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Thinking on governance: Token and DAO

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A community is a gathering of people who share values and visions, respect and support each other, and work towards a common goal, while benefiting all members (spiritual and material). Communities build and deliver our cultural consensus. No one will re

Thinking on Governance: Token and DAO

Originally written by Typto, DAOSquare

Daos are what communities should look like in the Web3 era, so the following content deemphasizes DAOs and is called communities.

I have a wish to build a real community, and I will devote my life to it. But what exactly should community look like, and how do we get there? This is a relatively big topic, and today I want to talk about governance.

I've been thinking about what kind of governance is better for the community, what we use to represent our governance, how to quantify it, how to acquire it, how to use it.

If we just use tokens as and exercise our governance in the community, then we will never be able to build a sustainable and healthy community, and we will never be able to build a cohesive and vibrant community. Instead, it will become a "group" with only chat coins left.

A group is not a community.

The worry of governance

Currently, there are two types of representatives that represent our governance rights in a project or community: tokens and shares. Aragon and DAOhaus provide typical frameworks for both types, respectively.

Token means that as long as you hold the Token, you become a member of the community and have proportionate governance (Aragon will automatically add you to the List of Aragon DAO). Share is the Share that represents the governance right to be allocated to members through collective consensus.

Tokens provide a relatively open market channel, so the way to get governance is very quick. However, the open market will also lead to the other side of this governance, that is, more tokens will be concentrated in the hands of traders (or even speculators), and the true community co-builders/promoters/contributors will always be in the minority, community governance can easily become a power game dominated by money. I am not against the transactional nature of tokens, but how to balance the transaction and governance at a healthy level is a question that needs to be considered.

Share solves the problem of Token transaction attribute. It provides us with a more fair and healthy representation of governance rights, but it also brings new problems. The acquisition of a Share is a process by which the "organization" grants governance, and this pattern is relatively closed. It works perfectly in some application scenarios, such as the Money management-centric VentureDAO. However, if we hope to build a relatively open and fair community that reduces subjective factors as much as possible, it is obvious that Share has some obstacles, because subjectivity is always one-sided. If the rights and interests of a community are determined by the subjective consciousness of a small number of people, there will be fairness confusion. At the same time, to some extent, recognition and contribution to the community does not require permission from current members.

Although the two existing schemes have made great contributions to the development of this era, it can be seen that neither of them is a perfect scheme. We are still in the very early stage of this era, and we need to continue to explore more optimized solutions, optimize the shortcomings of existing solutions, and try new ideas.

My thinking and DAOSquare's practice

In my view, community governance is not about governance, but about building a mechanism for human connection and interaction so that participants are more willing to work together. In terms of governance, I think two things are important:

The governance of a community should not be represented only by tokens, but should be composed of many factors, and Token is one of many factors.

Recognition and contribution do not require permission, and the right of governance cannot depend on subjective factors, but should be obtained through an open and quantifiable mechanism.

The first defines what governance is supposed to represent, and it determines who you are actually traveling with. The second defines how we are governed, and it determines how those fellows can join you and walk with you without barrier.

So we came up with the idea of building a permissionless contribution agreement where anyone in any community can make his or her own contributions (interests and governance) in any community. It's all self-running.

Let's see how that works.

What should represent governance

Depending on the purpose of your community, you have a different representation of governance, and everything needs to be around your community purpose. For example, if your community is a decentralized trading protocol (like Uniswap), your goal should probably be to provide a better trading experience for a decentralized world. It is then necessary for governance representatives to consider LP contributions as well as product contributions (such as code contributions) in addition to protocol tokens. So if you take Uniswap as an example, its governance might consist of at least one of the following factors:

Token (UNI)

LP Token

The product contribution

How do you package these factors as governance rights

How do we convert these governance factors into ultimate governance? This is the "permissionless contribution agreement" I mentioned earlier, which should include quantitative criteria and exchange channels. Allow me to illustrate this process with the permission-free contribution Agreement DKP that DAOSquare is developing.

DKP is a module of the DAOSquare Incubator. It's called DAO Kontribution Pool. (You can think of DKP in World of Warcraft.) Anyone can convert their contributions to DAOSquare into equity here. This is an open, permissionless place to contribute and cash.

At DKP, the business path is simple:

Contribution - & gt; Income - & gt; Administrative power

Contributions are where governance factors are collected. For DAOSquare, a donation to the OVO Grants is a contribution, a Stake $RICE is a contribution, and of course there are many more community contributors, such as completing DAOSquare Incubaotor 101, and attending community meetings and active discussions. In the "contributions" section we first need to quantify each contribution category, such as OVO Grants. We set a 1:1 ratio, which means that if you donate 1 XDAI to OVO Grants, you will receive 1 credit for OVO Grants. Note that different contribution categories require different credits, so you get better composability in the "revenue" and "governance" sections.And I want to emphasize that DKP is all on the chain, including the integral.

Revenue is where contributions are turned into revenue (remember that? Benefits all participants), including:

Participate in project private equity/public equity investment opportunities (e.g., CCO share)

A limited edition of NFT

Brand peripheral (such as the trendy T-shirts we are working on with MetaFatory)

Event tickets

Community access

When you have earned enough points in the Contributions section, you can redeem some of your benefits in the Benefits section, such as a $1,000 CCO share for a project with 100 points from OVO Grants plus 300 points from Stake $RICE.

Governance is the focus of this article. Overall, whether you participate in the "contribution" portion of OVO Grants or convert your CCO share in the "benefit," you are helping to advance DAOSquare. Therefore, governance collects the behavior of all "contribution" and "benefit" components and packages these factors into governance NFT representing different governance weights. There is, of course, a special factor to consider, the total record of your contributions. For example, if you donate 100 XDAI to OVO Grants and you get 100 credits for OVO Grants, but you exchange it for a CCO share in the "benefits" portion of the program, the credits are consumed, But the fact that your points are consumed does not negate the fact that you have contributed to DAOSquare.

How do you package contributions to get governance NFT? To take the simplest assumption, a governance NFT representing 1,000 voting rights would require a mortgage of $1,000 RICE plus a participation history of 5,000 CCO shares plus 500 OVO Grants points plus 100 community meeting points plus...... (How much more depends on how many factors your community needs to include).

In addition, we can see that in the DAOSquare community, other contribution factors are equally important as holding $RICE, but $RICE is always a prerequisite for everything, and any interest offered in the "revenue" or "governance" part needs to hold $RICE (to be pledged). As I mentioned in an article I wrote at the beginning of DAOSquare, DAOSquare requires three main characters: missionaries, mercenaries, and merchants. It is only by balancing these three that we can achieve a community-driven approach to DAOSquare, and a good Token design can be a community-driven "silver bullet".

When I shared these thoughts with Dekan of DAOhaus a while back, He shared Chuck E. Cheese with James Young in his Curation Economies article. The example in Chuck E. Cheese:

You can buy tokens with money

Then you can play the game with the Token

Then you can earn all kinds of tickets in the game

You can then redeem the tickets for prizes

Games change lives, and community governance should be THE BEST FUN YOU CAN HAVE!

Present and Future

In a wave of DAO in 2020, many people around me started to enter the DAO world, some started their DAO, some actively participated in different DAO. But I see a very obvious phenomenon, most people are in varying degrees of complaints to leave. Two complaints are the most common:

Totally confused what DAO can do

The DAO tool is too difficult to use

As for the first complaint, I think the problem is twofold: First, we started with the DAO before we knew enough about it, which can easily lead to confusion. The second is because we blindly launched a DAO. Everything needs a clear goal, and DAO is no different. What you're going to do is critical, rather than excitedly creating a DAO in DAOhaus and having no idea what to do with it. Tools can't tell you where to go, they can only help you get there. Think before you act.

As for the second complaint, I have to admit that current DAO tools are not easy to use, especially for those who are not technically proficient. This is where I hope to work, to make DAO participation easier and more fun, and to bring DAO into the lives of more people, just like Chuck E. Cheese.

I hope that DAOSquare will not only help the innovators of this era, but also help to advance the development of this era. DKP is a practice that we are working hard for. The DKP you've seen so far is only phase one. There are a lot of interesting features to be developed and delivered, such as Discord Bot, community red envelopes, Homeland. Etc., we will also implement better combination of rows through our API, and more modules that can be contributed to the DKP (e.g., POAP, games, etc.).In the future, we will open DKP to all communities and project parties to provide them with more interesting community governance solutions.

I have to admit, we're still not perfect, but we're moving forward. On the other hand, whether IT is DKP or not, there will be a better community governance solution in the near future to replace the existing Token speaking model, and I firmly believe in this trend.

I'm always excited about future trends, especially the "communities" that are emerging in this era. I wrote in the First meTokens Incubation Report:

We are embracing the best age of individual value. More and more people are moving away from mechanical labor to embrace more vibrant communities and individual value building. In the future, collaboration between individuals with community as the main scene will become more and more popular. At the same time, more great innovations will come from individuals and communities. This is the evolution of the social structure. As the popular saying goes in the early days of the Web2 wave:

Youth explore Databases, find friends in forums.

Has been updated by the people of this era to read:

Youth explore Ethereum, find friends in DAOs.