DAO governance in the path to systemic change

Transcript

all right i'm going to get started if you want to take a seat in the back or if you want to continue your conversation maybe you take it outside guys in the back all right maybe if you want to take your conversations outside i think it would be better any better okay so today i'm going to talk about um

dow governance uh governance mechanisms and the path to systemic change of all of the systems that projects within crypto but even outside of crypto are focused on changing really um so my name is cassidy daly i work at a project called centrifuge um and we have a dow and that's sort of the lens that i'm coming to this with but also having been in the space for a while and looking at a lot of other projects in the space i want to dive into a few different examples today across a wide range of different domains and and how each of them look to dow governance mechanisms to actually create the change in these systems that they care about so just a few of the projects that i

want to cover today obviously i'll talk about my project centrifuge but i also want to look at vita dao this is a dow to fund longevity research ave probably all of you know financial infrastructure as public goods is what they're focused on and radical is a project focused on open source code collaboration so going through domains of defy open source code collaborations and dsi or decentralized science that's what things like vita dao are working on and showing that there is really a thread that ties together all of these different organizations that their goals and beliefs they're aligned

even though they're across a wide range of focus areas they each are are trying to create systemic change in these domains and they're really trying to use these dows as a decentralized governance structure to be able to accomplish this and and that's part of the thesis right that we can use these dow governance mechanisms to actually achieve things that we were not able to before and what some may call a broken system um so what are dow structures good for and and where do they fail um i want to go into a little bit of examples on on how these governance mechanisms are useful but also sometimes hurtful for some of these projects but first i want to define

what is a dao this is my personal definition i think we can see a wide range of definitions of what a dao actually is across lots of different thought leaders in the space so here i've defined it as a self-governing collective with a shared goal that uses an automated decision-making process and i think for me the key here is that it is a collective a way a tool to be able to make collective decision making and empower every member of that collective to be able to participate in that decision making process so some of the standard mechanisms that are used governance tokens obviously these grant rights to the holders to

make decisions in the dow they're generally used in a democratic voting process and now we're starting to see emerging delegation mechanisms come up as well all of this governance happens transparently on chain and there's a history of decisions that are made by the dow often times we see daos manage collective funds and often we see the dow having sole governance power over some or all of the protocol's parameters so oftentimes when a project launches they may be things that are set in stone and then endow is able to govern certain parameters uh that can be changed or maybe even potentially all of them um

and so these are some of the standard mechanisms that that we started to see pop up um and i think the key here is that they're they're really enabling open transparent collective decision making [Music] so that's really when these mechanisms are ideal is when here are a couple of examples from tally.xyz this platform to be able to interact with these different dows so you see here getcoin and you have delegates here with different voting powers and you also see on the right side radical with a list of proposals that have been submitted and these are two organizations that have

have basically um have these goals that that this is their um the most important thing for them is this transparency is this ability to actually collectively make these decisions and they're making this trade-off between streamlined top-down decision making that's much faster much more efficient obviously but they're making this trade-off for the wisdom of the collective and having the collective actually proactively participate in the decision-making process so i think there are definitely areas where this makes sense and these dow governance mechanisms are really helpful but obviously if you want to make a

really quick decision if you have something that you need to get done and is like maybe a more short-term focus area that's something that could be good for a traditional corporate structure but these mechanisms are really focused on having this transparency having this collective coordination and so there are trade-offs that are that are made there um so just taking a look at some of the shortcomings the coordination process is much slower and the off chain discussion processes are still emerging so one thing that we see here is a lot of off-chain tools that are popping up so something like

what i showed you tally there this is a screen grab i think from a discourse forum and we're iterating i think as a as a collective on on how we can improve this coordination overhead i think this off chain tooling is actually something that's incredibly important um especially if you've been in the ethereum ecosystem for a while it has only been off chain governance coordination and that's quite difficult so having the on-chain component definitely does make things a little bit more streamlined and transparent and clear and then also iterating on these off-chain tools that we have to be able to use these dowels effectively is definitely going to make a huge difference

another huge issue that people have with dow governance is the fact that financial weight is deciding all of these decisions so contributors that have non-monetary ways of contributing to the dow are not fairly represented in the decision making because it's all coin holder voting and oftentimes these coins are just acquired by purchasing these tokens and this also brings up the potential for attacks so the screen grab here is actually from a post from a vitalik on someone offering to buy votes and this is something that actually comes up as a pretty terrible attack for a lot of projects

where there is a very liquid token supply and you can actually just go on a market acquire tokens and swing a vote without any consequences so having mechanisms in our dow governance that actually prevent something like this so for example having time locked voting definitely helps something like this but also being able to have a way to participate in the governance process that's not solely tied to just having the tokens and one thing one way that people are thinking of addressing this is for example awarding nfts to contributors or something like soul bound nfts to be able to represent contributors in the system that are non-monetary

contributors and i think another huge issue that we see in doubt governance still today but also governance globally in any kind of way is just low participation rates um and this also begs the question of what level of participation is even ideal i think this probably varies from down to dow and so in a i think a larger research effort this is something that a lot of organizations globally are trying to focus on and getting more participation in democracy but also the right kind of participation someone who's actually actively interested in the outcome of that vote and not just voting for the sake of it so not just incentivizing participation

by itself and like giving a token reward to vote but rather finding ways that we can actually improve meaningful participation so i think we're not quite there yet we do have a lot of research areas to focus on but i want to take a look at some of these different domains some of these different projects and how their approach really has a thread that ties them together and how they see using dowels and why it's meaningful to them so first i'm going to start off with my project centrifuge so centrifuges i would say financial infrastructure or rather credit infrastructure for people to borrow and lend money transparently and cost effectively

so the vision of our dow is to govern the protocol the protocol parameters and the unchained treasury with the goal the lofty goal to make finance fair and specifically by getting money to those who need it in the fastest and cheapest way so we do that by financing real world assets with securitization pools on centrifuge and the whole point of using a dow for us is that is that belief that we we think transparent and collective aspects of this dow decision making are what are needed to really rebuild our financial system um so those are really i think the key elements there of the transparency and something that we found

and i think many of us can agree is lacking in our financial system today and having that collective wisdom actually participate in the process as well one of the governance mechanisms that we've been really focused on lately and also on improving lately is the delegation process sorry um so delegates i think allow for empowered decision making they enable experts in different contexts um while also addressing some of this voter fatigue and participation and this mechanism of delegation somewhat addresses this issue as well of whale-led decision-making because you

don't actually have to own any tokens yourself to be able to to run as a delegate but this delegation system still has a lot of elements to be worked out so going back here to this voting power for get coin you can see that you know it tends to all sort of aggregate towards a few people to have this delegation voting power which can be good if they're actually interested in being a delegate and interested in being that expert but sometimes these people are just like thought leaders in the space and people delegate to them and they actually have no interest in being a delegate and so we've seen that come up in a few different cases

and i think that's something that we definitely need to improve is this coordination process off chain about what is the process to actually run as a delegate what is uh sort of the um the responsibilities that you have as a delegate and can there be agreements made in that delegation process between both the token holders as well as the delegate themselves for example the dow actually paying them a salary to be able to do due diligence over every single vote that they actually focus on so that's something that a lot of different projects are exploring um and i think we'll will make for much better informed uh voting as well so going into another project in d5

the avedao so the objective of the ave dao is to manage the parameters of the protocol and govern the treasury to distribute grants for the benefit of the avi ecosystem so basically very similar to centrifuge right defy really has this thread in it of trying to empower financial infrastructure as public goods and their thesis is that is that this should be the case and they're using the aveda framework as as the most conducive structure to achieve this um so within d5 you can definitely see this thread that we want this financial infrastructure to be public goods and the best way to actually govern that is through dow governance mechanisms

um so what about other domains i think it's maybe pretty apparent in d5 that that daos are pretty uh ubiquitous and used quite often but open source code collaboration using the example of radical also very similar thesis and very similar goal they want to become a community owned and operated self-sustaining open source network for software collaboration and their core thesis is that these projects are already functioning as dows and their mission is just to redesign the relationship that they have with money and their ability to coordinate and make decisions as a collective in a much more efficient streamlined process

they're also researching this point that i mentioned earlier about empowering non-financial weight and decision making through the use of nfts so if you're interested to learn more about this abby take home from radical is actually going to give a workshop this week about exploring how to use that within the governance process and so i think that could be really interesting to take a look at as well but there are definitely some tweaks to be worked out and something like that like how how do you actually measure the weight of what this collaboration should be compared to tokens and a percentage of the token supply if they're both used in the same governance process or maybe you have different cabinets and like

like a house and a senate and you have token holders voting in one side and nft holders voting in another or experts voting in another so i think there's a lot of questions still and how this could be worked out but i think it's definitely a very important effort that we actually find ways to empower non-financial weight within our governance process so now i'm going to jump to one final domain and that's uh desai or decentralized science so vida dao this dow to fund longevity research their thesis is that the business model approach of biopharma research carries severe limitations so basically they they believe that um r d inefficiencies are costing those

that should really be the core stakeholders the most the patients and the researchers um so they believe that this open cooperative structure will remove these inefficiencies by enabling an active community of contributors through a circular system that appropriately aligns incentives so i think that's the key here is that so they have this governance token vita it's acquired by contributing funds but it's also acquired by contributing work research data or ip assets so i think that's a unique unique way of addressing this issue of financial weight carrying all the power and so i think having that circular system of really incentivizing participation in order to get ownership and decision-making power within your dow is

really important so i think we continue to see these threads really between all of these different domains about how they look to daos to really create change in each of these different systems and how they believe this collective decision making model this transparent decision making model is what's really key in being able to accomplish that so i think despite the the thesis of these groups and these down mechanisms um having a lot of research and exploration today they're still novel they're still being tested against issues that arise in governance and so i think there are a lot of really interesting organizations out there today that are researching um that are funded to research also uh how

and if daos are able to really solve these specific issues in governance so organizations like scurf scrf and block science commons fund is actually set up like a dow to be able to really explore how these dows are used how these governance mechanisms work and i think it's really interesting even to look at these research organizations and how they're set up commons fund is an example of a research organization set up as a dao and something like block science set up as a traditional corporation and they do have different goals commons fund is is really looking for finding a minimum viable pattern something that can really work for the general

industry trying to use dows and block science is trying to iterate on new innovative mechanisms and move quickly and so i think it's really interesting to see even within the dow research space that there are different ways to organize in these organizations um so yeah i think if if you're interested in looking at any dow research i would definitely look into one of these organizations um i think they're doing some really interesting work uh and and definitely worth checking out if that's something that you're focused on um yeah so thank you for uh for attending this talk uh listening

to me talk about dog governance i wasn't really able to deep dive into anything in particular but i really just wanted to paint this picture of of what dow governance mechanisms are useful for um and and why these projects really have this um belief and thesis in this uh in this space of why they use daos to create this change in these systems so if you're a member of a dao i encourage you to collaborate with other dows like us and with the research organizations that i mentioned so that we can all innovate on these mechanisms and i think talking about coordination and coordination overhead we can definitely do that a lot better together sharing our learnings because i feel like sometimes i'm in a silo so if

you have any ideas about how to do that better definitely come talk to me but yeah thank you guys [Applause] are there any questions thank you um going back to dao uh delegation um do you believe that one day delegating will be a profession where you have teams of what have you i don't know three four or five people just following centrifuge three or five people focusing on ave etc but they all come from the same delegation house so to speak um do you think that's that's a

possibility how do you see delegation growing in the next five to ten years if possible yeah i think they're definitely going to be organizations that pop up that are focused on specific domains and that means that they're probably participating in several different dows um so for example um like a a credit risk group within the centrifuge ecosystem they'd be working with centrifuge on assessing the credit risk of different assets on our platform but they'd be able to do that for any doubt right so it's it's kind of like they could be set up as a traditional business model if they want to um and they can have the traditional corporate structure where they're just going to these dals looking for a salary as delegates to be the ones that are

providing the service to that ecosystem so i think it's not completely overhauling the way that we work as a society but more so making it transparent making it more open and and being able to have that collective aspect of it that anyone could come into that system and be able to participate as well thank you cassidy that was really interesting i have a comment and a question so my comment is just that i i really agree with a lot of the things that you said the potential of dows but also the drawbacks and i think it's really

related to the actual definition of the dial right to the decentralized part so how inclusive can we actually make it and what is the participation rate in that and then obviously the autonomous part which is the decision making is automated that's the goal transparent automated decision making but then what happens to all the off-chain conversations and i think you know that's the core of what it is and i'm really glad that you know you you said it so plainly my question is around it's a similar question around the delegated voting because what we're seeing now are folks with you know hundreds of jobs or they're not exactly in a position where they need to work and they're volunteering but it seems like you're saying that

this doesn't actually create room for others who might want to become delegates and actually do this sustainably and have enough resources to adequately research so i'm wondering if you've seen any models of of how that might work uh how that maybe future of work or future payment might work thank you i i know one model that's um imperfect but always on the leading edge of a lot of this dow work and that's maker dow and there are some issues with with having this incentivized process of delegates because it can end up becoming too political

but i think they're going in the right direction which is actually giving people the resources that they need to full-time focus on a topic um so i think we're going to end up seeing that sort of evolve over time where you don't necessarily have to be a politician in order to be able to run as a delegate but you do have to do some amount of work for example if your organization it probably makes more sense that you have three or five people one of them is maybe more of the politician but you actually have a team behind you of people doing research people doing work to actually make thoughtful informed decisions for this dow and they would then as running as a delegate ask for a grant from the dow i want to be a full-time delegate

this is the grant that i'm looking for to be able to accomplish that work and it would probably vary from domain like something like credit risk might be more expensive than something that's a little bit more um i don't know like a marketing work for example um also really important for dallas that they actually get noticed in the ecosystem so i think there's a lot of different areas where we can see this pop up and maybe it it moves more towards an organization aspect of of having delegates so that you can actually have yeah not super politic politician focus but but also really informed and compensated for that work as well you

um can you talk a little bit more about specifically the case of centrifuge the company versus centrifuge the dao what is the the relationship between the two today the roles and responsibilities and and what is the ambition to let that evolve in the future yeah so we're still i would say pretty centralized in the sense of the company is definitely the largest part of the dow right now but we do have a dow in terms of having tokens that are relatively widely distributed although still centralized in the company more so and we have 12 different asset pools that are live on centrifuge each of those pools is run by what we call an asset

originator and all of them have tokens ownership in this dow decision making power we've just launched a process to actually be able to open the next pools on centrifuge so so far it has definitely been a lot of hand-holding a lot by anna who's sitting there for the asset originators to walk them through this process and get them actually to a point where they can launch on centrifuge and hopefully we're creating enough documentation enough of a standard process that they can do this all in our on our forum by themselves and they can just get the community to actually vote on this um first on the forum this off chain mechanism then

being able to take that on chain once it gets to that certain point of the process that they can actually open this pool and centrifuge the company doesn't have to be involved in that at all so today's still a little bit more hand-holding definitely but we're we've launched that process and it is moving in the right direction so i'm definitely excited to see more participation and i think having this delegation mechanism is something that we're looking at quite closely to be able to facilitate that so so right now it seems like uh all these dial structures are very kind of closely tied to like financial aspects of things especially with kind of like

the fact that there's like tokens and things like this uh do you foresee a world where it's things calling central governments could move towards like dao structures and like would there be any kind of like benefits to that kind of thing because it's like the way that like central governments usually kind of have things where it's um it's like not in relation to like how much money someone makes is kind of like how much money they have is like their voting power sort of it's like just different but do you see kind of like benefits or kind of like a world where more nutritional kind of like companies or governments or something like that could kind of utilize doubts i think for a company it really depends on what their focus is like again if they want to move fast and they want to iterate maybe that top-down hierarchy

still having information asymmetry mostly because of the work of spreading the information really in companies could still work for some of those use cases for government i i think it could be useful to move in this direction i don't know if we're going to see it anytime soon for federal governments just because of the long-standing systems there and people who benefit from them but i do think we can start seeing it on community level and maybe even like working up towards county or states in different countries that are employing this because i think i mean just going back to like what a dao is maybe just taking the part of self-governing collective um i think that applies to a country it applies to a state um and then there's

there's the element of it of the dow that's this automated decision-making process and i think this can be quite clunky to actually implement from the beginning but once people get used to it i mean people learn quite quite quickly so i think it's more about getting people used to some a structure like this and so starting off on the community level is something i could easily see happening and i think it's already starting to happen in co-ops um and and other like collectives that are popping up around the world um and so hopefully that starts to evolve towards yeah more federal governments too any other questions cool thanks for all the questions

[Applause] thank you everyone