ELI5

A simple description of futarchy

Futarchy is a fundamentally new mechanism. Because of this, it normally takes some time to fully understand how it works.

At a high-level though, a basic way to think about futarchy is:

  1. When proposals are raised to a DAO, people speculate on whether the proposal would make the DAO's token go up

  2. When the market thinks that the proposal would increase the value of the token, the proposal passes

  3. When the market thinks that the proposal would decrease the value of the token, the proposal fails

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