> For the complete documentation index, see [llms.txt](https://square1-hello.gitbook.io/square-1/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://square1-hello.gitbook.io/square-1/decentralized-autonomous-organizations/aspects-of-decentralized-organizations/smart-contract-frameworks.md).

# On-chain Systems

"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

{% tabs %}
{% tab title="Permissionless" %}
Permissionless decisions are made using a combination of code defining the token's behavior as well as through marketplace interactions. 
{% endtab %}

{% tab title="Permissioned" %}
Permissioned decisions are made using some form of voting mechanism.
{% endtab %}
{% endtabs %}

### Voting

{% tabs %}
{% tab title="1p1v" %}
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.
{% endtab %}

{% tab title="Plutocratic" %}
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.
{% endtab %}

{% tab title="Quadratic" %}
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.

{% embed url="<https://en.wikipedia.org/wiki/Quadratic_voting#Quadratic_funding>" %}
{% endtab %}

{% tab title="Holographic" %}
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.&#x20;

{% embed url="<https://medium.com/daostack/holographic-consensus-part-1-116a73ba1e1c>" %}
{% endtab %}

{% tab title="Conviction" %}
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.

{% embed url="<https://medium.com/giveth/conviction-voting-a-novel-continuous-decision-making-alternative-to-governance-aa746cfb9475>" %}
{% endtab %}

{% tab title="Liquid Democracy" %}
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.

{% embed url="<https://en.wikipedia.org/wiki/Liquid_democracy>" %}
{% endtab %}

{% tab title="Futarchy" %}
Futarchy is a voting system that relies on prediction markets to determine decisions for an organization.&#x20;

{% embed url="<https://blog.ethereum.org/2014/08/21/introduction-futarchy/>" %}

{% endtab %}
{% endtabs %}

### Participation

{% tabs %}
{% tab title="Permissionless" %}
In an open network DAO, on-chain activity may include participants purchasing tokens as well as computers verifying network transactions.
{% endtab %}

{% tab title="Permissioned" %}
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.
{% endtab %}
{% endtabs %}

### Resource Management

Understanding on-chain resource management involves thinking about automated token distribution systems as well as manual voting systems.

{% tabs %}
{% tab title="Grants" %}
Grant systems are managed via voting on proposals or vault signatures for a specific resource pool.
{% endtab %}

{% tab title="Investments" %}
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.
{% endtab %}

{% tab title="Rewards" %}
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.
{% endtab %}
{% endtabs %}