It's great to be back!
OrgTech Review is now DAObase. Our new brand, tag-based site structure, and forum with embedded comments, will lay the foundation for our vision of growing this newsletter into a fully-fledged knowledge base for DAOs.
We're also honored to become the spiritual successor to DAOhub, the original community home for The DAO, and to carry that torch by building a home for all DAOs. We will be taking over the DAOhub Twitter account, now @DAObase_org. Follow this account if you prefer getting your news through your feed rather than your inbox.
Now, let’s catch up on some of the things we missed while we were gone (more to come in the next issue).
This issue was brought to you by Jack Laing.
📺 Previously on DAObase
- #18 – Most Clicked: What the Decentralized Web can Learn from Wikipedia, A reputation system which calculates global trust values based on peer-to-peer claims, A credit union DAO.
- OrgTech-Fr Review #4
Using their Web3 SDK, Abridged are building “DAOops” tooling, with the goal of making DAO functionality accessible via existing distribution channels. Their MVP integrates Moloch contract functions with a Telegram bot. They’re using this bot in a proof-of-concept “Signal DAO”, a Moloch DAO that is coordinated completely through Telegram, which significantly increased voter participation. They plan to integrate with Aragon and DAOstack in the future.
- ChainSafe published the final specification for Aragon Chain, including an Ethereum bridge that will facilitate token transfers and Aragon Agent interactions across chains.
- Aragon Court is live on mainnet (technical details here) and will lay the foundation for DAO members to be able to form subjective agreements with each other, deposit collateral when entering into relationships, and resolve disputes over any action.
- The Aragon Agent app received an upgrade, it now has a UI and can manage non-fungible tokens (NFTs); check out this example of the Agent being used to deploy the Aragon Network DAO and Aragon Court’s ANJ token, and this DeFi tutorial.
- The core Aragon team restructured, with Stefano stepping down from his role as the Association’s first Executive Director, Luis swapping his role as Aragon One’s CEO for a role as the replacement Executive Director, and Jorge stepping from CTO into the role of replacement CEO.
- The Association also has a new larger team. Their first decision was to shut down the Flock grants program, in favor of leaner funding experiments like App Mining. They are now focusing on handing governance of the Aragon Network over to ANT holders, leveraging the new Aragon Court and upcoming Agreements app to enforce the rules of coordination.
- 1Hive released a suite of apps that replicates the functionality of Moloch DAOs, enabling people to request governance tokens in return for deposits, then “rage quit”, redeeming their governance token in return for their share of the DAO’s funds.
- Autark launched their Open Enterprise suite on the Ethereum mainnet, enabling Aragon DAOs to attach bounties to GitHub issues, create budgets, reward dividends, and assign human-readable names to Ethereum addresses.
- An r/ethtrader moderator integrated Aragon natively into the governance of the subreddit, including a custom app for Harberger taxes.
- Consensys Diligence released AraGraph, a tool that enables you to visualize the permissions in an Aragon DAO.
- A beta Committees app, for managing permission groups.
- A Sablier integration, for real-time streaming salary payments.
- Placeholder Capital explores economic models for pricing ANT (Aragon’s governance token), ANJ and ARA (the tokens required to do work in Aragon Court and Aragon Chain respectively).
Bounties Network shut down all development work on their explorer and protocol, citing a failed thesis about interoperability, difficulties collaborating with other Ethereum teams, and misalignment with their investors. The network will remain active and open-source.
After rewriting their DApp from the ground up, to replace a serverless data layer that was undermining the UX, Colony launched their public beta. The beta allows you to create new tokens for your organization, assign existing tokens, organize tasks into domains, crowdsource task suggestions, assign permissions to community members or smart contracts, manage funding pots, and reward work with payments and reputation. A beta version of the Colony Network DAO (Metacolony), the Betacolony, is also live.
The first major revision of Colony's technical whitepaper was published, outlining a new access-control (permission) framework, support for extensions to integrate with this permissions framework, a standardized interface that will help extensions to manage stakes on behalf of users, and quality of life improvements to reputation mining.
Colony also introduced new features, Suggestions & Programs, which enable colonies to crowdsource task suggestions and to create bounty games that incentivize new community members to progress into valuable contributors. These features seem particularly useful for DAO onboarding, contributor recognition, and community ambassador programs. Check out the Betacolony ambassador program and the MetaGame "Gitcoin Grants Shill Quest" as examples.
LeapDAO, a developer cooperative working on Ethereum scalability, wrote about how they're using Colony in a custom DApp to power their Holacracy organizational model.
Commons Stack outlined how they are establishing "healthy initialization conditions" for their DAO ecosystem, by giving early governing power only to community members who earn reputation by contributing time or funds to the stack's development (the "Trusted Seed").
Commons Stack is building an open framework of token-engineered components that communities, interfacing with real-world public goods, can use to operate like platform cooperatives. Read more here.
Launched their app designed to help companies operate like an internal marketplace of teams, with marketplace, banking, and accounting modules. Check out the product demo on their landing page.
Tommy Cox has been working on a two-way bridge between Aragon and Colony. Here's his guide on how to give an Aragon Agent root control of a colony. The goal is to figure out how to weight voting in Aragon according to reputation earned in Colony, use the Agent to execute Aragon-voted actions in Colony, and design a template that will make it easy for anyone to use this setup.
DAOstack outlined their vision for 2020, to turn social networks into collaborative networks with more mainstream-friendly product features such as mobile apps, simpler account creation, and crypto onramps, and more niche governance plugins such as community fundraising and contests.
Released a simplified DAO Launcher that lets anyone launch a DAOstack DAO in under 1 minute. Guide to using the launcher here. They've also contributed work to the dxDAO, see below.
Fairmint's platform went live, enabling startups to run Continuous Securities Offerings (CSOs), whereby startups commit to allocating a share of their future revenues to a reserve, which investors can enter and exit at any time.
The MetaCartel-funded project launched their Discord bot enabling any Discord group (smaller than 12 people) to form a minimum viable DAO that integrates with Standard Bounties smart contracts (Bounties Network & Gitcoin). Check out a demo here and the contracts here.
Introduced the Kleros Governer, a smart contract designed to be the owner of other smart contracts. The Governer can only submit one list of transactions per week and will rely on the Kleros Court to decide which list is correct. If the Governer only receives one list, it will automatically execute at the end of the week, unless another person disagrees with the correctness of the list, in which case they can force a court ruling by submitting their own version of the list. This is an example of how the Kleros court, the original competitor to Aragon Court, can be used as a supreme court for DAOs.
Moloch v2 was released, enabling Moloch DAOs to hold multiple tokens, vote to kick members, distribute non-voting shares to investors, and to open up to non-member proposals, with a new voting process that requires non-member proposals to be sponsored by at least one member before they'll be voted on. More technical details here.
Democracy Earth upgraded their governance dashboard, Sovereign, to be compatible with Moloch DAOs and support integrating different voting mechanisms (e.g. quadratic voting) into Moloch DAOs. The long-term vision is for Sovereign to become a DAO Browser for all DAO protocols. Note: the article sparked an interesting debate on Moloch's forkable ecosystem vs Aragon's modular ecosystem.
Check out Moloch's Year in Review to recap everything that happened in 2019.
Introduced Smart Clauses, templates that make it easy for anyone to turn traditional legal agreements into Computable Legal Agreements (CLAs) which execute and settle automatically.
Underscore are adopting the Reasonable model, whereby the equity rights that founders/investors usually receive are replaced by debt obligations and governance rights, to be paid out of the future profits of the project. See the technical spec here. Under this model, they are incorporating as a limited liability DAO (LAO) in Vermont.
It works as follows:
- The organizer creates a Merkle tree of eligible voters ("Census"), publishes this to IPFS, and publishes the data required for vote encryption (Merkle root and public key) to Ethereum.
- The eligible voters then submit their "voting envelopes", using a zero-knowledge proof to verify they are part of the Census.
- Finally, Oracles submit the voting envelope to a Tendermint chain for validating and counting ballots.
0x launched v3 of their protocol, updating governance incentives by giving voting rights to market makers through a ZRX staking mechanism, and enabling ZRX holders to delegate half of their voting power to staking pools. They also released an updated governance roadmap, which includes a formalized "ZEIP" process for upgrades, giving control of staking economics parameters to the community, modularizing contract upgrades, and integrating on-chain voting capabilities.
Bancor are transitioning to decentralized governance, by airdropping their entire Ethereum reserve to BNT holders, upgrading to an inflationary token model, and empowering BNT holders to decide the BNT inflation rate and allocate the inflationary funds.
Compound introduced a new governance token (COMP), with the ability to delegate voting power and a rule that users can only create proposals (executable code) if they have greater than 1% of delegated COMP. Full technical details here.
Nectar DAO, one of the wealthiest DAOs to date (controlling 17,000+ ETH), started bootstrapping its reputation distribution in December 2019. In January, the DeversiFi team transferred ownership of the Nectar token's Controller contract to the DAO, so that the token can only be upgraded by the DAO.
The DigixDAO voted to dissolve itself, due to general lack of engagement with the Digix platform, and the fact that DGD (the governance token) was historically trading below the DAO's book value. The DAO's treasury of ETH is being pro rata distributed to DGD holders who burn their DGD. This is an interesting case study of how token-weighted voting, combined with arbitrage opportunities between governance tokens and the treasuries they control, can lead to the dissolution of DAOs.
district0x shared more details of their integration with Aragon. When new districts are added to the District Registry, an Aragon DAO will be automatically spun up. When any DNT holder stakes to a district through the Registry interface, they'll receive voting rights in the Aragon DAO according to a bonding curve.
Galt Project, a decentralized property registry, went live on the Ethereum mainnet. The platform enables anyone to create a private property registry, distribute tokens to neighbors, then use the registry to raise funds and vote on community issues.
The dxDAO ecosystem has been making steady progress, growing beyond its ownership of the DutchX exchange with various new DeFi protocols in the works. These include Omen, a prediction market platform for which dxDAO will be the main arbiter, Mesa, a front-end for the Gnosis DEX, and Mix, a privacy-centric DeFi dashboard. The DAO's bonding curve contracts and fundraising DApp are being developed by dOrg and LevelK (contracts here, pre-release DApp preview here).
The Open Source Initiative approved a new Cryptographic Autonomy License (CAL) for Holochain. The license, designed for DApps, protects users' rights to own and control their data and private keys.
Ross Campbell, a crypto lawyer involved with Open ESQ, OpenLaw, and The LAO, formed a cooperative of crypto-legal professionals which leverages a number of interesting DAO-enabled business models:
- The lexDAO Research token (LDR) is a service token that represents one 500-word report. This can be bought from the lexDAO's pool via Uniswap, then redeemed for the service by submitting it back to the lexDAO's Aragon Finance app. Uniswap's bonding curves facilitate price discovery for the service.
- The lexDAO provides an escrow arbitration service, using Aragon Agent, with a 5% arbitration fee.
- The lexDAO Registry (TLDR), the registry of lexScripts (legal templates) is used to govern the reputation of lexScribes (lawyers). LexScribes earn tokens each time their lexScript is used by customers, which they can use to renew reputation points every quarter. This reputation renewal system ensures that only active lexScribes are allowed to provide legal services.
Livepeer's governance roadmap will first establish a healthy community environment – with education/documentation, a formalized Livepeer Improvement Proposal (LIP) process, and a polling application for rough consensus. Once these are in place, the core team will deploy a system for updating parameters/code, replace a core developer multi-sig with a governance contract, and introduce a binding voting system. For more on the principles behind this roadmap strategy, see "progressive decentralization" under Thoughts below.
The Maker team made several governance advancements. They transferred control of the MKR token from the Maker Foundation to the DAO, laid out plans for a decentralized workforce, delegated voting, and a formalized Maker Improvement Proposal (MIP) process, and transferred trademarks and software IP to the independent DAI Foundation.
It wasn't all plain sailing; a design decision to have zero delay in the Governance Security Module was highlighted as a pretty severe attack vector. This has since been resolved, but there are still open questions about the security of Maker's governance incentives and particularly the problem of vote renting. For more on this issue, see "borrowing attacks" under Design below.
Filling a gap left by the Ethereum Foundation, the Marketing DAO is an Ethereum community effort to formalize and coordinate Ethereum marketing. More details on the design of the Moloch fork here. So far, they have formed several working groups and given grants to these 10 projects.
The MetaCartel community has been thriving, with the development of several projects. Check out their Community-first manifesto for insight into the values that have led to projects such as:
- MetaCartel Ventures: A Moloch v2 investment DAO targeting early-stage DApps, MCV uses a Delaware LLC that defers to the Moloch smart contracts in matters such as members joining or exiting the DAO. Full legal agreement here. Non-accredited investors can join the DAO but they must perform managerial responsibilities such as sourcing investment opportunities, due diligence, and managing assets. Otonomos offered an interesting critique: the Rage Quit mechanism may be incompatible with the time horizon of typical VC ROIs, and there is a lack of individual dealflow incentives, two incentive problems that may be resolved with a Series LLC structure that divides the assets of each investment and forfeits Rage Quit rights for deal leads.
- MetaGame: A gamified inter-DAO reputation system, powered by SourceCred reputation, NFT achievements, and savvy community game design. In this retrospective, The founder of MetaGame explains how he grew the MetaGame community through the power of memes and narratives. Links to several blog posts within.
- MetaClan: An eSports DAO that pools funds to equip its athletes with the best equipment to go hunting for rewards (e.g. NFTs) in competitive Web3 games, in return for a share of the rewards. Partnering first with Axie Infinity.
- MetaFactory: A crowdfunding platform that empowers creators to distribute limited-run custom goods to their brand communities. Each collectible will come with a digital twin, represented by an NFT.
- MetaCoin: An ETH-only alternative to MakerDAO's DAI, which aims to minimize the role of governance in the system.
Nexus Mutual processed their first ever insurance claim. It was initially declined due to an assessment that no smart contract failure had occurred, rather a failure of bZx's cryptoeconomics. That is until a post-mortem came out, confirming that there was indeed a smart contract failure.
Using 1Hive's Dandelion suite for Aragon, which replicates Moloch functionality, PieDAO is a protocol that enables investors to create tokenized indices of synthetic assets. This is the first Aragon DAO that Luis Cuende (Aragon co-founder) has invested in.
Parity are transferring ownership of their Ethereum client to an "OpenEthereum" DAO, in an attempt to outsource maintenance to a crowd that they believe will be better equipped to support the complex codebase. Parity will be a member of the DAO in a mentorship capacity.
Stake Capital's DAO will allow stakers to vote on the whitelist of staking services and the parameters for yield cycle durations and token disbursement rates. The DAO will be powered by Aragon. More details in this lightpaper.
After TRON’s acquisition of Steemit, Steem investors attempted to soft fork the blockchain to minimize the voting power that Steemit (and now TRON) owned. In response, TRON partnered with major exchanges (Binance, Poloniex, Huobi, among others) who used their substantial token holdings (consisting largely of customer deposits) to reverse the “criminal and illegal” soft fork, hard forking the blockchain to replace the top 20 community-owned block producers with block producers owned by Steemit/TRON. In an open letter about the hostile takeover, Steemit/TRON said they’d “give the governance back to the community when it’s back in order and mutual agreement”.
The LAO, an LLC-wrapped investment DAO that can perform convertible note and seed investments, launches on April 28th. Membership is only open to accredited investors, who must purchase at least 1% of LAO tokens. To apply for funding, read here.
The LAO uses Moloch v2, in addition to custom functions that provide greater security and compliance, such as multi-sig admin roles, hybrid security tokens, and delegated voting which enables members to separate their voting and rage quit permissions across different wallets.
The LAO team also published a taxonomy of legal wrappers for DAOs: DACs (tokenized C-corps), LLACs (LLCs with DAO-controlled administrators), Series LLCs (fractal LLC-DAOs), Cooperatives (democratic DAOs), and Ricardian Contracts (DAOs with internal arbitration agreements).
Sunny Aggarwal, Cosmos/Tendermint researcher, proposes that Uniswap turn their liquidity pools into DAOs, who can govern their curve parameters and fee models, and introduce the ability for Uniswap DAOs to fork and compete with each other for the same trading pair.
Arweave's ARCA DAO, bZxDAO, Centrifuge's Dev Fund DAO, Collab-19, Decentraland DAO, DMM DAO, Enigma's Secret DAO, KeeperDAO, KyberDAO, OracleDAO, Peeps DAO, SingularDTV's snglsDAO, StakerDAO, SynthetixDAO (and GrantsDAO)
🧠 Brain Food
- Burn Signals (burning tokens) can be a general purpose signal when combined with quadratic voting (to minimize plutocracy) and identity systems (to limit sybil attacks), assuming rational actors will burn their tokens proportional to their utility.
- An open grants standard would make Ethereum funding more transparent and could be paired with voting/signaling mechanisms for minimal on-chain governance.
- The Coinbase security team explains how they enable customers to use their cold stored tokens for governance (using proxy contracts).
- Vitalik Buterin provides an overview of quadratic payments use cases: quadratic voting, quadratic funding, and quadratic attention payments. Elsewhere, Daniel Kronovet offers a mild critique of quadratic funding, which Vitalik and Glen Weyl respond to constructively here.
- For-profit investment DAOs can avoid registering with the SEC if they require inactive members to sell their DAO tokens, so that no members are making profit from the efforts of others.
- DAO designers can minimize the impact of borrowing attacks on governance by increasing the duration a token must be held to complete a vote.
- The Banzhaf power index can be used to measure the voting power of an individual in weighted voting systems (normalized), as well as the probability that the voter will swing a vote (absolute). Jake Brukhman applied this to an analysis of Moloch DAO voting power. He then outlined some computation strategies for applying this to larger on-chain voting systems; open sourced here.
- DAOs can be classified using a taxonomy based on the scope of their multilateral agreements, whether their resources are managed on or off-chain, whether their discussions are rules-based or discretionary, and whether their voting is stake or merit-based. This and other explorations in Binance Research's report.
- Cryptoeconomic Systems are complex socio-economic systems – with properties such as emergence, nonlinearity, adaptation, spontaneous order, and feedback loops – and thus require interdisciplinary research, grounded in complex systems theory, and deploying "economic systems engineering" methods.
- MVP product development practices complicate the path to decentralization, a tension that can be resolved by progressive decentralization: founders should maintain transparent centralization (e.g. admin permissions) until product/market fit is established then, at the first signs of traction, build strong community practices, incentivize contributions through bounties and network fees, then finally distribute tokens and relinquish admin permissions to token holders.
- DAO technologies enable us to automate Ostrom's principles for commons stewardship. For example, tokens and bonding curves clearly define the economic boundaries of inclusion, the tokenization of governance rights enables us to design more participatory decision making, the composability of governance technologies enables us to adapt governance to local conditions, and blockchains enforce accountable monitoring. Other principles that we should design for include accessible conflict resolution (e.g. Aragon Court), legal recognition (e.g. LAOs), graduation of punishments, and nesting of ecosystems.
- The Law Merchant was a medieval court system that mediated a decentralized network of traveling merchants who superseded local jurisdictions. All merchants would query the Law Merchant before a trade, to assess the reputation of their counterparty based on the outcome of theprevious trade, then boycott the counterparty accordingly. By limiting reputation to the previous period, and incentivizing all merchants to use the system in every period (they had no recourse if they didn't query before a trade), the Law Merchant lowered the cost of enforcement in the decentralized network. DAOs can learn from this in off-chain governance by creating an independent court system that can adjudicate on any transaction (e.g. Aragon Court).
- The Liechtenstein Venture Cooperative (LVC) is designed to enshrine innovations under the ownership of a cooperative legal structure, making them potentially suitable for DAOs. However, this might be hindered by their strict requirements for paperwork and a bank account.
- Because there are more communities than companies, and small DAOs will have more impact than large DAOs, DAOs will outnumber tokens.
- Why are DAOs important?
- Startups who don't give their customers ownership won't be able to compete.
- DAOs will not look like traditional orgs, many will be too short-lived and complex for traditional legal structures, which is why we need a digital jurisdiction.
- DAOs democratize the ability to form global organizational structures; a tweetstorm on the history of corporate law.
- The lawyer behind MetaCartel Ventures opines on being practical about smart contracts.
- Several DAOcasts
- Several Wizard of DApps with Orochi DAO, MetaCartel Ventures, BeToken, Abridged, and Aragon
- CZ on why he might turn Binance into a DAO
- Aragon in conversation with David Nage (Base Layer) and Nathaniel Whittemore (CoinDesk)
- MetaCartel Ventures on Pretopia
- Abridged on Into the Ether
- Azeem Azhar (Exponential View) and David Runciman compare the decision making of AI to corporations and states
- a16z very briefly discuss [34:28] whether DAOs fall within the expanding scope of the US' Committee on Foreign Investment in the US (CFIUS) [they don't]
- DAO TV co-hosted by DAOfest and Crypto Mondays (1, 2), with OpenLaw, DAOstack, MetaCartel, Commons Stack, Colony, BeToken, Abridged, and Aragon
- EthCC: MetaFactory, MetaCartel & Abridged, Radicle, Stake DAO, OpenEthereum, MetaGame, Colony, Aragon Agreements, Commons Stack, Quadratic Funding, Continuous Organizations, Schelling Games and the Theory of Voting Systems, zk-SNARK based protocol for public elections system, Impact Delivery Agreements: a new protocol for investable bounties, Permissionless Innovation and The Law, DAO Economics