#DappCon22 : Day 2 - Building DAOs: Organic Pathways For Progressive Decentralization, JF Schwarz

Transcript

thank you [Applause] uh yeah thank you so much everyone um so nosa's guilt who are we we are a small team incubated by gnosis and um we support organizations including gnosis but also others um along their Paths of decentralization and today I want to take you on a journey um you're basically from zero to a technical setup for fully decentralized governance it always begins with an idea and a group of people forming around it and now we start our journey along a

path that we see a lot of projects in the space taking nowadays they go and um deploy a noses safe multi-signature account adding the entire team as owners on that safe so the safest for holding the shared assets and in this example they configure it so that it takes four out of the six multi-stick owners to sign um yeah every transaction [Music] um so initially they just coordinate on this card and this works well but over time their decisions become more more

substantial and also they want to involve more and more people so at some point they decide to launch their own token so they go and deploy an erc20 contract and mint some tokens to the to all the team members and maybe also keep some reserves to incentivize future contributors in order to keep a formal record of the decisions they create a snapshot space for token voting so in case you don't know snapshot um it has become this really popular governance tools tool for Dallas since Rising gas costs have made voting on ethereum prohibitively expensive

and in snapshot anyone can post public proposals that are then taken to voting and when doing so you define a block number and then snapshot will yeah take a snapshot of everyone's governance balance governance token balances at this block so then all the token holders can come and cast their votes that are weighted according to their respective balances um a vote on Snapshot is simply a signed message that is stored on the ipfs decentralized storage system which means it is off chain and voters they don't

need to pay any gas so it's completely free removing the burden for voters to participate and this brings them to what we call the first stage of Dao's and actually this stage is also where we see most of the towers out there are currently operating at so they'll use snapshot for off-chain token based voting and then they trust a selected group of signers to execute on the vote outcomes so now let's continue our journey um exploring some New Frontiers for those uh with the safe snap plug into snapshot

as part of a proposal the author can define a list of transactions to be executed once the vote passes and yeah is positive so once the voting finishes the transaction can then be triggered by clicking this button directly in the snapshot UI and this can be done by anyone so how does this work under the hood this uses the reality is Oracle and we had admin this morning explaining in depth how this article works but if you weren't at this talk I can yeah repeated maybe in a nutshell so this Oracle uses an escalation game where

anyone can go and submit the answer or the outcome and if someone is dishonest and posts a false outcome anyone else can come and challenge that answer and whenever you post an answer you need to set up a bond and when you want to post like challenge it post a new answer you need to pay double the previous Bond and um yeah this game continues for an arbitrary amount of rounds of rounds um the bonds become Higher and Higher and at some point the required Bond becomes so high that no one individual would be able to post it and the Assumption now is that an honest majority could always coordinate to

collectively put up the highest Bond so for setting all this up we can go to the save apps section which is something like an app store for the safe and here we find an app called zodiac and when opening the zodiac app um we can find a list of modules supporting different kinds of governance Primitives so we now select the reality module which allows executing transactions from the safe based on the outcomes reported by a reality is Oracle to enable it we need to provide some

settings so this is where we put the contract address of reality ease the timeout is the duration during which a reported outcome can be challenged and it resets after every new answer and with the cooldown we can configure some extra time that needs to pass once the Oracle has settled on a final answer before the encoded transactions in The Proposal actually become executable and this is just um yeah like some optional extra safety mechanism giving the safe owners designers the chance to intervene in case something unexpected happens so with this module enabled on the dial

safe and the save snap plugin being configured on the side of snapshot being configured so that it points to the reality module we get this integration directly into the snapshot UI where anybody can just click this button so um yeah so now we have the reality module set up which means that we can Bridge the off-chain votes in on Snapshot into on-chain execution and with that our dial has taken a massive leap towards decentralization the organization no longer needs to trust the group of safe owners to execute on voting outcomes but now yeah they

basically rely on the escalation game cre behind the oracle um yeah so this is um phase two and Beyond token voting a Dao might want to adopt other governance Primitives so for example not every dial is meant to stay forever and while typically a lot of sod is put into launching comparatively little goes into how to disband and yeah I now want to present another zodiac module that addresses this the exit module and the idea here is um to let people redeem their governance tokens access the Dow redeem the doubt

governance tokens for a fair share of the treasury held in the Dallas account so first let's walk through the process process of setting up the exit module so this is our save the dial is safe and we see that it holds some die and ease and again the idea is to let leavers claim their share of die and ease so we can go again to the Zodiac Safe app and we see here in the left column that the reality module is enabled is what we did earlier and now we go and select the exit module and women we want to enable the exit module it asks us for the

contract address of our governance token so we provide that and yeah that's basically it so now with this module enabled um yeah we allow governance token holders to redeem them to do so as a token holder I go to the exit app um and this is how it looks but um so on the top left you can see the circulating supply of our governance token then below that we see like our balance of the governance token so let's see balance held by the connected wallet and here I can enter the amount of these

tokens that I want to redeem at the moment we haven't felt anything here so we see on the left side that the flammable value is zero but if we then go or decide to go maybe with 100 tokens since this is 10 of the circulating Supply it should also give us 10 percent of the assets held in the safe and we can see these values updating on the right hand side so we can check the cash out and if we are happy we confirm by clicking this button and once the transaction has been executed we can observe the values updating so we see um here the asset balances in the safe

they went down less ease and less die in the safe they went to our wallet while our balance of the governance token went down um yeah so we see exit module in place we have now reached the third phase of our dial Journey where we have everything in place for fully um yeah for fully decentralized governance but there's still our original group of multi-sik owners on the safe and they still have full control to do whatever they want with that with four out of six signatures and ideally they don't actively use this

control but rather act as a backstop in case something unexpected happens and then after running like this for a while the dial builds more and more confidence in the setup and at some point it becomes reasonable to remove this backstops that is removing the safe owners from the safe yeah and it's only now that we've reached the final stage of our journey no multisig owners left on the safe no way to circumvent the voting process and now we can truly claim to operate in a state of fully decentralized governance so

um yeah we've seen a simple Journey from idea to full decentralization using two zodiac modules the reality module and the exit module but there's more that you can enable in the Zodiac Safe app so we call zodiac the expansion pack for Dallas but more than just a set of tools zodiac is a composable design philosophy and an open standard think of D5 where you have some established standard interface erc20 and then different protocols yeah building on top of that having erc20 tokens as their inputs and their outputs and this gives us this amazing composability where different protocols

can plug into each other and build on top of each other allowing for more and more complex Financial applications to emerge yeah and this this interoperability of protocols throughout an entire ecosystem creates a flywheel effect and this is what made D5 explode and we imagine Dow tooling to work in the same way if we look at existing dial Frameworks from Aragon to Colony to moloch Etc they are all designed as monolithic systems they are built around their own set of

core contracts and then Implement their own version of modularity on top of that like extensions plug-in apps what not so each of these systems is like the center of its own universe and there's no concept of composability between them and yeah this creates World Gardens it means tremendous switching costs if your Dow wants to grow and evolve its governance Beyond of what's the chosen framework allows so let's say you launch a dial on the Aragon framework and then six months later your community decides it would like to migrate to molok this means proposals to transfer all of

the Dallas tokens and assets proposals to update all systems where your your dial account as an owner or has some other role as well as updating any external references to the dials account address and yeah coordinating all of this can amount to a Monumental challenge the key Insight that inspired zodiac is the decoupling of the account from the logic that makes it do things so using our previous example the Dao would spin up a nose is safe as its account and then set up Aragon as a governance framework they would enable a zodiac Aragon module to allow Aragon to control the safe

and now if six months down the road the community wants to switch to molok it can do so in a single proposal it would simply remove the Aragon module replacing it with a zodiac moloch module and from now on yeah moloch would exercise control over the account and that way the Dow keeps all its Assets in the same place the account address stays stable but yeah governance is provided by a different framework what this example also illustrates well is that we don't see zodiac competing with any of the existing dial Frameworks we rather think it will connect existing

tools enabling organic Pathways for Progressive decentralization so we at Northwest guilt we see ourselves as keepers of the zodiac open standard and we want to build this as much as possible out in the open so we invite everyone to contribute yeah so join us in building an ecosystem of interoperable Dao building blocks join us in using and composing zodiac modules to design your dials and yeah let's see what fantastic and unforeseen applications will emerge out of that uh this is how you can find us thank you for being here today and I'm sure

there's plenty of time for questions thank you thank you Ian yeah we we have time for questions uh high end great presentation um I was wondering is there anything like half of an exit module so if I want to redeem like percentage of my participation but not a rich quit let's say yeah this is what we just saw in the example where I had like 500 governance talking in my wallet but I only redeemed 100 so it's up to you to choose how much

of how much you want to exit yes okay I overlooked that part um another thing like the fourth step towards uh fully full decentralization like removing the safe owners can can you explain it a bit more in depth please so when initially setting up all these governance tools you still have your safe owners like they can still execute transaction with four out of six signature however they like um and this is probably also good because otherwise you kind of give away full control without ever battle testing the setup right so it is reasonable to run like this for a while and yeah the safe owners they are supposed to not

actually use their power but they are really there only as a backstop but yeah technically you cannot call this full decentralization because there is still this back door so to say um removing these owners really decentralizes the setup because no one can circumvent the token voting processes um yeah so my questions around the example you gave of like removing

Aragon um the they were on before and they seemed to have a new version that's sort of unopinionated and it's also modular so I'm curious like is there really a use case for removing something that's sort of unopinionated and also like plug-in based like is there an innate design difference in how you've designed it versus something that's sort of also unopinionated and modular yeah I'm not fully aware of the latest developments of Aragon but it sounds great if they move in this direction like our mission establishing zodiac is mainly to kind of form an open standard so we would love for Aragon to yeah

adopt some kind of modularity that fits also with what other projects are doing because then we get this overall composability right then we can have um yeah like Aragon you can evolve your governance and Aragon but then if you want to use maybe a little part from some other framework you can do that as well and you don't need to have like a huge switch over thank you thank you for the presentation I was just wondering on the points of removing the safe owners is it possible to appoint new safe owners because I think

that to have a backstop is is something really important and I don't think that's any Dio should remove it if you make the parallel with any legal system there's always a backstop like that supreme authority so is the option to appoint a new new safe owners often absolutely I mean you can always have dial proposals and then a vote on who should become the new safe owners you can temporarily remove them and then add them again or you can maybe even have something like regular votes to appoint new safeholders this is absolutely possible yes thank you excuse me

just to wear a short one how are you making money at the moment we are in the lucky position to have some funding from gnosis um for the longer term we see ourselves collaborating with stars supporting them and adopting our technology and then hopefully finding some relationships for that with them that align interests for the long term and somehow make us sustain our work I think if there are no more questions we'll wrap it up there thank you Jan so

much thank you [Applause]