"On-chain" refers to actions using a smart contract.
Systems requiring on-chain action are immutable and thus relatively permanent. Both permissioned and permissionless structures use on-chain mechanisms for their organizations.
On-chain Coordination
Permissionless decisions are made using a combination of code defining the token's behavior as well as through marketplace interactions.
Permissioned decisions are made using some form of voting mechanism.
Voting
1p1v refers to the way a system will give one vote for each entity involved in the DAO regardless of their contribution or involvement with the organization.
Plutocratic voting weighs decisions on the number of tokens allocated toward the decision. This type of decision-making gives power to particularly large holders (or whales) to make good decisions for development.
Quadratic decision making is a voting mechanism that takes into account the degree of a member's preferences, rather than the simple yes/no direction of their preference.
Holographic voting was a method developed by the DAOstack team to address the challenge of DAOs at scale, specifically, how can human members of a DAO be expected to vote on thousands of proposals?
They created a system that leverages economically "boosting" proposals to bring attention to the most important issues. These boosted proposals pass via relative majority rather than absolute majority.
Conviction voting is a form of continuous weighted voting and solves for voter apathy and on-chain gas costs. It was pioneered by the Commons Stack and first used in a DAO called 1Hive.
Liquid democracy allows for members of a system to delegate the weight of their decision to another person or entity they trust to have a more informed opinion.
Futarchy is a voting system that relies on prediction markets to determine decisions for an organization.
Participation
In an open network DAO, on-chain activity may include participants purchasing tokens as well as computers verifying network transactions.
A permissioned DAO uses a proposal process to add new members. This typically requires a vote over some threshold by current members of the organization.
Resource Management
Understanding on-chain resource management involves thinking about automated token distribution systems as well as manual voting systems.
Grant systems are managed via voting on proposals or vault signatures for a specific resource pool.
Investments are similar to grants, but will also ask for the grantee to offer some form of token or equity in exchange for the DAO's capital.
On-chain rewards can be thought of as a programatic incentive to benefit network contributors. Generally this is seen in contributing computer power and liquidity, but there are also projects beginning to reward social influence and marketing.
