposal, even if they vote against it, the proposal may still pass. In the Moloch protocol, there is a 7-day buffer period from the time the proposal is voted on until it is actually executed. During this time, if a member who voted against the proposal does not wish their funds to be used for the project, they can choose to "rage-quit" and reclaim their remaining rights in the contract before the proposal is executed.

Key features of "rage-quit" include:

1. Enforced by smart contract code.
2. Only members who voted against in the previous round of voting are eligible to execute.
3. Can only be done during the buffer period after the proposal has been approved but not yet executed.
4. You can only withdraw the remaining shares in the contract when exiting.

It is worth noting that members need to have a direct and traceable historical contribution to the DAO's treasury in order to fairly confirm the remaining rights and achieve an exit from the contractual level.

The Evolution of "rage-quit"

With the success of the Moloch v1 protocol, the development team has launched the more advanced Moloch v2. The new version adds features such as support for co-investment, expanding its application scope in the business sector. This has prompted the rise of investment DAOs, such as The LAO, Flamingo, and MetaCartel.

However, the "rage-quit" mechanism of investment-type DAOs is more complex than that of donation-type DAOs. Since it involves equity or token rights of invested projects, historical rights confirmation and distribution need to be considered upon exit. Therefore, the v2 version of the "rage-quit" is more complex in terms of code and details compared to v1.

Scope of "rage-quit"

It needs to be clarified that "rage-quit" mainly applies to donation or investment type DAOs, as a mechanism to protect the rights of members. Its core function is to allow members to reclaim their remaining funds that belong to them in the treasury by relinquishing their shares in the DAO.

However, the structure and operation of most DAOs do not meet the basic conditions for implementing "rage-quit." Many DAO members have not directly contributed to the treasury, so membership is not directly linked to the treasury balance. This makes the applicable scenarios for "rage-quit" quite limited.

It is worth mentioning that Nouns DAO has gone through a fork, and the new contract supports the "rage-quit" feature. This is mainly because Nouns is essentially closer to a donation-based DAO: every time a Nouns auction is successfully completed, it brings traceable direct funds to the treasury, while the funds that have been used are considered support for ecological construction and do not correspond to the personal rights of specific members.

Conclusion

The development of the concept of "rage-quit" reflects the fusion and evolution of technology and culture. Each innovation and misunderstanding has driven thought and improvement in the DAO space. Today, "rage-quit" is no longer limited to its initial definition, but has become an evolving institutional innovation.

As an emerging decentralized organization model, DAO is in the early stages of development. Each challenge provides us with the opportunity to explore the operational mechanisms of future digital societies. "rage-quit" is not just a function; it also represents the pursuit of freedom, fairness, and community interests. As DAOs continue to develop, we look forward to seeing more innovative mechanisms emerge, promoting the improvement of decentralized governance models.