Understanding Rage-Quit in a DAO

Rage-quit refers to the process where a Decentralized Autonomous Organization (DAO) member withdraws part or all of their stake, claims a proportional share of the assets in the DAO‘s treasury, and discontinues their participation.

A Mechanism for Exiting DAOs

The concept of rage-quit was initially introduced as a fundamental feature of the V1 Moloch DAO framework and has been retained in subsequent versions.

It has also been incorporated into other DAO frameworks.

In the implementation of Moloch DAO, any member can initiate a rage-quit at any time, unless they have already voted “Yes” on an active proposal.

Notably, a member who has not voted “Yes” (voted “No” or not voted at all) can rage-quit during the grace period between when a proposal has been approved and when it is executed.

Fostering Member Alignment

Rage-quit aims to ensure that all DAO members maintain complete control over their respective share of the assets held in the DAO’s treasury, even when those assets are available for collective deployment in pursuit of the DAO’s objectives.

This feature also safeguards minority members from being overruled by the majority, making it easier for individuals to pool their assets and work towards common goals regardless of their wealth.

A DAO that includes the rage-quit feature attracts members who prioritize active participation in the DAO’s activities over their stake in the treasury.

This fosters stronger alignment among the remaining DAO members, who are all committed to the DAO’s mission.