The "rage-quit" mechanism in DAO: Origins, Evolution, and Misunderstandings

The concept of "rage-quit" was initially relatively niche in the DAO space, but as DAOs have developed and faced more challenges, it has gradually become a focal point of interest. However, there are often misunderstandings about this mechanism, and even some professional media occasionally misuse it.

Origin

In 2019, at the Ethereum Denver conference, a protocol called Moloch v1 was introduced, aimed at simplifying the creation and management process of DAOs. Compared to other complex DAO systems, Moloch v1's core code consists of only over 400 lines, making it easier to pool and manage funds.

To prevent the majority from abusing decision-making power, the Moloch protocol introduced the "rage-quit" mechanism. This mechanism allows members who oppose a proposal to withdraw their funds under specific conditions to protect the interests of the minority.

How "rage-quit" Works

In the Moloch protocol, after a proposal is passed, there will be a 7-day grace period. During this time, members who voted against can choose to "rage-quit" and retrieve their remaining rights in the contract before the proposal is executed.

This mechanism has several key features:

1. Enforced by smart contracts
2. Limited to members who voted against the previous proposal.
3. Can only be done during the grace period after the proposal has been approved but not yet executed.
4. You can only retrieve the remaining shares in the contract upon exit.

It is worth noting that the premise of "rage-quit" is that members have a direct and traceable contribution to the DAO treasury. If members have not contributed to the treasury, this mechanism cannot be executed.

Evolution

The success of Moloch v1 prompted the community to develop Moloch v2, which added features such as support for co-investment, broadening its application. This sparked the rise of investment DAOs, such as The LAO, Flamingo, and MetaCartel.

With the improvement of features, the "rage-quit" mechanism has also become more complex. Investment DAOs need to consider the equity distribution issues of invested projects, making the exit process more cumbersome.

Misunderstandings and Clarifications

Although the term "rage-quit" is widely used, in reality, most DAOs do not have the conditions to implement this mechanism. Many DAO members have not directly contributed to the treasury, so they cannot simply withdraw funds proportionally.

Even if the founder of the DAO proposes a "rage-quit", it is usually the result of negotiations among various parties, rather than a strict "rage-quit" in the literal sense. Unless there is a clear correlation between the founder's equity and the treasury funds, they do not have the right to withdraw the funds.

Nouns DAO is a special case that supports features similar to "rage-quit" after forking. This is mainly because the operational model of Nouns is closer to a donation-based DAO, where each NFT auction brings traceable funds to the treasury.

Conclusion

The evolution of the "rage-quit" mechanism reflects the continuous development and innovation in the DAO field. It is not only a technical concept but also represents the exploration of freedom, fairness, and community rights. As the DAO model matures, we look forward to seeing more institutional innovations that contribute to the healthy development of the digital society.