Community Decentralisation Index - Measuring the Decentralisation Gaps of DAOs

[GENERAL] Name and surname of main applicant

Vanessa Cardui

[GENERAL] Email address of main applicant

decentralisation-index@proton.me

Additional applicants

Mercy A

Jeremy Bolander

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

7

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language.

No

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

No

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.” .

No dependencies.

[GENERAL] Will your project’s output/s be fully open source?

Yes

[GENERAL] If NO, please describe which outputs are not going to be open source. If YES, please write “Project will be fully open source.”

Project will be fully open source.

[METADATA] Category of proposal

Standards and Regulation

[IMPACT] Please describe your proposed solution.

The Edinburgh Decentralisation Index, or EDI, developed by the University of Edinburgh Blockchain Laboratory, measures several criteria to determine how decentralised a blockchain is. We propose to adapt their approach in order to develop and share an index to measure how decentralised a community or organisation is - particularly, a DAO.  

To do this, we will consult both formal DAOs and more informal communities, to understand from the inside their experiences of trying to move towards decentralisation, and to find out which criteria actually matter to them in practice.

The meaning of “decentralisation” for a community can seem elusive because the word “decentralisation” is a “floating signifier”, capable of bearing many meanings. Decentralisation in practice is contextual, and may look different for each community, so communities might each be talking about different things when they say they are aiming to be “decentralised”. Making such a core ideal measurable and comparable on a range of criteria is important for our communities, as well as for our blockchain; while it is obviously important to know if the blockchain itself, as measured by the Edinburgh Decentralisation Index, can support decentralisation, it is equally important to measure whether, and in what ways, our communities themselves are moving towards decentralisation. The process of working out how to measure the decentralisation of a community will help us better understand the range of what decentralisation can be, and how we can move towards it in our different contexts, with our different priorities.

A core element of our proposal is that (unlike the processes often used for building indices, which are derived top-down and from theory alone), we will embed, and incentivise, community consultation and co-production. It is DAO communities themselves who understand from experience what they have needed to do to move towards real decentralisation, and what signs have indicated progress for them; so it is vital that their knowledge is the basis for what we measure. We also know that “decentralisation” is rarely total or absolute - and DAO communities are the people who can tell us about that centralisation/ decentralisation spectrum, how they navigate it, and how we should value it.

So we propose to collaborate closely with 6 DAO communities (yet to be selected - we have a shortlist of those interested), to understand what “decentralisation” is to them: what elements of their operations they aim to decentralise, what issues they have faced, and the weight they give to different criteria to determine how “decentralised” a DAO is. Based on this input, as well as theoretical and analytical material from our reading, we will devise a weighted index that measures a range of criteria. We will test it with our 6 core communities, and make a 2nd iteration; then we will test it again with 10 more communities who have not been involved in the initial discussions. They will be testing the Index “cold” and will give us feedback on how well it worked, how well they felt it reflected their degree of decentralisation, and how easy it was to use.  

The end result will be an accessible community tool - a weighted index that anyone can use to determine the degree of decentralisation of a community. In addition, a community can use its own answers to identify which areas it could address if it wants to become more decentralised. Alongside the Index itself, we will produce detailed documentation of our process and the insights we gathered from communities, so that anyone in the future could use our research to develop our work further.

We plan to approach the work from 3 core perspectives:

1) Being specific

The word “decentralisation” is capable of bearing many meanings, so any discussion or measurement of it should be specific about which features of a system are being decentralised. To scope our Index, we plan to go into DAO communities to collect data on

• the dimensions of decentralisation they try to achieve
• the parameters they control to move the needle on those dimensions
• the indicators that reveal the effects of toggling the parameters.

While no DAO can claim they are completely decentralised, they can be forthright about the struggles and limitations they face, and the parameters that challenge them; and they can resist overstating what any particular sort of decentralisation might achieve. They can also measure over time, and note that decentralisation is not a static state, but a process.  

Our aim is to work with our 6 core DAOs, who will be very varied, to identify the specifics that matter to them (what kind of decentralisation, of what, and when?), and build our Index to reflect these findings.

2) Diverse checks and balances

People have diverse access to resources and skills, but maintaining that diversity within algorithmically- determined structures requires constant rebalancing. This has been a struggle of political institutions for centuries. For example:

• As Cardano navigates its way to self-sovereignty via CIP-1694, we’re rediscovering notions from old, institutional political theory, such as the separation of powers. Fully exploring these is critical, since we know re-centralisation can occur because of imbalances of power.
• Wealth in crypto-economic networks correlates to early adoption of technology, external economic wealth, and proximity to external resources like low-cost electricity or connectivity topology.
• DAOs like Colony balance stake-based and reputation-based power for users - a balance between those with a lot to lose, and those with popular support.

DAOs experiment with lessons on checks and balances from a long and diverse legacy of cooperative economics (an indicator that there are further mindsets of distribution and cooperation beyond blockchain decentralisation). DAO token economists onboard the market-based lessons of Hayek and also learn from the economics of “common-pool resources” theorised by Elinor Ostrom and others.

Our approach will use community co-production to surface genuine diversity amongst the key participants and early adopters of our Index. Through grounded theory and ethnographic techniques, we will develop an open-source, extensible, repairable index that is as heterogeneous as its users. Incorporating multiple forms of decentralisation and participation can enable each different approach to contribute to checking and counteracting creeping centralisation.

3) Making centralisation accountable

Our early scoping research has indicated (see our inital research Miro board) that decentralisation and centralisation exist on a spectrum, and that communities use what works best along that spectrum at any given time. Communities unpack and navigate that spectrum to help them a) prevent the concentration of power under centralisation, and b) avoid chaos and entropy under decentralisation. Our Index will help them do this.

Rather than quashing centralisation whenever we spot it, the Index will help us identify it clearly, explore the reasons why it is emerging, surround it, and hold it accountable early and often. Centralising tendencies may appear in response to, for example:

• internal bugs and emergencies that may need temporary suspensions of norms to resolve
• centralised organisations emerging to oversee protocol development or bootstrapping
• fallout from exogenous shocks to the community, such as market fluctuations.

Our Index will help DAOs evaluate where they sit on the centralisation/ decentralisation spectrum at any given time, so they can design for the challenges that await them at either end, and respond to centralisation before it can metastasise. The Index will also help them identify which specific parameters and dimensions to adjust, based on which indicators are flashing. Worried about a benevolent dictator for life? Plan for a democracy. Concerned about imbalances of power due to multi-pool operators? Design a node that holds an offsetting power to challenge such accretions.

Supporting accountable DAOs

Overall, we expect that using the Index will have wide-reaching effects on a DAO in helping them think about how they work, and how they navigate their ongoing relationship to decentralisation. 

Decentralising communities and organisations is complex. The tools meant to achieve it can introduce novel, liberating possibilities — but they run the risk of enabling astonishingly unaccountable concentrations of power. The ability to measure how decentralised a DAO is can create more accountable organisations and relationships.

And we aim to enable DAO communities to measure just that.

[IMPACT] How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?

Our proposal addresses the challenge by creating a tool to help DAOs operate, by helping them assess and navigate decentralisation, one of the core governance issues they face. 

While the Index is not a management platform in itself, the information and insights that DAOs gain by using it will underpin their use of any management dApp or platform that they do use. Having a developed understanding of their own approach to decentralisation will support them with all the other issues mentioned in this Challenge, from organising their community intentions, to designing their operations and collaborations, to developing their governance. 

An insight from a proposal called Open dAPPs Framework in Fund 9 was that the platforms and products we use shape who we are; so a tool like this Index, which helps us define and monitor our ethos, can act as a touchstone. It can help us evaluate the features of other tools, and ensure that when we adopt platforms, we use them, and not the other way round.

The Index can also support new DAOs coming into Cardano, by helping them define their approach to decentralisation, and how they want to apply it in their governance and in their use of DAO tooling. In the words of the Challenge, the Index is a “Tool for prospective organizations to use in evaluating the features available in Cardano DAOs.”

The Index also has wide-ranging potential benefits to Cardano as a whole. Increasing DAO members’ insight into their own decentralisation will help them play a role in addressing the current challenges Cardano is facing as it moves towards Voltaire governance. Unless Cardano DAOs adopt legitimate decentralisation, Cardano as a whole may not be able to achieve it either; there is a fractal expression of the local and the global.

Blockchain and web3 communities are sometimes not as decentralised as they aim to be, for reasons such as:

• many free-to-join, participatory, open-source communities are regulated by “benevolent dictators for life” such as Torvalds (Linux), van Rossum (Python), and Berners-Lee (W3C);
• most of us were not brought up to work in decentralised ways; so we revert to old patterns;
• the vast and decentralised traffic of the web flows through a tiny number of enormous platforms ;
• flight from a venture-capital financing regime into the novel disintermediation of crypto-networks has produced some striking intermediaries supporting a lack of diversity and autonomy, from the mining cartels dominating Bitcoin and other protocols to the sweeping charismatic authority of Vitalik Buterin over Ethereum governance.

Despite Cardano’s robust research foundation and constant iterative development, this dissonance can appear here too, because decentralised tools do not necessarily lead to decentralisation.  The Index will help us discuss and analyse these kinds of issues from within our communities and organisations, rather than just in the abstract. The measurement and analysis that the Index enables will also give a new lens through which the Cardano ecosystem can examine the complexities of decentralisation, and allow a focus on what it means for our human communities, relationships and working practices.

The ideal of decentralisation remains compelling because its promise is real. Our Index can help realise that promise.

[IMPACT] How do you intend to measure the success of your project?

• Number and variety of communities engaged as core collaborators
• Number of consultation meetings held
• Qualitative feedback about the meetings and how useful they were
• Number of communities testing the index “cold”
• Qualitative feedback on how well our Index measures what our pilot communities think of as decentralisation
• Views of our documentation on GitBook and Loomio
• Feedback in the final meeting with communities on how many of them consider the index a useful tool
• Views and comments when we share the finished Index with the wider Cardano DAO community.

[IMPACT] Please describe your plans to share the outputs and results of your project?

The sharing starts with connecting to DAOs and communities, and continues throughout the project.

• 6 key participants will be onboarded early and will be incentivised to work with us to scope and test the index. We will select 6 early adopters for their relevance in the Cardano community, their advocacy for decentralised values, and their variety of skills and interests. We are currently approaching eligible communities, and if funded, we would like to include established, formal DAOs from different parts of the Cardano and blockchain ecosystems, as well as communities that are in the process of designing and forming DAOs.

• Opensource, transparent documentation throughout the project lifespan, including scoping, development, launch, and engagement. Maintained on a GitBook mirrored to a GitHub repository, by the experienced documentation team at QA-DAO. The proposal core team has had extensive time-on-task in this area and understands how robust documentation protocols make Catalyst projects accountable, functional, and effective.

• Testing and iteration are key building blocks of the design process, and require the creation of a smooth outreach and communications protocol. We will onboard a further 10 communities to test the Index “cold” and share with us their observations of its efficacy, applicability, and usefulness.

• Public launch of the Index under a Creative Commons License, with the Index, Whitepaper, and Documentation repo shared via a closeout report to the Catalyst community. We will share it widely through the community's key channels: Twitter, Cardano forum, Telegram, Discord, Town Halls. 

[CAPABILITY/ FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability?

Our team is experienced in approaching and navigating relationships with communities and organisations in ways that bring out the best in others. From Wada hubs to community facilitation skills, we have the tools and processes to successfully work with the key participants and early adopters at the heart of this proposal.

In addition, for the Index development, we have experience writing and contributing to whitepapers, deep familiarity with working in open-source ways with a commitment to open-source tools, and have already begun standing up the research root for this project. We have an understanding of the requirements for privacy and security when handling data, which is important when approaching communities for their participation and consent. We value anonymity to protect data providers, and we build that protection into all of our processes and protocols while working with participants to craft customised citations and acknowledgments when they require them. We also understand the ethical implications of taking on the task of creating a standard, and how we need to evolve our methods if we want evolved standards.

We are skilled project managers across the team, with multiple successfully completed proposals in Catalyst, including delivering Challenge Team insights, various businesses and enterprises outside of Cardano, and various skill sets across the core team. We all also have participated in building governance and infrastructure throughout Catalyst with a vision of an accountable, pluralistic, decentralised innovation fund.

[CAPABILITY/ FEASIBILITY] What are the main goals for the project and how will you validate if your approach is feasible?

1) Provide shared meaning around the concept of decentralisation in communities in blockchain and even beyond. It surfaces the values of different communities and organisations in its development, provides a shared language and extendable frameworks for its application and use, and provides support to autonomous communities by helping them evaluate and compare their own trends in decentralisation over time. 

This will be validated by the Index itself, together with our final whitepaper and GitBook documentation, which will draw together our findings and the input we have received from communities. 

2) Deep community engagement and true co-production of a tool for the commons - this brings in a broad group of multiple skills and interests, beyond the core proposal team, who are all motivated to learn and work on the issues and particulars of developing tooling for measuring decentralisation.

This will be validated by including a register in the documentation that lists the DAOs, communities, and point-people within those communities that we are engaging with, along with the exchanges of value taking place, such as transfer of incentives, feedback provided, advice, reports, etc. Proof of this is intended to be provided in Milestones 1 and 4 below.

3) Build on a sound foundation of research - Understanding the ecosystem of DAO communities and projects attempting to conduct themselves in decentralised ways begins with establishing shared meaning for terms and jargon, as well as considering work already conducted and being used in the space, including efforts such as the Catalyst Funded ClarityDAO tool sets, or the elegant Community Health dashboard efforts from rnDAO.

This will be validated by maintaining an open repository for the creation of the whitepaper which includes all papers, insights, articles, collaborations, and other resources which will inform the ongoing development of the index. This repo is evidenced in Milestones 1, 2, 4, and 6 below.

4) Create a structure and process for Index development - i.e. a documentation and development platform that is adaptable, extendable, and allows for early testing and versioning of the index in order to build in feedback from the very beginning. 

This will be validated via Gitbook documentation that records the development and changes made during development, alongside a versioned history of the index. Our commitment to open source means the process and structure will be able to be replicated by others. Evidence of this structure and process is provided in Milestones 4 and 5 below.

5) Launch an iterated version of the Index alongside a whitepaper. This project aims to deliver a reusable, adaptable standard for measuring the decentralisation of communities. It is a standard we expect to be picked up voluntarily by aspiring DAOs in designing and analysing their structures and processes, as well as established communities that wish to evaluate their current status and trajectory.

Validation of this standard is in the criteria we stand by for its success:

• Robust but not verbose
• Inclusive, with a variety of skills and backgrounds informing design and development
• Integrates well into the existing processes of communities
• Remaining focused on the specific need for clarity around decentralisation
• Has a broad testing phase that is made available early during development
• We’ve provided clarity on how and why decisions have been made

[CAPABILITY/ FEASIBILITY] Please provide a detailed breakdown of your project’s milestones and each of the main tasks or activities to reach the milestone plus the expected timeline for the delivery.

Milestone 1 (within 2 weeks of getting funded): PLANNING AND SET-UP (15% of budget)

• Set up our GitBook structure and other documentation processes;
• Identify and onboard 6 communities / DAOs, of a range of types, as our core collaborators to develop and test the Index; 
• Devise an initial half-day session for them, to introduce the concept of the Index and explore their understanding and experience of “decentralisation”, and what they feel can and should be measured; 
• Conduct a literature review of any existing material about measuring decentralisation of communities, document on GitBook, and share with our 6 communities as background.

Milestone 2 (within 2 months of getting funded): INITIAL SESSIONS (10% of budget)

• Deliver sessions to our 6 collaborating communities and collate their input on the project GitBook; (NOTE: the intro session will be repeated 3 times, each with 2 communities attending)
• Begin drafting the first part of our whitepaper with this information.

Milestone 3 (within 3 months of getting funded): 1st DRAFT OF INDEX (20% of budget)

• Write our draft Index, based on our literature review, initial scoping, and input from 6 communities;
• Devise the session we will deliver to test it with our communities; 
• Document our process on GitBook, and feed this info into our draft whitepaper.

Milestone 4 (within 4 months of getting funded): TESTING THE 1st DRAFT (20% of budget)

• Return to our 6 collaborating communities and present the Index, and run a half-day workshop to explore and test. Collate the resulting data on the project GitBook and feed it into our draft whitepaper.
• Document this on GitBook.

Milestone 5 (within 5 months of getting funded): NEW ITERATION (20% of budget)

• Collate and analyse feedback, and produce one new iteration of the Index incorporating issues raised by communities.
• Engage 10 additional communities/ DAOs to run the new iteration of the Index with their communities without the support of a workshop, and share their feedback.

Milestone 6 (within 7 months of getting funded): WHITEPAPER, PEER REVIEW, CLOSE-OUT (15% of budget)

• Write and share a whitepaper on our findings, including a process of community oversight/review from 3 people from the Catalyst community who have specific domain expertise in the areas covered by the whitepaper. 
• Close out the project.

[CAPABILITY/ FEASIBILITY] Please describe the deliverables, outputs and intended outcomes of each milestone.

Milestone 1 (within 2 weeks of getting funded): PLANNING AND SET-UP (15% of budget)

Deliverables:

• a literature review
• a list of the 6 communities we will be working with 
• a documentation structure
• a session plan for our first session

Outcomes:

• We will have a clear grasp of any previous work in this field and will have incorporated it into our thinking and our session planning
• We will know who we’ll be working with, and begun to build relationships
• We will have a solid plan for our initial session
• We will know how we’ll structure our documentation

Milestone 2 (within 2 months of getting funded): INITIAL SESSIONS (10% of budget)

Deliverables:

• Documentation on GitBook of 3 sessions with communities
• List of key insights from the sessions

Outcomes:

• Our process and our initial sessions will be documented and publicly available
• We will have established critical connections to key participants in the project
• We will have the data we need (core features and real-life use cases) to build the Index

Milestone 3 (within 3 months of getting funded): 1st DRAFT OF INDEX (20% of budget)

Deliverables:

• a first draft of our Index, published on GitBook and shared with our 6 test communities
• documentation of our work so far will be shared on GitBook
• a session plan for sessions with 6 communities to test the index; and a testing framework, including how we will capture feedback
• a registry framework for adoption and use data of our co-producers
• a list of 10 additional communities who will test the Index on their own, and a method (e.g. Google Form) to capture their feedback

Outcomes:

• A working first version of the Index will support engagement from our 6 co-producer communities, as they will be able to see the results of their input
• Our session plan, testing framework and registry framework will mean our co-producers know how the next step in the process will work, and can feel confident about how their data will be used.

Milestone 4 (within 4 months of getting funded): TESTING THE 1st DRAFT (20% of budget)

Deliverables:

• documentation on GitBook of 3 sessions with communities to test the Index

Outcomes:

• We will have an iterated and adapted testing, registration, communication, and education protocol
• We will have core data for the later development of governance processes for index sustainability

Milestone 5 (within 5 months of getting funded): NEW ITERATION (20% of budget)

Deliverables:

• The second iteration of the Index, based on feedback
• Documentation on GitBook of the feedback from 10 additional communities testing the new iteration of the Index on their own
• Public launch

Outcomes

• We will have a collection of user stories and feedback to validate success criteria and outcomes at various levels
• An up-to-date map of our user ecosystem 

Milestone 6 (within 7 months of getting funded): WHITEPAPER, PEER REVIEW, CLOSE-OUT (15% of budget)

Deliverables:

• Completed whitepaper
• Project close-out report

Outcome:

• Project outcomes will be widely shared for the benefit of the whole ecosystem.

[RESOURCES & VALUE FOR MONEY] Please provide a detailed budget breakdown of the proposed work and resources.

Development team 37,800 ADA x 3 people, = 113,400 ADA 

This covers, for each of us:  

• initial outreach to find our 6 test communities/DAOs and onboard them: 1 day
• Literature review and scoping: 3 days
• Planning 2 sessions with our test communities: 1 day
• Facilitation of 6 sessions with our test communities - first session (repeated x3) to define most important elements to include in the index, 2nd session (repeated x3) to test the index and discuss. Each session will include representatives from 2 communities. 3 days (6 half-days) 
• Creating the index: 8 days (4 half-day meetings, 6 half-days working async together, and 6 half-days individual research)
• Analysing feedback, and writing 1 iteration of the index with whatever changes are manageable (while recording any feedback that we do not have the capacity to implement): 5 days 

 

so 21 days’ work each, at 1,800 ADA / day 37,800 ADA x 3 people = 113,400 ADA

Consultancy:

Additional consultant to join us on the writing process, and bring insights from the Edinburgh Decentralisation Index: 4 days 1,800 ADA/ day = 7,200 ADA

 

Communities we engage with: 6 communities at 4,800 ADA each, plus 10 more at 1,200 ADA each = 40,800 ADA

• initial group: 3 members of a community attend 2 half-day sessions with us (3 people x 800 ADA per person, total 2,400 ADA per session, x 2 sessions = 4,800 ADA. Multiplied by 6 communities = 28,800 ADA)
• additional 10 communities/DAOs: payment for their time to run the Index for their community and share with us. 1,200 ADA x10 communities = 12,000

subtotal 40,800 ADA

Whitepaper and peer review: 18,000 ADA

We will write and publish a whitepaper about our discoveries, covering the Index itself, our background thinking, our working process, insights from our 6 core communities and from our 10 additional test DAOs, and our conclusions. The first draft will then be peer-reviewed by a team of 3 reviewers from the Catalyst community who have specific domain expertise in the areas covered by the whitepaper. 

• Writing whitepaper (including 2 drafts, edit, proofread, layout, and publicising/sharing) = 12,000 ADA
• Community oversight/review: 2 meetings x 3 people x 1,000 ADA per meeting (includes their time in reading and reflecting on the Whitepaper) = 6,000 ADA

 

Documentation: 12,000 ADA

Capturing thinking process, results of meetings, feedback from communities, iterations of Index and Whitepaper, etc, on a project GitBook

Project management: 7,000 ADA

Covers arranging meetings and managing communications with our collaborators; publicity and sharing with the community; wallet and budget management; milestone reporting and monthly reporting; close-out report and video 

 

total 198,400

[RESOURCES & VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

To negotiate the exchange rate when compensating contributors to this proposal and paying for services and tools, we are anticipating continued market macro conditions that will suppress ₳ prices. As of mid-July, we are basing our conversion rate of $0.25 (V$/₳ = 0.25) on the lower bound of the support channel established around the 200dma ($0.24-$0.35).

Our pay rates are average freelance rates for this type of work in the countries where we are based, reflecting our skills and experience. Note that freelance rates are higher than salaried rates, because they take into account the employment overheads of the worker (for example, unlike salaried employees, freelancers do not get sick pay, holiday pay, national insurance or pension contributions; taxes are not deducted at source; and they cover all overheads for their own workspaces.)

Our approach of paying communities for their input represents an important way to recognise and reward their time, and will build their engagement. It has been consistently shown that incentives increase response and participation rates. Furthermore, monetary incentives outperform all other incentives due to the following characteristics:

• Transparency — Giving money is simple and straightforward. People know exactly what they’re going to get, without any extra hoops to jump through. Money is also guaranteed.
• Immediacy — Promised incentives (“you’ll get X at some point in the future”) are generally less effective than instant gratification. Cash delivery is easy to facilitate in both in-person and remote participation. Payment can be made instantaneously, sometimes directly to wallets or accounts.
• Flexibility and convenience — Participants can take those funds and apply them as they see fit.

 

While incentives can carry risks for the integrity of the data collected in participatory research and input, we plan to mitigate those risks by only approaching communities that are already active in our area of research, specifically adopting or seeking to adopt tooling for decentralisation (DAOs).

Based on the above, plus the complexity of the work and its potential benefit to the Cardano ecosystem. our budget represents excellent value for money.

[IMPORTANT NOTE] The Applicant agreed to Fund10 rules and also that data in the Submission Form and other data provided by the project team during the course of the project will be publicly available.

I Accept