We develop and apply epistemic tests to various decentralized governance
methods as well as to study the impact of participation. These
tests probe the ability to reach a correct outcome when there is one.
We find that partial abstention is a strong governance method from an
epistemic standpoint compared to alternatives such as various forms
of “transfer delegation” in which voters explicitly transfer some or all
of their voting rights to others. We make a stronger case for multi-step
transfer delegation than is present in previous work but also demonstrate
that transfer delegation has inherent epistemic weaknesses. We
show that enhanced direct participation, voters exercising their own
voting rights, can have a variety of epistemic impacts, some very negative.
We identify governance conditions under which additional direct
participation is guaranteed to do no epistemic harm and is likely to
increase the probability of making correct decisions. In light of the
epistemic challenges of voting-based decentralized governance, we consider
the possible supplementary use of prediction markets, auctions,
and AI agents to improve outcomes. All these results are significant
because epistemic performance matters if entities such as DAOs (decentralized
autonomous organizations) wish to compete with organizations
that are more centralized.