SubDAO

A SubDAO is granted a specific, bounded mandate from its parent DAO, such as managing a treasury, developing a protocol feature, or running a grants program. This delegated authority is encoded in smart contracts, allowing the SubDAO to execute decisions within its scope without requiring a vote from the entire parent organization for every action. For example, Uniswap Grants Program operates as a SubDAO with a defined budget and mandate to fund ecosystem development.

SubDAOs often implement tailored governance models distinct from the parent. This can include:

• A separate governance token (e.g., airdropped or earned by contributors).
• Unique voting mechanisms (e.g., quadratic voting for grants).
• Custom proposal thresholds and voting periods. This specialization allows for more efficient decision-making by a smaller, more knowledgeable group of stakeholders directly involved in the SubDAO's domain.

A core feature is the control over a dedicated treasury, allocated by the parent DAO. The SubDAO has autonomous spending authority within its budgetary limits for operational expenses, grants, or investments. This is typically managed via a multi-signature wallet or a custom treasury module, with transactions requiring approval from the SubDAO's own elected signers or via its internal governance votes.

While autonomous in daily operations, a SubDAO remains accountable to the parent DAO. The parent typically retains ultimate sovereignty, including the power to:

• Adjust the SubDAO's mandate or budget.
• Sunset or dissolve the SubDAO.
• Override major decisions via a higher-level vote. This creates a balance where the SubDAO can move quickly while the parent ensures alignment with the broader protocol's goals and values.

SubDAOs manifest in several recognizable patterns:

• Workstream DAOs: Focus on a specific function (e.g., marketing, development).
• Regional DAOs: Manage community and growth in a specific geography.
• Protocol SubDAOs: Govern a specific application or layer within a larger ecosystem (e.g., a lending market within a DeFi hub).
• Grants DAOs: Specialize in allocating capital to ecosystem projects, like Compound Grants.

SubDAOs are built using a stack of DAO tooling and frameworks. Common infrastructure includes:

• Governance platforms like Snapshot for off-chain voting and Tally for on-chain execution.
• Multisig safes (e.g., Safe) for treasury management.
• Custom smart contracts that define membership, voting rights, and the scope of executable actions. This technical layer enforces the rules of the SubDAO's operation.

A Protocol SubDAO is responsible for governing a specific component or set of parameters within a larger DeFi protocol. This decentralizes operational control and leverages specialized community expertise.

• Example: A lending protocol might have a Risk Parameter SubDAO that votes on adjusting collateral factors, interest rate models, and asset listings.
• Example: An AMM might delegate fee tier adjustments and liquidity mining rewards to a dedicated sub-committee.
• Key Benefit: Allows for rapid, informed adjustments to protocol mechanics by those most knowledgeable.

A Product SubDAO forms around a specific initiative, such as building a new feature, dApp, or service. It acts like an internal startup team with its own budget and roadmap, accountable to the parent DAO.

• Example: A DAO governing an NFT platform spins up a Mobile App SubDAO to develop and launch its first iOS application.
• Example: A Research Working Group forms to explore and prototype integrations with new blockchain networks.
• Key Benefit: Fosters innovation and product development with focused teams and clear accountability.

A Legal Wrapper SubDAO is a legally recognized entity (like an LLC or Foundation) established to represent the DAO in the traditional legal system. It holds assets, signs contracts, and provides limited liability for members, bridging decentralized governance with real-world requirements.

• Function: Can employ staff, manage intellectual property, enter into legal agreements, and handle tax obligations.
• Structure: Often governed by a multisig wallet controlled by elected DAO stewards.
• Key Benefit: Mitigates legal risk for contributors and enables off-chain operations essential for growth.

A Community SubDAO manages non-technical, human-centric operations essential for the DAO's health. This includes onboarding, education, event planning, contributor compensation, and internal communications.

• Responsibilities: May run community calls, manage a contributor rewards system, maintain documentation, and coordinate hackathons.
• Tools: Often utilizes platforms like Coordinape or SourceCred for peer-to-peer reward distribution.
• Key Benefit: Sustains community engagement, scales contributor participation, and maintains organizational culture.

A Security Council or Emergency SubDAO is a small, trusted group with privileged permissions to act swiftly in a crisis, such as pausing a vulnerable protocol or executing a time-sensitive upgrade. Their powers are strictly defined and often time-bound to prevent abuse.

• Activation: Powers are typically dormant and only activated via a main DAO vote or a clear emergency signal.
• Composition: Members are often elected security experts or long-standing core contributors.
• Key Benefit: Provides a critical fail-safe mechanism to protect user funds and protocol integrity during emergencies.

A SubDAO example focused on treasury management and financial operations. While not always formally named a SubDAO, many DAOs spin off specialized working groups that function as one, managing aspects like liquidity provisioning, asset allocation, and yield strategies for the protocol's treasury.

Many DAOs form technical SubDAOs or working groups responsible for smart contract audits, protocol upgrades, and developer tooling. These groups have specialized knowledge and delegated authority to execute technical tasks without requiring a full DAO vote for every code change or security review.

• Function: Core development, bug bounties, and security committees.
• Benefit: Enables faster, more expert-led execution on technical roadmaps.

A critical operational SubDAO formed to handle compliance, legal structuring, and government relations. These entities often operate as limited liability companies (LLCs) or other legal wrappers to protect contributors and manage real-world obligations, such as contracting and intellectual property.

• Purpose: Mitigate legal risk for the broader, pseudonymous DAO.
• Example: The formation of a legal entity to hold assets or engage with regulators.

A SubDAO operates under a formal delegation of powers from the parent DAO's governance framework. Its authority is explicitly scoped, such as managing a treasury for a specific product, overseeing a grants program, or governing a regional community. This creates a separation of concerns, allowing the main DAO to focus on high-level strategy while specialized groups handle operational execution. The scope is typically defined in a constitution or charter ratified by the parent DAO.

SubDAOs often implement tailored voting mechanisms distinct from the main DAO. Common models include:

• Token-Gated Voting: Only holders of a specific token (e.g., a project's NFT or a dedicated governance token) can vote.
• Quadratic Voting: Voting power increases with the square root of tokens committed, reducing whale dominance.
• Conviction Voting: Votes gain weight over time, signaling sustained support for a proposal.
• Multisig Execution: Proposals approved by vote are executed by a designated multisignature wallet controlled by elected delegates.

A core function of many SubDAOs is autonomous treasury management. The parent DAO allocates a budget or a stream of funds (e.g., via Sablier or Superfluid) to the SubDAO's dedicated treasury. The SubDAO then has sovereignty over disbursing these funds for its operational scope, such as paying contributors, funding development bounties, or acquiring assets. This creates accountable, granular financial control without requiring a vote from the entire, often slower-moving, parent DAO for every expense.

Prominent DAOs use SubDAOs to scale governance:

• Aave Grants DAO: A SubDAO of Aave Protocol that autonomously manages a grants treasury to fund ecosystem development.
• Compound Treasury: A SubDAO created to manage institutional capital and real-world asset strategies separately from the core protocol's governance.
• Uniswap Grants Program: While not always formally a SubDAO, it exemplifies the model—a delegated committee with a dedicated budget to fund ecosystem projects, governed by UNI token holders.

Critical to SubDAO design are the safety mechanisms that allow the parent DAO to intervene. These include:

• Veto Power: The parent DAO retains the ability to veto SubDAO proposals within a timelock period.
• Scope Amendment: The parent DAO can vote to modify or revoke the SubDAO's charter.
• Treasury Clawback: Emergency powers to reclaim allocated funds in cases of malicious activity or critical failure. These mechanisms ensure the SubDAO remains accountable to the overarching community and its legal or reputational interests.

SubDAOs are built using a stack of smart contracts and tooling. Common infrastructure includes:

• Governance Frameworks: Snapshot for gas-free voting, Tally for on-chain execution, or OpenZeppelin Governor contracts.
• Treasury Safes: Gnosis Safe multisig wallets are a standard for holding and executing on funds.
• Coordination Tools: Discord with governance bots (e.g., Collab.Land for token-gating) and Commonwealth or Discourse for forum discussions.
• Legal Wrappers: Some SubDAOs use Delaware LLCs or other legal entities for real-world operations, managed by the on-chain governance.