So, Tally snagged $8 million. Good for them. No kidding, because any win for DAO infrastructure is a win for the potential of decentralized governance. So let’s not pop the champagne just yet. Have we truly made any progress towards bridging the gaping chasm of disdain that hinders DAO governance? I'm not so sure.

Money Doesn't Equal Engagement

Just throwing money at a problem doesn’t fix it. That’s like giving a starving person a gold-plated spoon—giving them the tools they need won’t help if they have no food. Tally's scaling its tech, which is great. They support an end-to-end software stack, managing every aspect along the journey from token launch to value accrual. Fantastic. Arbitrum, Uniswap, ZKsync, Wormhole, Eigenlayer, Obol and Hyperlane as their clients? Impressive.

Here's the cold, hard truth about DAOs: people just don't care enough to vote. We've seen it time and time again. Low voter participation creates pernicious incentives, as we saw with CompoundDAO’s goldCOMP goldmine debacle. Remember that? An important counter-proposal slipped through the cracks largely because nobody had the energy or time to show up themselves. Was that a technology problem, or a willingness problem?

Tally’s betting on these kinds of staking mechanisms – economically rewarding active stakeholders is key. Stake your governance tokens, mint tLSTs, earn passive yields, and maintain your voting power. Sounds good on paper. Will it actually move the needle? I think not.

So how many of you actually vote on every single proposal in every single DAO you belong to? Be honest. Probably not many. And why? Because it’s all so time-consuming, incredibly confusing, and quite frankly most proposals are more boring than reading the phone book. (Alright, perhaps a little more exhilarating than that, but you catch my drift).

The funding will be used to further develop Tally’s tech to serve more DAOs. Great, but will it scale engagement?

The Illusion of Decentralization

We speak about DAOs as though they’re some kind of panacea for democratic coordination. An ideal, transparent, and equitable process where all communities have a seat at the table. Let's be real. Most DAOs are far from that ideal. They’re usually controlled by whales, insiders, and anyone else who has the time and wherewithal to be an active participant.

Tally’s vision of on-chain organizations one day being able to compete with nation-states is…well, let’s just say it’s ambitious, to say the least. Making it easier and less expensive to create and run nonprofits and foundations is a noble aspiration. Competing with nation-states? That requires more than just fancy tech. It needs legitimacy, it needs trust and it needs a depth of stakeholder engagement that DAOs just haven’t mastered yet.

This leads me to my second surprising link. Let me explain… DAOs, in their current form, are like the social media networks of the early 2000s. Who else remembers when it was believed that Facebook and Twitter would help bring about global democracy and human connection? We were going to overthrow dictatorships with hashtags and create a fairer world through online activism.

Social media amplified existing power structures. It has since morphed into a powerful weapon for manipulation, division and the spread of disinformation. Are we really confident DAOs aren’t making the same mistake and marching off a similar cliff? Are we sure that increasing access to participation will genuinely lead to better governance? Or will it merely result in smarter rent-seeking on their part?

Tally’s betting on more institutional participants, thanks to recent episodic clarity in the U.S. regulatory landscape. These large organizations constructing private or semi-private ecosystems on blockchain infrastructure will require and desire the capacity to govern that infrastructure, allegedly.

Institutions to the Rescue? Or Ruin?

Okay, maybe they're right. Perhaps this institutional money will pour into DAOs, providing a new level of sophistication and professionalism. I'm worried. What occurs when these institutions just start bullying and flexing? Will they unduly impact the governance process by drowning out the voices of all other smaller, retail token holders? Will they prioritize profit over principle? Or will they make DAOs into a genuine democratizing force and not simply another tool for increasing corporate control?

Let’s be careful what we ask for. This level of institutional participation would be a boon for DAOs, but it would be their undoing. It’s like bringing a bull into a china shop and expecting it to develop an interest in fine porcelain.

First, look, I’m not saying Tally’s $8 million raise is a bad thing. It's not. It's a step in the right direction. It's not a silver bullet. Yet many discussions about fixing DAO governance apathy assume solutions are just better tech and shiny financial incentives away. It requires a fundamental shift in mindset. It takes public pressure and a public that really pays attention and understands what decisions are being made. That’s a much bigger problem to tackle than any technical feat.

So, Tally, keep building. Keep innovating. Don't forget that the most important ingredient for successful DAO governance isn't money or technology. It's people. We have to truly involve them in a meaningful way. Without that, all the funding in the world won’t matter. Perhaps, Tally should focus on "gamefi-ing" the voting experience to make it more entertaining and engaging to vote for DAO.

So, Tally, keep building. Keep innovating. But don't forget that the most important ingredient for successful DAO governance isn't money or technology. It's people. And until we figure out how to get them genuinely engaged, all the funding in the world won't make a difference. Perhaps, Tally should focus on "gamefi-ing" the voting experience to make it more entertaining and engaging to vote for DAO.