Balancing Power in DAO Governance: Lessons from Majority vs. Minority Stakeholder Votes

Jupiter DAO $JUP
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The decentralised nature of DAOs is built on the promise of equitable decision-making, yet power imbalances can pose significant challenges. Recently, it has been suggested that the first proposal vote to approve the next two Jupuaries might fail. This is due to resistance from large whales, who feel the proposal does not sufficiently reward them and may dilute their substantial holdings. Such situations highlight a critical problem: when a small group of stakeholders wields disproportionate influence, it can undermine collective decision-making and harm the DAO’s overall functioning.

This scenario provides an important opportunity to reflect on the lessons that can be learned and the structural changes needed to ensure fairer governance processes. When large token holders have the power to override the will of the majority, it can erode trust, discourage participation, and jeopardise the long-term health of the DAO. To address these challenges, DAOs must adopt mechanisms that balance voting power and align incentives across all stakeholders.

Ways to Address and Balance Voting Power

1.	Quadratic Voting

Quadratic voting reduces the influence of large stakeholders by making the cost of additional votes increase quadratically. This approach gives smaller stakeholders a more proportional voice, ensuring that decisions better reflect the broader community’s interests.
2. Weighted Voting Systems
Introduce a hybrid voting model where a portion of the vote is determined by token holdings, while another part operates on a one-person-one-vote system. This helps ensure that both large and small stakeholders contribute meaningfully to decision-making.
3. Stakeholder Segmentation
Divide the DAO into stakeholder groups (e.g., by activity level or contribution type) and assign voting weights to each group. For instance, active participants or contributors could have more voting power than passive holders, creating a balance between engagement and financial stake.
4. Reputation-Based Voting
Implement a reputation system where voting power is influenced by a stakeholder’s contributions to the DAO rather than purely their token holdings. Contributions could include governance participation, providing liquidity, or developing proposals.
5. Time-Locked Voting Power
Weight voting power based on how long tokens have been held. This mechanism rewards long-term commitment to the DAO, reducing the influence of speculative or short-term holders.
6. Veto or Check Mechanisms
Provide minority stakeholders with collective veto power if a significant threshold of opposition is met. This ensures that large holders cannot unilaterally impose decisions that are strongly opposed by the broader community.
7. Governance Education
Promote education on the DAO’s governance processes to align stakeholders on its long-term vision. Transparent discussions can help mitigate conflicts and foster greater collaboration between majority and minority groups.
8. Periodic Governance Reviews
Regularly assess and adapt the DAO’s governance model to address emerging challenges and ensure the system remains equitable. Feedback loops from the community are essential to maintaining trust and functionality.

The issue of whales potentially blocking the next Jupuaries proposal underscores the need for DAOs to address power imbalances in governance. To fulfill their promise of decentralisation, DAOs must adopt mechanisms that empower all stakeholders, not just the largest ones. By implementing strategies such as quadratic voting, reputation-based systems, and stakeholder segmentation, DAOs can create a more inclusive and equitable decision-making process.

Ultimately, the success of any DAO depends on its ability to balance the interests of all participants, ensuring decisions reflect the collective will while promoting the long-term health of the organization.

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If a new system will be applied, whales can simply adjust their staking by spreading their JUP in optimal amount of wallets for example. Also if every person has 1 vote, the next time it’s a whale who will post why people with less assets can decide what happens for the minority with more assets.

So while we could try to battle against whales power in DAO, I think whales would just adjust for the new system.

Also if the voting power would not be liner to the JUP one holds, JUP would be less attractive for wealthier individuals to buy it.

I understand the linear model is not perfect but finding a perfect solution can be troublesome. We could require KYC from all the voters but even that can be gamed by buying KYCs.

I’ll keep reading the thread and see what others have to say. :+1:

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My take on quadratic voting is that while I understand the idea, I don’t personally appreciate portraying whales as a negative force.

Whales are as part of the community as everyone else. They’ve accumulated enough JUP to be deemed whales, put their funds on the line, and, by doing so, show commitment to the Jupiverse mission.

Instead of making up systems to disenfranchise certain DAO participants, I think the DAO- and the community benefit more from making sure that proposals and ideas include each segment of the DAO participants, whales and non whales so to say, and their needs and wants

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The equivalence of voting power between $1M and $10K JUP holders undermines fundamental investment principles. Such flattening of voting rights disincentivizes significant capital investment in this project, which is crucial for project growth and sustainability. Just look at some of the data across other successful protocols, which shows that whales play a crucial role in ecosystem development.

Your proposed seven-tiered approach introduces unnecessary complexity to our current voting mechanism. Many of your ideas could be seen as barriers and may risk reducing participation rates, contrary to the stated goal of increased governance engagement.

Also, concerning whale voting patterns on Jupuary proposals: Large stakers exercising their voting rights to protecting their positions represents rational investment logic, it’s just normal. The current voting data shows diverse voting patterns across different holding sizes, indicating that opposition isn’t strictly correlated with holding size.

Some of your points are good (7-8), however others appear to prioritize absolute equality over economic incentives. Also miuq is right: whales could just divide their tokens into multiple wallets.

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A lot of different options as you pointed out but really we should first discuss the crux of the problem: what should the DAO be representing?

What inherently is wrong with a whale having outsized voting power? Don’t they have the most at stake/lose if everything goes south?

Should a 1 JUP holder have as much say as a $1m JUP holder?

Should a lurker who never posts have as much say as someone who actively participates in the DAO?

Once we start understanding what we want out of the DAO then we can think of solutions. I don’t think anyone has a good idea on the answer to these questions so a linear model is a simple solution that holds off surprisingly well against most arguments.

If we start suggesting proposals with the sole intent of driving out whales is the project really going to stand?

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You raise a valid point that whales can adapt to changes in governance systems by distributing their holdings or finding loopholes, which makes completely neutralising their influence challenging. Additionally, deviating from a linear voting power model could reduce the appeal of JUP to high-net-worth individuals, potentially impacting the ecosystem’s growth and liquidity.

However, the argument assumes whales’ influence is inevitable, which discourages innovation. While perfect fairness may be unattainable, implementing quadratic voting or other non-linear systems can still significantly reduce the ease with which wealth translates to power, leveling the playing field for smaller stakeholders. The pursuit of improvement, even if imperfect, should not be abandoned for fear of adjustment by powerful players.

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I agree with your perspective and appreciate your balanced approach. The suggestion of exploring alternatives like quadratic voting is not about villainising whales but about fostering a discussion on fairness in Jup DAO governance. Whales undeniably play a crucial role in the community, demonstrating significant commitment through their investments.

However, not everyone can achieve whale status, yet many smaller participants contribute invaluable ideas, effort, and expertise that also drive the DAO’s success. The goal should be to create a system that fairly represents all voices, recognising that contributions can take different forms—not just financial. By triggering this debate, we can work towards governance models that respect and balance the needs of all stakeholders, ensuring a more inclusive and effective DAO.

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You raise valid concerns about maintaining economic incentives and the role of whales in ecosystem growth, but there are aspects of your argument worth looking at for fairness and inclusivity in DAO governance:

Flattening voting power does pose risks to significant investment; however, the goal isn’t to negate the importance of whales but to ensure the system remains attractive and fair to all contributors. While whales play a crucial role, over-concentration of power can alienate smaller participants too whose ideas and efforts are equally valuable to the ecosystem’s sustainability.

Your point about avoiding unnecessary complexity is valid. Simplifying voting mechanisms encourages participation, but tiered or hybrid systems could allow for balancing economic incentives and fairness without excessive barriers. For instance, weighting mechanisms that include factors like time staked or community contributions could maintain simplicity while increasing inclusivity.

It’s true that whales protecting their investments is rational, but the concern lies in whether this concentration consistently aligns with the broader community’s interests. Diverse voting patterns across holding sizes are encouraging, but ongoing review can ensure this diversity persists under all conditions.

This is a legitimate concern, but mechanisms like quadratic voting or reputation-based systems could mitigate token-splitting without undermining whales’ influence entirely.

I want to clarify that I am not opposing the current voting system. My intention in raising this topic stems from the numerous comments during the ongoing Jupuary vote debates regarding voting power and fairness which didn’t come from me. My goal is to initiate a conversation around these concerns, encouraging discussion and exploration of the topic. Through this dialogue, my
hope and hopefully those who have raised this might get to better understand whether the current system truly serves Jup DAO’s needs or if alternative approaches might be worth considering.

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Interesting points you have raised to stimulate the discussions further. That’s the point of this topic. Like I just replied to @ardenghost, my goal is to initiate a conversation around these concerns, encouraging discussion and exploration of the topic. Through this dialogue, I hope to better understand whether the current system truly serves Jup DAO’s needs or if alternative approaches might be worth considering.

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Hi there, I never thought I will ever take part in the DAO discusion. Until now I was just observing closely this forum and was casting my votes. I onboarded too late to be part of first Jupuary, but I bought some coins rigth at the start and never sold one. I am staking all of my JUP but I am not not large holder (I am in 1.000 to 10.000 segment). So my stake in JUP is not insignificant, but also not too big to make my sleep restless.

When the criteria of this vote were announced I was bit concerned, because 70 % treshold is REALY high. In the real world is practically imspossible to reach such level of consent on any topic. It was obvious (at least for me), that this proposal will not pass, because JUP is too concetrated in the hands of the few.

In all legal systems there are rules for finding consent:

  1. common majority: + 5O % of casted votes
  2. qualified majority: + 66 % of all votes elligible for voting.

While common majority is for routine administration (e.q. LFG votes), qualiffied majority is for managing important issues (such as this one).

In the EU, which is where i live, we have to ensure, that big nations (Germany, France, Italy) will not outvote smaller nations. There is special quorum for important issues. For the proposal to be passed there must be enough votes (1 nation = 1 vote) representing certain level of population. Big nations cannot overvote smaller nations (big population but to few nations), while smaller nations cannot do it either (many nations but not enough population). This “double majority rule”.

I assume, that such principle could be implemented on DAO voting mechanism. If there will be mechanism, that will block whales to take over DAO, it will incentive decentralization of distribution of JUP (that is what I consider to be crucial in the long term) . On the other hand, whales, knowing that they can with their voting power block any proposal unfavorable for them, will be motivated to stay with the project for long term.

Voting mechanism must be as simple as possible and based on the objective criteria (not arbitrary ones such as reputation or Discord discusion engagement).

So here is my proposoal for qualified double majority criteria (numbers have to be carefully assesed) :

  1. 66 % of votes (counting form the votes casted)
  2. which represents at least 66 % of wallets.

I am not able to asses if it is technically possible to make sure, that bots are not voting, but if it is possible, it should be implemented.

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ALOT of yapping from stakers about farm this or that. Sybil this or that.

0 talks ever about how JUP prevents holders of jup from simply distributing a large stake over several wallets and voting.

And it shows

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Thank you for sharing your thoughtful and detailed input—it’s great to see someone who has primarily observed stepping into the discussion with such a constructive and well-reasoned contribution. Your perspective, especially as someone in the mid-tier holder segment, adds valuable nuance to this debate and highlights how governance issues resonate across different parts of the community.

Your comparison to legal systems and the EU’s double majority rule is particularly insightful. It provides a practical example of how mechanisms can balance the influence of larger and smaller stakeholders while ensuring fairness. The idea of tying proposals to a qualified double majority, based on both voting power and wallet representation, is a compelling suggestion that aligns with the goals of decentralisation and long-term project stability.

Contributions like yours are precisely why this debate was initiated—to spark ideas and explore how the voting mechanism can evolve to reflect the values and priorities of the entire Jup DAO community. Thank you for sharing your perspective and for suggesting a concrete framework that deserves further discussion and assessment.

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Get how you fee and glad you expressed it in such an honest way.

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Whales lose in quantity because only minority can become whales.
Whales get relatively less because there are no conditions such as “the more you hold, the more you get relative to your holdings”.
If a whale gets relatively the same than a non whale, a non whale considers that the whale gets more.
Whales get shit from people who are not whales.
Whales have to fight for their right to be whales.
Whale is a curse word for lots of non whales.
If there was a proposal which would benefit the whales more than none whales, more than half the voting power is still on “none whales”.

If you are not a whale but you are a true believer, why wouldn’t you sell your everything and use half the mortgage to buy JUP and become a whale? Or why don’t you get your ass up from the chair and start working towards becoming a whale or what ever you want to become and stop complaining that someone has something you don’t?

Lots of people have opportunity to become whales over long period of time if they truly want it and commit.

This is not directed to you @Mbolorman but in general it’s getting quite boring to read whales this and that, so some food for thought.

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I don’t disagree with your sentiment here around many’s attitudes towards whales. I believe you aren’t directing this to me. My reply just recently to a proposal that suggested all cats be treated equally below:

To clarify, my intention in raising this topic comes from the numerous comments made during the ongoing Jupuary vote debates about voting power and fairness—concerns that weren’t initiated by me but are worth addressing. My goal is to spark a conversation around these issues, encouraging thoughtful discussion and exploration. Through this dialogue, I hope that both myself and those who have voiced these concerns can gain a clearer understanding of whether the current system truly meets Jup DAO’s needs or if alternative approaches might be worth exploring.

That said, I deeply respect those who have earned their holdings and the privileges that come with them, as I would expect the same respect in return. However, discussions like this provide an opportunity for everyone to learn, better understand the current structure, and consider whether any changes might be beneficial.

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This is an interesting read. Thanks for the insightful piece.

While It might feel undemocratic that a whale would have more of a voice than 100 other voters, we can’t dispute the fact that he contributes a larger part of the machine making that pie than the others. It is only fair he gets heard due to the high level of exposure. An inflow of tokens could affect price and reduce the value of their bags, shit load of money for some so I understand the hesitation.

DAO governance can be tricky especially in decisive votes like the jupuary vote but unlinear voting could making investments in a token less active. After all Jupiter is a DeFi protocol.

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Thank you for sharing your perspective and contributing to the debate. I completely agree with your points, especially the acknowledgment that high exposure and investment inherently warrant a voice in governance. The balance between fairness and practicality in DAO governance is indeed challenging, particularly with major votes like the January one

Your point about the potential for inflows of tokens to impact price dynamics and overall bag value is well-taken—it’s a delicate ecosystem where decisions can ripple across holders in various ways. While unlinear voting could potentially dampen active investment, as you mentioned, finding solutions that maintain both fairness and engagement is key for protocols like Jupiter to thrive in the long run.

I appreciate your insights and the constructive dialogue!

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Really well put together friend.

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Thanks for the feedback my friend @Workwithnature🙌🏿

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I believe the vote would have been much higher than the 58% yes vote if some stakers would not be in the position of wanting to simply sell their positions at the end of the bull run. It is in their interest to vote no as they have gained their rewards don’t want dilution so price goes up and wishing to probably increase their holdings by buying back in the bear market. Thereby further gaining a larger say in the project. It is good to see that there are 58% of people who are in a different position. But what you are proposing will need to be considered in order to not have this imbalance happen again.
It is for this reason I believe this time the team should simply decide. I have proposed a vote in the topic section based on letting the team decide. So far all topics I have started have never been approved. Could be that I need to reach a certain level before creating topics. But I think we should hold a vote if the community thinks the team should just decide it all this time.

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