Moving from Governance v1.5 to v2.0

Transcript

yeah so uh yeah basically i'm gonna talk about um i'm calling it like sort of governance 2.0 and it's like the next iteration of what we have in terms of governance platforms today so oh yeah before we start scan my my thing right yes scan it i'm second i'm second i'm losing i was first the whole day anyway um so yeah what we're going to talk about is um a little bit about me uh a recap of my previous talk that i had in ecc that was talking about you know similar topics this is kind of an extension of it it's it's still not a complete idea but i hope that you know

we can have a discussion around these things um kind of a discussion about like why is tolkien voting bad quote unquote and you know an example of you know an enforceable uh tragedy of the comments that you have with token voting um you'll say that no attacks haven't happened and there is no problem but i think there is um and then i don't know trying to go towards a solution with um kind of like a perfectly balanced meme right um and then yeah maybe a framework to how to upgrade your governance so yeah about me i used to live in china and then i was using bitcoin to buy stuff and then someone sent me the article about the

dow hack and that completely like you know changed the course of my life essentially and i've been involved in dao's ever since um i joined dao stack i was advising them before and then i joined them and in dao stack i ran a project called d hack which i don't know some people might know here it was kind of like the centralized hackathon before kovin um and then yeah i was in the sort of in the formation of dx dao uh and i've been a member ever since uh it's kind of like you know my passion and most of my time today's uh in collider ventures which is a venture fund out of israel so yeah and i care about a lot of our governance so uh quick recap on the previous talk um i talked about like the ownership economy

right the premise is that you know it's not just founders and investors taking home value it's also uh users um talked about like what makes daos work and came up with this thing of like initiative anyone can come with an initiative to a dao and you know you know drive it get funding for it and you know do something um kind of where we are right now with like bottom-up collaboration like cross-community collaboration and like uh like critics that are welcome um yeah a meme is worth a thousand explanations it's kind of like how i explained the problem uh and then uh talked about like reputation and a hybrid solution um for you know voting power so let's like continue to recap this is kind of

like how proposals are being done in daos and this is what drives them you know someone comes up with an idea to i don't know to list sushi or ek sushi on ave or someone is saying that uh um you know we're breaking the the someone is giving like you know some critical feedback on you know what the tao is doing um yeah this is kind of like a meme of how i see where daos are today right like we were talking about ownership economy but you know we're sort of recreating the same capital economy around like token voting um and then yeah like this whole thing like i'm kind of against snapshot at least in its current form um voting in like you know on a server and you know a

multisig that holds billions of dollars so who here is a part of a dao everyone what does it mean what does it mean for you to be part of adele you're building it down okay and okay and is it already like there's a community around it and everything yeah okay so uh what we're actually focused now is we actually launched a token like two two weeks ago and it's like already before that there was like a huge product market fit so we have like a

strong community around and now we are trying to fund all of these like new guys who want to work with us in a way that we still like have our traction and yeah basically like set up the environment so everyone could actually you know do the part and like the engagement is like a mutually beneficial beneficient in a way that yeah the whole environment strives so yeah so like the project will continue on forward yeah long term yeah you want to like spin up the sustainable flywheel yeah okay um yeah awesome so i think most of the people here are like a part of dao so want to talk about the elephant in the

room um which is token voting everybody's using token voting it's the easiest way to do right you send a token pull up a snapshot everybody votes it's really nice and easy so why token voting bad right so [Music] um a few things is first of all it's kind of you know um if you have a lot of tokens that you are more incentivized to vote because you have more influence and um this could very easily oh wow i have a screen here amazing anyway um yeah if you're a small holder then maybe you're not really incentivized to vote like voter apathy like my vote is not going to matter it's not going to be

very effective um the interest of really one uh reputation sorry one uh um um sort of like a stakeholder in the in the ecosystem is being highly represented in its capital right um these tokens usually represents like future uh uh claim to capita to uh revenue and they are highly represented um and then sometimes we have like conflicts of interest right like large token hurdles holders may have interest that not are aligned with the best interest of the tao and then does anyone have any example or do they know of something that happened that you know

just token voting going bad yeah flash flash node voting oh yeah for so you do a flash loan and you get a token and then you vote for something yeah so i think a lot of governance systems are mitigating that so yeah what else oh the default education fund so this was in my last talk i didn't put this here but this is a very good one like 20 million dollars went to like not really sure who exactly and they got uh yeah and they're supposed to i don't know represent the d5 ecosystem um i'm gonna look at like two like very specific one the first one is like bond i don't know if you know but bond um it's basically uh sorry a barn bridge it

was basically like a very bootstrap community bootstrap project it barely had any venture capital like investments in it and then they wanted to get added into uh uh ave for collateral so what happened is that as you can see like the community is totally in for it right like 52 people voted in the forum and what happened eventually is that the vcs of saffron finance like uh the ones who are you know the biggest competitor of barnbridge they voted against the proposal and now i mean barn sorry the vcs they have a lot of uh uh power in ave right but they obviously didn't vote for the best of the platform they just you know they voted for their own interest that they wanted saffron

finance on top of it and not um and not barbridge and then another um example so this is a bit close to me because uh i'm i've invested in hats right and they're a project that's close to me uh so they first uh presented to nexus mutual um they wanted to collaborate with them and then a proposal passed the community was all in favor there was a decent discussion in the forum there was an ama and then once the second uh proposal came to like actually participate one of the biggest token holders a vc that you know consequently even invested in the uh the competition voted against the proposal like the last minute like 30

minutes before it it finished so kind of like what are we doing here like it's really not representative of you know the actual interest of the dao and the best of the dao so another kind of like problem or something that we can touch on is a what i call a cryptographically secure tragedy of the commons and i mean i didn't invent this right this is like vitalik but you know imagine a contract where you know you can deposit like the um the voting power token and then basically everyone who deposits it uh you can auction on a daily basis or a weekly basis um the the voting power and then someone could buy this voting power just for a

certain proposal or a certain vote um and yeah like you get dividends basically for how much they paid so this you know this can actually create um like enforced cartels in doubt and then you'll say but but sir this has never happened right this doesn't happen well i think it did first of all who remembers this like the the steam governance and justin sun who remembers it anyone want to like briefly say what happened yeah so uh so um yeah so justin sun basically paid

some exchanges that they had a majority of the validating power of the blockchain steam which was a delegated proof of stake chain um in order for them to vote or actually it was not even voting it was to do i think it was an invalid state transition where basically they emptied the tokens of the main oppositors of justin's son taking over uh steam basically yeah right so i i think it was actually much worse like so what happened is that justin's son bought like uh steemit which was the main front end and they had a lot of tokens and then he told cz right hey i'm going to do some upgrade to the

governments let me vote with all the steam tokens that are on finance right and he did that right and then um there was like this whole thing with finance pausing uh withdrawal so people couldn't withdraw their tokens and like vote by themselves um and he used essentially all this uh to make a governance change that excluded some people from uh the platform and then hive rose up it's like a community that essentially was like you know you justin's son and we're gonna fork away and it was fairly successful um so this is like a very interesting one i don't know if this could be done with like a d5 protocol because let's say you know someone does that with maker how do they fork like where does the die go what about all the ether that is locked

in the smart contract like these type of forks can always happen so kind of like why hasn't this happened in d5 like i want to make this more engaging but i don't have much time so um i'll go right to the answer so we're a promised ownership economy but if you can see this is like the compound governance right look at this it's held in the hands of very very few and it's not really decentralized and don't think it's even intended to be decentralized yeah so kind of like the goal of the go of governance today is a to claim sufficient decentralization um b to kind of like you know

allow exchange of some of what some um agencies in the u.s call unregistered securities and then more important is that most um most protocols or projects today the the person who's designing the dao is the chief legal officer or you know the legal counselor um it's the person who's responsible you know for you know the legal stuff of the company it's not about anything to do about you know giving actual power um to the users so this is kind of like a quote from vitalik um like we need to make sure that uh because coin voting is very easy right now we cannot allow this to be you know the only legitimate um

um you know uh like governance system um yeah and then yeah he speaks about um you know the problems that large portions of the supply stand in the hands of tightly coordinated click of insiders which is that's the state right now so what can we do um as i i like to i like i like to explain with memes right so how can we balance like sweat equity and capital equity i'm not saying like you know kick token voting away completely because you know it has an important part but how can we have like sweat equity as a part of it how can you allow you know the people who are actually working or doing stuff without to have you know voting power um

yeah so it's kind of like a governance structure that represents more than one constituent or more than one um stakeholder okay so and it's called like reputation-based voting and reputation is non-transferable it's a it's a value that the dow holds rather than you know you actually the individual um and yeah like i'm gonna breeze through this so i'm my what i'm saying or like you know where i'm aiming at is to have to combine token and reputation voting for like a unified formula um that you know combines sweat equity and capital equity so

i'm a legend so um i'm thinking about like you know what what is currently happening right in in most of these um most of the projects they're using like pure token voting right now and you know there's there are ways or at least i want to think of ways of how to allow them to upgrade to you know a more equitable governance and then you know a simple kind of like balance like a like a v1 or an mvp for this is you know voting power is composed of 50 reputation and then 50 token voting you know and it could be like you know either locked unlocked or a score uh as a part of future locked and then reputation is gained by you

know working for the dao like people who are actually employees or working at the company uh governance participation uh often participation so you know calls source cred uh po-ops um community appreciation and rating like coordinate and specific contributions and then this is kind of like how you would bootstrap right now from a token-based voting dow to uh reputation-based voting now and then like this is it's kind of fancy but um imagine you take a percentage of the rep is going to be uh given out to the community over the course of let's say 24 months and then anyone can lock their tokens in order to generate rep in this you know uh in this epochs essentially

um and then yeah the longer the more you lock in and the longer you lock it for then the your higher your score is and then um it basically distributes it in uh in an auction mechanism where it's descending like the last point is kind of um you know it's descending by 10 for every ebook so every month like 10 less percent of reputation has been distributed and then you know like a v2 of this could be like dynamic balance and like mutual requirements so uh in order to participate in government you have in governance sorry you have to have both tokens and reputation and what this creates is an incentive for you know those who have sweat equity to also earn tokens and be you know financially

aligned with the tao and for those who have capital equity to actually participate and contribute tangible work for the dao um yes and then like this is a bonus holographic consensus but i don't know if i have kind of like time for that um yeah maybe i'll briefly talk about this so um most of the governance systems today use quorum um but at the end of the day most like 99 of proposals they simply pass right in daos and it's only those contentious you know one percent that needs like more debate on so this will allow you um to essentially um like someone puts essentially their money where their mouth is um with um

yeah like with each proposal and then if the proposal passes they get their stake back plus some if it doesn't pass then you know they lose their stake um and this is you know this is originally developed by daostak now dxdow is pushing this forward um and i think uh this is going to be a very interesting um like governance system and ideally we would see more um yeah i don't know more dows going down this route um and yeah open discussion questions stuff a couple questions any questions thoughts disagreements where am i wrong yeah so this is a this is a very common

problem that dao's have right now right like and the the balance between something like that which sounds amazing on paper and it definitely sounds like the thing that we should do versus the ease of whipping out a snapshot page what when are we gonna have frameworks that allow us to do that fairly easily without a massive overhead six developers working on it for three months to adapt it to your community connect bots here from discord source cred coordinate like i'm i'm trying to manage all of this together and i'm like i still have to do my job

how what's the solution what's coming yeah so i mean this is obviously not an easy problem and i mean we're we're we're at the very infancy of this entire thing right um i hope that you know at least for the governance system like the guys like us at dxdow we're really working on that and improving that governance system ideally you know others will be able to also build on top of it or use it deploy it themselves hopefully you know like a no code deployment that would be like the most ideal but it's pretty far away and then i know there are a couple of projects out here that are working on you know taking this coordinate and and uh um and source grid and taking all of these

things and packaging them into like a single thing that you can do you know hopefully this will happen you know soonish um but yeah i think like agora space some of the guys are here uh they're doing that i think there are a couple of others and yeah ideally we're building horizontally so yeah do you want to say something so like where would you start what's the like the lowest hanging fruit you know we don't have it you know that it's in progress so now you have a dow and you want to implement like you know some reputation system so like what's the easiest way um come talk to me like i'm happy to help i'm happy to help i'm like you know in

digs now i'm pushing for this specifically like bring on more more doubts that will use similar governing system so yeah how do you see the difference between organizations that already exist and try to decentralize into a dao and those that are starting off as doubts wait how do i differentiate um [Music] oh yeah so what are the different what is the difference between like a dow that is already out there and wants to decentralize and a dow that starts from

this like it's not a dow yet and they want to start like like that so i think like starting decentralized it's like almost impossible like starting like fully decentralized from day one and i mean if you need to launch something immediately then you know go for it do the snapshot do the multisig do that but you know have in mind how do i do central how do i actually decentralize it because it's a sandbox it's fine for snapshot to be like a sandbox um but you know it's not long long-term sustainable and it's definitely not scalable and it is especially i guess not like um um what do you call it like um from like a legal perspective that's

that's definitely not going to protect you or you know the rest of the multi-sig holders yeah thank you