Tokenized Voting System of DAO-Democracy: Concept and Provisions

State budgets spend millions of dollars on organizing voting (for example, the 2019 presidential elections in Ukraine cost taxpayers about 85.56 million USD), and yet the results always raise doubts in society. Large sponsors and oligarchs have effectively capitalized on democracy, financing election campaigns “behind the scenes” and gaining disproportionate influence over politicians. Citizens participate in deciding the fate of the country only indirectly, choosing from among candidates offered by oligarchs, after which they have illusory and limited control over the decisions of those representatives.

DAO-democracy (Decentralized Autonomous Organization democracy) is a new model that seeks to solve these problems by tokenizing elections. In this system, voting is replaced by direct voter participation through digital assets (tokens) associated with candidates or political parties. This concept combines blockchain transparency, direct democracy, and market mechanisms to build trust.

Main Idea: From Ballot to Token

DAO-elections radically differ from traditional ones. Usual attributes — polling stations, paper ballots, party lists — are abolished. Instead, the voter’s voice becomes a token, and a citizen’s participation turns into a financially validated blockchain transaction. Key features of this system:

• Direct participation without state mediation or influence:
  The state does not organize or fund the elections. The government only provides the legal framework and conditions for voter verification, but does not spend budgetary funds on the electoral process. Elections are essentially self-organized on a blockchain platform, where the rules are pre-coded into smart contracts.
• One person — one vote (via token):
  Each voter, after completing the mandatory identity verification (KYC/decentralized identification), gains the ability to support selected candidates by purchasing the respective candidate tokens. Importantly, the system adheres to the “one person — one vote” principle, meaning that a voter’s influence on the outcome does not depend on the amount of money spent. Whether a citizen purchases 1 token or 100 tokens of a candidate, their participation counts as a single vote in support of that candidate. A large financial contribution does not grant more votes — only the fact of supporting a candidate through the purchase of at least one token is counted.
• Multiple choice and proportional support:
  A voter is not limited to choosing only one candidate or party. They can distribute their trust among several political forces by purchasing tokens of various election participants — proportional to the attention, respect, or trust they have for each. For example, if a voter sympathizes with two parties at once, they can support both by buying tokens from each. Each such transaction is counted as a separate vote for the corresponding candidate. Thus, one person may support multiple candidates, but for each candidate their vote is counted no more than once. This brings elections closer to a trust-ranking model, where citizens freely express support for several representatives at the same time.
• Token = voting ticket and donation:
  Purchasing a candidate’s token essentially means direct financial support for their political force. Funds from token sales can be transferred directly to the campaign fund of the candidate or party, serving as a transparent mechanism of campaign donations. Who, when, and how much has invested in a candidate — is visible to everyone on the blockchain. This is a completely public alternative to shadow financing: now everyone can see who “voted with money” for a politician. The token purchase transaction performs a dual role — it is both a record of will expression (vote) and an act of material support for the candidate or political party.

DAO Voting Procedure

Below is a step-by-step description of how voting takes place in a tokenized DAO-type electoral system:

Voter verification. First, the citizen undergoes mandatory identity verification to confirm that they have the right to vote and that a single account is not used by multiple individuals. This can be done through the national digital ID system or decentralized Proof-of-Personhood solutions (such as projects like BrightID, Proof of Humanity, etc.). The goal is to ensure that each real person receives only one voting account, making “Sybil attacks” (mass registration of fake identities) impossible.

Tokenization of the vote. For each candidate (or party), a unique election token is created in advance (e.g., “${CandidateName}$”). The number of tokens may be fixed or issued gradually; what’s important is that their market price is determined by demand. Voting consists of the voter, after verification, accessing the election blockchain platform and purchasing tokens of the candidates they want to support. This can be done in any proportion: someone might invest the full amount in one candidate, another may distribute it among several. Each purchase is automatically registered in the ledger as a vote for the corresponding candidate. In this system:

• The monetary value of the token or the number of tokens purchased does not count — the system counts unique voters who supported a candidate, not the amount of their investment. For example, 1,000 citizens who each purchased 1 token of candidate X will give him 1,000 votes, even if the total capitalization of those tokens is lower than that of candidate Y with 500 wealthier investors. One person = one recorded vote per candidate, regardless of the amount invested.
   This is a fundamental difference from standard DAO voting based on “1 token = 1 vote,” which is criticized for concentrating power in the hands of “whales.” In our system, it’s impossible for a wealthy participant to buy advantage, because voting power is tied to the person, not to capital. 
• Self-funded voting for society. Each voter votes with their own funds by making a small investment. This removes the financial burden of elections from the state — no budget funds are needed at all, except perhaps for the basic verification infrastructure. The electoral process is financed by the participants themselves, with the funds going directly to support the political forces chosen by those citizens. Thus, taxpayers’ money is not spent on election bureaucracy — instead, contributions go to the direct support of democratic will expression.

Counting and results. Voting continues for a set period during which voters buy tokens. After it ends, a smart contract tallies the results: the number of unique voters who supported each candidate. The winner is the candidate (or party) who received the most support from different individuals — in effect, the highest number of “votes” under the principle of direct democracy. This is the realization of the majority’s will: the winner is the one who was “voted for” by the largest number of citizens in a decentralized manner.

• It is important to emphasize: vote counting occurs automatically and openly on the blockchain. Human influence in this process is minimized — the results are recorded in a distributed ledger and can be independently verified by anyone. This transparency greatly increases trust in the voting outcome.

Post-Election Token Dynamics. After the announcement of the results, tokens acquire a new meaning:

• The winner’s token becomes a kind of “bond” of the political future.
  Since this candidate has received public support and is likely to take office, the market price of their token reflects the level of trust and expectations of society going forward. If the newly elected politician meets expectations, interest in owning their token may grow (for example, as a symbol of participation or even as a share that potentially brings dividends in case of successful governance). If they break promises or lose popularity, the token may be massively sold off, and the market will promptly adjust its value downward. In other words, the winner’s token price becomes a “live” indicator of public trust — it’s not the Central Election Commission or pollsters who determine the rating of support, but the market itself through the supply-demand balance for this digital asset.
• The tokens of defeated candidates who failed to gain sufficient support quickly depreciate.
  After the elections, demand for them sharply drops, as they no longer hold political weight. This fate resembles the devaluation of fiat currency under a pseudo-democratic regime that has exhausted itself — the “failed” tokens may collapse in price to zero. This was already observed with so-called political meme tokens: after the 2024 election cycle in the U.S., tokens tied to candidates (MAGA, BODEN, etc.) lost ~90% of their value. However, this is natural: they served as an indicator at the time of the election. In our model, distrust toward a candidate is materialized in the price of their token — the absence of buyers is equivalent to the absence of support.

Transparency and Trust Through Blockchain

The proposed system is built on blockchain technology, which guarantees transparency and immutability of records. Every step — from voter registration to the final recording of results — is a record in a distributed ledger, accessible for public audit in real time. This means:

• Full voting transparency.
  All token purchase transactions are open and linked to verified (albeit encrypted) voter identifiers. Anyone can verify how many people supported a particular candidate, and even see which wallets (individuals) did so. In this way, elections cease to be a “mystery behind the curtain” — citizens gain a tool of control and can ensure the honesty of vote counting. It is worth noting that this is a conscious departure from the principle of secret voting in favor of greater accountability: support or its absence becomes a public fact.
• Open financing without oligarchic shadows.
  When the entire register of donation-votes is accessible, it immediately becomes clear who contributed to whose campaign and in what amount. Major sponsors can no longer hide behind offshore chains or shell funds — their contributions are recorded on the blockchain. A candidate’s “election wallet” is transparent to society. For instance, if an oligarch funds a candidate with 1 billion, it becomes publicly known instantly. DAO-elections eliminate the “gray zones” of political corruption, because bribery or mass vote-buying leaves a clear digital trail that can be seen by journalists and law enforcement. Under such conditions, politicians are forced to rely on broad public support, not just on a narrow circle of wealthy donors.
• Immutability and protection against falsification.
  Blockchain ensures cryptographically protected recording of every action. It is impossible to “stuff ballots” or rewrite protocols — any attempt to alter data in the ledger would require colossal computing power and would be immediately detected by network participants. As a result, manipulation or external interference in elections becomes significantly more difficult. Trust in the results is reinforced, because every vote is a transaction signed by the voter’s digital key — which cannot be forged.

The Role of the Market: Tokens as Trust Indicators

One of the unique features of DAO-democracy is the emergence of a market dimension of political support. The token price of candidates in real time reflects the balance of trust and skepticism among voters: the more people buy the tokens, the higher the capitalization and the market value of the token. This can be compared to a sociological poll conducted through one’s wallet or even a stock index of political popularity. For example, studies of the 2024 U.S. elections showed that traders used political tokens (such as “MAGA” or “BODEN”) to express their expectations about candidates, and the prices immediately responded to significant campaign events.

However, the market price is not a direct measure of electoral victory, but rather an indicator of sentiment: our vote counting is based on the number of people, not the amount of money. There is an important nuance here: large investors can potentially influence the token price speculatively, without increasing their number of “votes.” Consider this situation:

• If an oligarch invests a huge amount in Candidate A’s token, while thousands of ordinary people make much smaller contributions to Candidate B’s token, the token of Candidate A may become much more expensive than that of Candidate B. At first glance, the high price of Token A signals broad support. But in reality, Candidate A was supported by only a few wealthy individuals (only a few votes), while Candidate B has thousands of small supporters (many votes). In this case, Candidate B will win the election — because what matters is the number of participants, not the amount of investment. The expensive Token A reflects financial speculation rather than mass trust. Moreover, an excessively high token price may deter new supporters from purchasing it (few people want to “vote with money” when the entry cost is too high). In contrast, the cheaper Token B is accessible to more voters, encouraging broad participation.
• Conversely, if a political force gains popularity and many people start buying its token simultaneously, the price will rise sharply. To an external observer, this signals a trust trend. However, in our system each new buyer is valuable in themselves as a vote, not for how much money they spent. That is, price growth is a consequence of mass support, not its cause.

Thus, the market capitalization of candidate tokens serves as a “barometer” of public opinion but does not replace vote counting. It publicly demonstrates how society evaluates the prospects of one politician or another. It resembles a permanent referendum of trust: even between elections, the token prices of the ruling party or opposition may serve as a popularity indicator — one shaped not by polling, but by the real actions of people on the market. It’s worth noting that similar approaches to gauging public opinion via market mechanisms have already been discussed in the concepts of futarchy and political prediction markets. DAO-democracy effectively integrates these ideas into the electoral system: we get a “stock exchange of political capital” where every citizen is a trader of their trust.

Advantages of the Tokenized Electoral System

1. Significant cost reduction for the state.
   Most traditional expenses — ballot printing, maintaining electoral commissions, transportation, information campaigns — are eliminated. The DAO-voting infrastructure is scalable and significantly cheaper, as it is based on software solutions. The state saves hundreds of millions currently spent on the electoral process and can redirect them to other needs. Meanwhile, voters voluntarily fund the system through token purchases, meaning money is invested directly into the democratic process, rather than being absorbed by administrative overhead.
2. Transparent and fair political financing.
   Thanks to blockchain, elections become financially transparent. Everyone sees which forces are truly supported by the people, and which are artificially “inflated” by money from individual patrons. This creates public pressure on politicians: to be accountable to those who funded them (voters), not just to a handful of wealthy individuals. Furthermore, every citizen gets the chance to materially support their favorite candidate with even a small amount — effectively equalizing the influence of an average voter and a millionaire (since what counts are votes, not money).
3. Citizen engagement and activation.
   The DAO-democracy model motivates voters to take more active part in politics. Purchasing a token is a more conscious act than passively dropping a ballot into a box. People become a kind of investor in the future, which increases their interest in candidates’ programs and the future decisions of elected officials. The experience of PolitiFi tokens in the U.S. has shown that such mechanisms can increase political engagement, especially among youth and tech-cultural communities. Additionally, the ability to support multiple candidates expands the spectrum of voter self-expression — they are not limited to a binary choice but can voice sympathy for various ideas.
4. Speed and automation.
   Voting takes place online and is calculated in real time by smart contracts. Results are known instantly after the close of voting, eliminating human error and delay. This is especially valuable during crises or when rapid decision-making is needed (direct digital democracy). Moreover, the problem of invalid ballots, protocol errors, etc., disappears — the system clearly tracks the validity of every vote.
5. Continuous feedback and accountability.
   Unlike traditional elections, which provide feedback once every few years, the tokenized model ensures constant monitoring of trust. Token prices act as a continuous rating. This keeps politicians under permanent public scrutiny: if their actions are unpopular, voters can “vote with their feet” on the market, selling tokens and lowering the price (a warning signal for the politician). On the other hand, a successful decision can raise the value of the “political bond” and signal support. This dynamic may discipline power far more effectively than episodic elections, since trust is measured daily.
6. No geographic barriers.
   Blockchain voting eliminates the need to physically go to polling stations. This is especially relevant for voting from abroad (the diaspora) or remote regions. Participation is greatly simplified: one only needs an internet-connected device and completed verification. Expatriate voters, military personnel outside the country, and people with limited mobility — all gain equal access to expressing their will, without the complexities of ballot mailing or long consulate lines.

Possible Challenges and Solutions

Despite its clear advantages, the implementation of a tokenized electoral system faces a number of questions and risks. Let’s examine the main ones:

• Legal implementation and public trust.
  Transitioning to DAO-democracy will require significant changes in electoral legislation. It is necessary to officially recognize the digital vote-token as legitimate. Lawmakers will need to regulate the status of smart contracts, digital identification, taxation of contributions, and more. This is not a simple process — it requires educational efforts and broad public discussion. Some citizens may be skeptical of such innovation due to a lack of understanding of the technology. Therefore, pilot projects and a gradual transition are essential: starting with local communities, internal party elections, or referenda, and scaling to the national level only after successful trials.
• Technology access and cybersecurity.
  Although the Internet is widespread today, not all citizens have the skills to use crypto wallets or digital signatures. It is necessary to provide a user-friendly voting interface (perhaps via a mobile application similar to the state app “Diia”) and user support. Cybersecurity is also critical: voter keys, the platform, and personal data must be protected from leaks and hacker attacks. The use of two-factor authentication, hardware keys, and modern encryption methods is essential. Trust in the system will remain high only if it demonstrates resilience against external influence and maintains personal data confidentiality (even if the vote itself is public, personal identity must be properly protected).
• Privacy vs. publicity of choice.
  DAO-elections make voting open — each vote is “signed” by a specific voter on the blockchain. On the one hand, this adds accountability and transparency; on the other — it removes anonymity. There may be a risk of pressure on voters from employers, relatives, or even criminal elements who know whom the person voted/donated for. To balance this, technologies such as selective disclosure or Zero-Knowledge Proofs can be implemented, where the fact of support is counted but the identity is not publicly disclosed (only the aggregate number of votes is shown publicly, while detailed data is encrypted and available only to oversight bodies). Finding a balance between transparency and protection from persecution is a critical design task.
• Prevention of manipulation and bribery.
  In traditional elections, voter bribery is a criminal offense — but in a tokenized system, new forms of abuse may emerge. For instance, wealthy individuals might sponsor mass token purchases for a candidate, handing out money to voters in exchange for the “right” vote (analogous to bribery, but via crypto wallets). Tracing and proving collusion may be difficult. To counter this, it is necessary to:
   a) impose limits on the maximum number of tokens one person can buy for voting (to reduce the impact of “bulk” purchases);
   b) criminalize and monitor atypical transactions (e.g., thousands of new wallets receiving funds from the same address and immediately buying one candidate’s token — a clear sign of a bribery scheme);
   c) implement anti-collusion mechanisms like MACI (Minimal Anti-Collusion Infrastructure), which make coordination among malicious actors more difficult.
• Wealth effect and unequal access.
  Although votes are counted equally, the financial barrier to participation may be subject to criticism. On one hand, the contribution can be minimal (in principle, purchasing just one token at a symbolic price may suffice), but on the other — the “pay-to-vote” principle may be unacceptable to some. To avoid deterring anyone, a very low entry threshold must be ensured: for example, issuing a large initial batch of tokens at a fixed low price (so everyone can afford at least one). Another option is subsidizing voting for the underprivileged: the state or an independent fund could provide vouchers or crypto-grants to cover the first token purchase for every citizen. The key is to maintain inclusivity and prevent elections from turning into an “auction” for the affluent only.
• Response of the traditional political system.
  The current political elites and institutions (election commissions, legacy parties) may resist DAO-democracy, as it reduces their role and opens up competition. Legal challenges and information attacks are possible (“this is all a scam, a pyramid scheme,” “they want to take away your right to vote,” etc.). Therefore, implementation requires strong allies among reformers and a large-scale public awareness campaign. It is important to show that the new system does not benefit individuals, but provides transparency and cost savings for society as a whole. Early successful cases (perhaps at the level of local communities or student self-governance) can help convince skeptics by demonstrating how it works in practice.

Conclusion: The Path to Open and Effective Democracy

A DAO-type tokenized electoral system is a bold response to the challenges of modern democracy. It transforms elections into a transparent market process where each citizen is a participant-investor, and information about support and funding is accessible to all in real time. Although such a model may sound like a radical “capitalization of democracy,” in reality it proposes to do openly and honestly what has long been happening de facto — but under public control.

With blockchain, we have a chance to eliminate corruption schemes, reduce the cost of voting, increase citizen participation, and make government continuously accountable to the people. DAO-democracy may become the next stage in the evolution of political systems — more flexible, digital, and fair.

Of course, the transition to tokenized elections will require gradual changes, experimentation, and legal framework improvements. We call on investors, technical experts, civil society activists, and lawmakers to join forces to develop a detailed White Paper and launch pilot projects. It is necessary to establish security standards, verification protocols, and abuse-prevention mechanisms to ensure the success of this initiative.

DAO-democracy is a chance to return control of democracy to the hands of citizens. If elections are a kind of marketplace of ideas and leaders, then it’s time to make this market open and fair. Tokenization of elections gives us the tools to build a future where the will of the people is expressed and counted transparently, and trust becomes a tangible and measurable value. We stand at the threshold of a new era — an era where blockchain and decentralization can revolutionize democracy, making it truly the rule of the people in the digital age.

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