Dao 2.0 - Anthony Leutenegger

Transcript

and some Round of Applause please um great thanks so much for the warm introduction um yeah I'll be talking a bit about what we see at Aragon as sort of the future of onchain governance what are the next few years looking like what are we working on um what do we think Dows 2.0 are going to be because I think we've definitely moved on from the original concept um and now we're on to something new and hopefully more effective so the future of onchain governance um Dows were meant to be unstoppable we like to call them Unstoppable organizations um but to some degree what's the point of being Unstoppable if you're not being effective at reaching

your goals and this has been some of the the problems that have Arisen out of of becoming Dows um over the last few years um there are some exceptions of course there's some great Dows out there that are actually quite decentralized they very autonomous thinking Lio a maker and just like any organization they obviously go through um ups and downs themselves but by and large most stows are struggling to reach their goals and they're sad so why is that so the main reason we believe this is the case although there are many is that there the current tooling forces tradeoffs and these trade-offs are often velocity or Effectiveness for

decentralization and of course you always need to make trade-offs when you make decisions correct um but when you're an early stage startup for example as most crypto projects are if you decentralize extremely quickly rapidly early on when you're meant to be in a fast moving growth stage this can have impacts that can be negative towards this growth so what we've had so far is very cookie cutter governance basically if you're a dow and I mentioned this last year actually you're following almost one form of governance and this is basically a referend style you know governance setup where X token holders U or sorry token holders with x amount of tokens can put up a proposal every single person is supposed

to vote and then either there's a trusted uh multisig or not that executes that's it every single doubt basically every single down 99% work in this methodology right but organizations shouldn't be run in a c a cookie cutter governance style it doesn't make sense organizations need to adapt and change as they change and as they adjust their goals so what's our first what's the first thing we're we're going to look at here as we think of Dallas 2.0 it's context based governance and it requires modular technology so sneak peak some Alpha this is coming out in March Dows fully on chain on Aragon are now going to be able

to govern their protocols their assets Etc in a context based way what does this mean this means instead of every single proposal that goes up requires a referendum style vote we can now start to granularly create different types of proposals as you can see here here are different proposal types there's minting for your token as one proposal type there's protocol upgrades as another proposal type and there's grants as another proposal type right and so now we have different types of proposals and they can have different forms of governance and what we call stages right and here you can see that

to upgrade um the protocol for example you have three stages and it can start it can be optimistic it can start with okay let's have only the you know the security Council or the core team who know the protocol to be able to put up a proposal so it's permission but then in stage two we'll give token holders the ability to veto hard power to veto this change in case they think it's malicious right this is a and then it will go into a time lock if people want to exit if they disagree if it's still passed so what does this give us now this gives us fully onchain governance token holders have hard power but you're allowing the team to work optimistically more effectively and faster at an early stage uh in their existence as a dow right and

the great thing is is not everybody has to vote on this and that's okay right this is going to be experts who actually understand the code base and the protocol upgrade are the ones who can put up this proposal but token holders have hard power and that's going to be a different proposal flow if you want than a grants proposal where you might have some people with a lot of business Acumen who are participating those who have experience handing out grants and in Grants programs right that could be all token holders so now we start to get more granular like organizations can be run fully on chain with checks and balances in the way they should in with in context based way and here's the members right so you have your super majority multisig is one member you have your core team you have token holders

grants committees legal Guardians whatever you want and they can be plugged and played wherever you want into the different proposals that you create so now you have an actual organization that can run like an actual organization and adapt over time you can easily upgrade by swapping plugins you can easily upgrade your governance methodology and make changes so now we have future proof governance right we can start to actually work as a great organization so that's the first one sorry we have 15 minutes right and I got three things to tell you the future of dows so um the first one was yes context based governance modular governance giving um Power you know power to experts in a context based way now we have automation Automation in AI like this is the Hot Topic AI topic right right right

now um there's a lot of funds that are going into it um and these are really important um vitalic I think it was back in like 2014 said automation especially for Dows was meant to be at the center and humans were meant to be at the edges and I'll explain why this is so important in a minute but first let's take a look at some AI agents that are working within Dow today obviously we have clanker which is super interesting um and the clanker bot has its own token uh and it basically enables token launches where you can just as a as a human go in and input what you want out of that token it will launch a token for you it'll take a fee and then that fee goes into its own token and it's all Ai and automated so now we're getting into like a really

fast way of launching tokens um and actually it has its own wheel because it's generating Revenue off of that which is cool Botto for example um creates like 20 to 30,000 images per week for nft auctions people vote on those nft auctions and the money gets resent to all these artists that have inputed um uh their art to allow for Bata to create more art at Aragon actually there's some interesting happening we have a voting plug-in agent right so this actually allows um for the AI agent to actually um optimize on our ve log er um where rewards are sent to so you don't as a human have to go in every week revote for something to try and receive your maximum rewards back well this AI agent does it for you and

then of course something that's really important to us is actually starting to automate the distribution of emissions themselves and rewards which is super important this is how projects start to get their flywheel going which I'll talk about in a minute um they often give out these emissions and these rewards but right now it's done manually somebody has to calculate how much to give out they have to put it up to a full reference random vote in the Dow for 2 weeks before it gets sent out and by that point you you're definitely not optimizing how many how much um value you want to give out to incentivize people to use your protocol so you're missing out there so there's lots of work going into Ai and automation right now um but why is this important so automation allows us to continue to be decentralized while still being

effective and that's what's super powerful about it right if we don't have to have humans touching everything in the Dow it means we can still have tons of humans with power over the Dow but they have less to do which means there's less bureaucracy um and we can move quite a bit faster so we can still have our decentralization we can still have for example a token distributed amongst you know millions of people but we can still be effective and that's something that Automation and potentially AI brings into the fold here um which is super super important so AI will not in the short to medium term replace our long-term strategic thinking and decision- making I don't think that that's the case I mean I guess we could argue about that but I think really the Dow and humans

within the da will set that long-term Vision set that long-term trajectory they probably will do a better job than that and AI can come in in narrow decision-making points and be able to execute on that in a more effective way and more quickly without having the bureaucracy of humans having to touch everything um and this I think is what it's going to allow our Dows to be more autonomous in what they do obviously be more decentralized and that they can have you know token holders but still be effective um I really do believe that AI should support Dows but Dows should govern AI in the future which is really interesting um and I mean Elon Musk has talked not specifically about Dows but about like how do we safely manage AI in the future and Dows are just a brilliant example of

a way that humans can actually work together to make sure that you know AI is controlled to some degree um and so yeah so that's our belief so finally the third thing so we have the first was context based mod governance let's get more granular right let's have projects actually working like regular organizations but with the proper checks and balances um we obviously talked about Ai and automation very briefly where um obviously we can be really decentralized autonomous um but still be effective and finally let's get to something that's really important which is toonomic driven governance so to date there's been like a real disconnect and it's primarily due to regulatory reasons but most governance tokens lack

not just onchain power over protocols or Capital flows but also there's like a there's a segregation between value ACC cruel to the token and the protocol itself but we have set up a system where tokens and governance are intrinsically linked right distribution liquidity impact governance Dynamics and security and governance decisions determine value acrel but when these are are misaligned we get start to get problems so an example if you have your Dow and it is secured via governance by tokens but your token has not acre any

value what is the purpose of people wanting to own that token some might say okay they want to defend the protocol but that hasn't really shown to be the case the problem is is they don't want to own that token so what happens they start to sell it they start to try and buy other tokens where there is value AC cruel and they hunt for that value cruel and so you what you get is you start to have not only less token holders but less participation in governance and this is where security risks open up so here I mean and these are actually some of the biggest Dows in our industry funny enough um but here we have obviously Li which I'm a which I'm u a delegate in you know struggling to reach Quorum and you know hu recently just posted funny enough like started to like

hint at like you know value occurring to the Token being pretty important um why because what is the point of owning ldo right now right um there is no value uring to it and so people don't want it and so now they're struggling to reach Corum because they don't have voters to vote right the same goes for ens uh brantlee one of the I think he's one of the co-founders of enss just you know put out a huge blast yesterday saying delegate you know delegation is only going down like please delegate to me well ens actually generates a pretty substantial Revenue but it's not really acre back to the Token so why are people holding the token they're not they're selling the token and then finally this is the arbitrum um I believe percentage of ARB token that's actually um delegated to

vote and this continues to decrease as well and it's for the same reason so actually if we're going to have tokens actually govern something then we have to make those tokens valuable enough for people to own to participate and it's not just working to you know to have onchain power which most don't over the protocol it needs to Value needs to crew in the token we couldn't talk too much about this before you know regulatory reasons are why Unis swap for example didn't put forward their proposal you know it sort of all of a sudden sort of died but these conversations are starting to open up now with a slightly we think um better regulatory environment so toonomic mechanisms can help reward loyalty and participation um yeah I was just speaking to Brett

from Cherry and we were talking about um sort of offense for defense uh versus defense which is pretty interesting um Dows for the most part have been focused around defense right they've been about securing the protocol securing these assets well if you're a project that needs to grow which most do 99% are are newer projects that need to grow well then you need to be on the offense and that means we need to start embedding tokens and tokenomics to create this offense and that's what we've started to do um at Aragon so token lockers for example that have power over Financial flows this turns governance into a productive asset it improves value cruel and it introduces liquidity syncs which can help price um number two right um I

was talking about this earlier as well like balancing the carrot versus the stick approach right back in the day curve has this really cool model where you lock your token it has a four-year sort of lock with a decreasing power curve but if you exit it's a stick approach what we're trying to do is incentivize people to use your protocol with carrots and this improves loyalty it decreases principal agent problems as well um of the of the current existing delegate model where there's no skin in the game like the people really owning the protocol and governance actually may not even own any tokens and then finally um rewarding participation and contributions NE offsets you know financial and human capital costs for those actually involved so we need to start using our tokens as offense rather than just defense and there are some

great examples so we worked with um mode which is a um which is a um roll up on the op stack on the super chain and this is what happened after they deployed a ve model with gauges so meaning you had to lock your token in order to participate if you participated you received rewards for participating okay so after 6 weeks roughly 43% of the circulating Supply staked 7,000 plus unique voters participated and over 31,000 votes were cast into these gauges and what they were doing is they were directing incentives so emissions and our rewards to the apps that we building on top of mode guess what happened then all those

projects started incentivizing people to vote for them they started launching tokens on that and you begin to create this flywheel and so um what happens obviously now you have decreasing circulating Supply in token sync you actually get rewarded for owning the token and participating and so the price jumped up from I have the little thing there um you know sorry just after September and October I think it was 11 cents uh and it went up to 60 cents basically or 0.06 cents sorry and then back down a little bit but you're talking about like you know a six a 6X increase here so that's them using the token offensively versus purely defensively and we're starting to see that across the space now uh we launched

with mode puffer came after that we have three more uh protocols that launch with us Kim tenderize um yield nest and this is really starting to pick up now projects are all vying for um a set amount of liquidity a set amount of participants and our and our industry is pretty small so it's a battle to be offensive and so they're starting to use their tokens once again in this manner which is really really interesting yeah so the ability for Dows to reach their goals and adapt over time is what will make them effective but the most Unstoppable Dow is going to actually be the most effective Dow and so I think we've done a great job of creating you know Dow tooling on the blockchain that allows them to be

unstoppable you know you can have referendum style vote quots um that's great but they're struggling to be effective and that's our next step Dows 2.0 it's let's make these organizations more effective than the organizations or the traditional organizations that we see offchain let's use these things like tokens of superpowers uh let's give them modular tooling where they can customize how they interact and what they use and let's use automation to ensure that humans are more at the edges rather at the Inc than at the center so that um not only can we stay decentralized and autonomous but actually still be really effective at the same time so those are the three things that we'll be focusing on at Aragon in the next couple years um already seeing great great great

feedback and as you see some stats from um Dows going on the offense with tokenomics um automation is going to help them take that to the next level um yeah and modular governance is just it just makes sense right like how do you else do you run organizations you don't have a referendum on every single decision you want to make but that doesn't mean we have to give up being decentralized and autonomous to do that so that was really quick because I only have a minute left um but yeah here's my Twitter feel free to message me if you're interested in Dows if you are thinking of launching one yourself if you're thinking of launching a token whatever we're here to help thank you so much well thank you very much we have time for a few questions and I would expect there are a few so please go

ahead go ahead just a second the mic is coming the mic is coming thank you uh on the contextual based voting who decides in which of the contexts and a proposal goes to because you could you you incentivized to Beck like the most favorable one to pass right so so say it again so you're saying when you make your proposal yeah so this is how it works only the people granted permissions to create a proposal under that proposal type can do that so if the proposal type is uh is a referendum Style proposal type let's say let's say it's a grants and token holders the requirement in stage one is that token holders with X tokens can put up their

proposal they can only do it in that proposal flow they can't go put up a protocol proposal because they don't have the permission to do that on the blockchain so in in the other sense if you if you set it up that okay for a protocol upgrade only the security Council can then only those members probably on multisig would be able to do that so it's how the permissions are set these permissions are set when you launch the Dow through an admin function and then you can you remove the admin function when you launch your Dow and then the root power will stay with the token holders to make decisions in the future you can separate the power if you want there are ways to ensure the admin stays if you really want to although now is that a dow who knows but you get my

point you have that flexibility uh I'm wondering like what prevents someone from launching a proposal on the so let's say that someone has access to to the pro protocol upgrades is like very strong so like to the grants one right what prevents them from actually like masking a proposal upgrade into the grand flow um they won't be able to do that because the so when you when they put forward the payload so they have to put a payload up on the proposal so the payload that they'll put up on the proposal in that proposal type has to be money it's the only thing that will allow them to connect is to move money it won't let them put up a proposal with a payload to upgrade the protocol it just like the permission won't be there

yeah yeah okay okay so the the way that grants work is codified okay exactly exactly yes it's not just a UI feature this this is why this is super powerful like this is not just UI featured this is on the back end this is in the protocol through what we call a permission management system which allows people wallets uh token holders digital identification it's agnostic actually to the input it's a permission management system so exactly it's not on the UI great question really great question we have one more question yes Sabrina please University of lucern so now I'm curious to hear we're curious okay nice catch hello hi um I would like to know I'm curious what do

you think about polycentric approach within Dows yeah I think I think it's certainly um an option I look I think any approach to managing any organization is based on what you're trying to achieve what goal you're trying to achieve I think the problem is is that we've we keep basketing all the decisions in one Dow to follow one methodology when there really should be several methodologies within one Dow to make decisions for the most part and likewise depending on what your Dow is trying to achieve it should have a different decision-making process an example Lio is one of my favorite examples because um because they're they're huge like

there's $40 billion that's governed on Aragon via Lio so we can't afford for anything to go wrong we can't afford for there to be censorship resistant we can't afford for there to be you know regulatory problems or somebody trying to take it over so that's why they have to have a slower sort of U more referendum style based governance because well there's so much at stake that they have to play more defensively it's funny because they did put up a proposal a couple months ago to start trying to be more offensive but they're going to have to always be careful because there's just too much at literally at stake right so I think it just depends on on your goal as an organization I think any form of governance can be viable depending on what you're trying to achieve um you just have to tailor it and I think the

most important thing which until now you couldn't do is you have to be able to adjust your governance as you go no organization is going to start with one govern uh form of governance and govern the exact same way for its for for its entirety whether you know if the organization lives to be 100 years old and in the tooling you could not have done that until basically last year when we we launched OSX our new protocol yeah thanks great question though well thank you very much again I think we could listen to you all afternoon but I'm afraid we are out of time but again a round of applause that was a really great presentation and wonderful question thank you very much thank you everybody [Music]