😕The core problems

DAO governance is a high friction, low reward activity. For potential voters, there is far too much friction in participating in governance and little reason to push through the various obstacles in their way. For token holders, there's little incentive to delegate their tokens thereby adding it to the governance landscape. These dual obstacles cause major issues for DAOs both in their idea-generation pipeline and for DAO security by reaching quorum.

Friction

To be an active and prudent participant users have to: keep up with and contribute in various governance forum debates, participate in community calls, read working group reports, stay up to date in delegate telegram group chats, read and understand Snapshot proposals, vote in Snapshot proposals, write and post Snapshot vote rationales, read and understand on-chain proposals, vote in on-chain proposals, write and post on-chain vote rationales, and be an expert in DeFi, gaming, DAO operations, marketing, grants, and business development. And this is just for a single DAO. Most delegates are delegates across various DAOs. It's just not a reasonable ask, much less for uncompensated retail wanna be participants.

Reward

If someone manages to do this all they are rarely if ever rewarded. Very few delegates are paid fairly for their time and contributions. New DAO participants also rarely receive more delegations as token holders rarely delegate or redelegate their tokens. So for most people, the calculus just doesn't work out in their favor.

On the token front, DAO token holders have little reason to add their tokens to the governance ecosystem via delegation. There is no reward for doing such. So these tokens, just as their voter counterparts, stay sidelined.

Core problems

The combination of friction and lack of reward creates 2 core problems for DAOs:

1. Low voter participation

2. Low token participation

Low voter participation

Low voter participation means you just have fewer people contributing novel and potentially useful ideas to DAOs. DAOs with lackluster ideas will be outcompeted by those with stronger ideas. Worse yet, DAOs with only a handful of contributors are bound to fall into group think and stagnation.

Low token participation

DAO tokens which are delegated to delegates become part of the "votable supply." However, quorum (the minimum number of Yes and Abstain votes required for a proposal to pass) goes up as the circulating supply grows. So as investors' tokens vest, and as grants are handed out of the treasury, quorum goes up along side it. But if these new tokens are not delegated, quorum becomes increasingly out of reach.

To make matters worse, many delegates eventually stop participating in governance due to the friction outlined above. Since tokens which are delegated rarely get redelegated, this creates what we call a "Satoshi wallet" effect whereby these tokens, while still in the votable supply, are functionally out of comission. Redelegation campaigns notoriously do not fix this problem.

For example, of Aave's top 100 delegates, only about 7 are actually active. So the dual issue of the votable supply continuing to increase, paired with delegate fatigue results in an increasingly out of sight quorum. How bad is it? A working group out of Arbitrum DAO ran the numbers is are projecting that within the year, 99% of all Arbitrum DAO proposals will be unable to reach quorum.

This is a cause of concern not only because DAOs can be brought to a standstill, but for security reasons. If the votable supply remains low relative to the circulating supply, it becomes significantly easier to force through an attack such as a treasury drain on the DAO.

Event Horizon solves both of these problems.