Unlocking Trust:
The Competitive Edge of Transparency in DAOs

Experience through simulation: the effect of transparency in increasing the donation

Transparency Simulation Results

Adjust Transparency Level

Transparency: 0

Simulation Results

See their learning process ↓

Donation Level: N/A

Try to collect enough fund for your project by making your execution process transparent!

Adjust the “Transparency” slider to set the level of monitoring cost, represented as a percentage of the total donation. Without transparency, donors bear this cost to ensure the fund is used responsibly—an example of agency costs.

With a group of 10 potential donors, each with a budget of 100, the simulation uses a reinforcement learning algorithm to guide each donor in finding their optimal donation amount based on your chosen transparency level.

Press “Run Simulation” to see the results in action!

Notice how greater transparency leads to higher donations in the simulation?

This is corroborated by statistics:

53%

is the one-year increase in contributions for industries who got a seal guaranteeing transparency.(1)

70%

of donors prioritize trust before donating money.(2)

As such, building trust in fundraising platforms is crucial, but many fall short, undermining user confidence.

Clear and open communication about how funds are utilized fosters stronger, more lasting relationships, encouraging greater contributions and involvement.

Implementing a DAO makes every step of the process accessible, ensuring transparency

A DAO records every action and transaction on the blockchain, providing complete visibility. Votes and decisions are open and verifiable in real time, ensuring accountability and clear governance.

Blockchain technology enhances donation platforms by offering secure, unchangeable records and real-time financial tracking. Donors can see exactly how their contributions are used, and open voting ensures transparent decision-making. This clarity helps address challenges like the free-rider problem and promotes more frequent, confident donations.

Here's how you can implement it:

1) Clearly define the scope of your donation system: Are you trying to curate donators’ confidence ? Are you trying to streamline the donation process ?

2) Choose a blockchain or create your own: Based on your needs and goals, you may choose to create a brand new blockchain or to base your DAO on an existing blockchain.

3) Design governance rules: In order to make your donation system truly autonomous and transparent, donors should have the ability to shape some of the donation features (e.g. counterparts…).

4) Create communication channels among members: In order for the donation system to run smoothly under DAO, privileged communication channels for governance should be established.

5) Launch your DAO solution

Click to Learn About a Platform that Successfully Implements DAO Transparency: ONGAESHI

Explore More

Introduction Page

How to Incentivize Donations and Overcome the Free-Rider Problem

Fukuhara Masahiro Research Seminar 2024

For any inquiries, please E-mail fukuharazemi@gmail.com

Decentralized Funding

Unlocking Trust: The Competitive Edge of Transparency in DAOs