DAO Governance Attacks, a Threat to be Aware of in Web 3.0

Decentralized Automated Organizations (DAO) is a system designed to allow investors around the world to use tokens to vote on projects without revealing their identities. It has been a trend that has received a lot of attention lately because it increases the decentralization of the governance or management system of an organization. There are other advantages, such as transparency and accountability. 



However, with the increasing adoption of Web 3.0 today, there are more threats and cyberattacks. One of the threats is the governance attack, where malicious actors use their voting rights for their own personal benefits. This affects the cryptocurrency project, especially a DAO system, when it comes to deciding on proposals for management systems. So today we have preliminary measures to counter malicious actors that may be a threat to DAO projects. 

First, to ensure security against governance attacks, you need to make sure a suspected attacker’s potential to make profit is negative and reduce the incentive for protocol exploitation by devaluing an attack. Costs could be increased, or the process of gaining voter rights could be made more difficult. Costs could be increased at channels that are vulnerable to attacks. The details are as follows: 

The scope of a protocol’s management system model should be limited at the design stage to reduce the risk and vulnerability of being attacked by malicious people.    
The management system or governance should be expanded to have a solid foundation from the beginning of the project. Once the project has matured and there is decentralization, conflicts within the governance section can be dealt with. At the very least, a large quorum should be used to make the most important decisions.   
Make it more difficult to get the right to vote to reduce risks. The more liquidity there is for a token, the easier it is for users to obtain voting rights. Therefore, projects may have to reduce liquidity in exchange for better governance security.    
Use veto power, which causes a vote to be delayed or suspended for a certain period of time. This is to warn inactive voters in the system and enable them to recognize a potentially dangerous offer.  By doing this, voters have time to react and stop malicious offers.   

In addition, a balance can be established for change within an open community, and malicious proposals can be prevented from taking advantage of loopholes.

Thank you for the information from a16zcrypto