ArchDAO governance is built on the principle of futarchy, a system that replaces opinion-based decision making with market-driven outcomes.Rather than asking participants what they think should happen, ArchDAO asks a more precise question: what outcome are participants willing to risk capital on in order to create value.This approach aligns governance with incentives and turns decision making into a continuous, measurable signal.
Most governance systems rely on token-weighted voting. Participants signal preferences, but they are not required to justify those preferences with capital at risk.As a result, decisions are often driven by narratives, coordination, or influence rather than accuracy.
Governance participation is typically low, and when participation does occur it is often uninformed. Many token holders abstain entirely, while others vote without strong incentives to evaluate long-term outcomes.This leads to weak signals and inconsistent decision quality.
In traditional governance, being wrong carries little to no downside. Poor decisions rarely result in direct consequences for voters, which encourages speculative or short-term thinking.
Futarchy separates opinions from outcomes. Instead of expressing what they believe should happen, participants express what they believe will lead to higher future value.This distinction is critical. Governance becomes about forecasting results rather than advocating positions.
Prediction markets aggregate information by allowing participants to trade on outcomes. Prices reflect the collective expectation of future value, incorporating diverse viewpoints and information.Markets continuously update as new information becomes available, producing more responsive governance signals than static votes.
In futarchy, influence is earned by risking capital. Participants who are confident in an outcome can express that confidence by taking a position, while those who are unsure naturally participate less.This filters out low-conviction opinions and amplifies high-quality signals.
Markets reward participants who are consistently correct and penalize those who are not. Over time, this feedback loop improves the quality of decisions and aligns incentives toward long-term value creation.
Founders retain the ability to propose actions, but outcomes are determined by markets. This constrains unilateral decision making and creates accountability without removing founder leadership.
Investors who are exposed to a project’s upside are also responsible for shaping its decisions. Governance participation is directly tied to economic exposure, aligning incentives across all stakeholders.
Governance begins with discrete proposals that define a specific action or decision. Each proposal is evaluated independently, allowing markets to focus on clear and measurable outcomes.
For each proposal, a decision market is created. Participants trade on the outcome they believe will result in the highest future value for the project’s token.The outcome with the strongest market signal becomes the accepted decision.
