DAO-NET

Goals

1. To operate as a collective of DAOs, a DAO composed of DAOs.
2. To operate as the legal interface to legacy government for the DAO collective.
3. To provide a collective Tax Pool framework to pay taxes, fees and fines to legacy governments for member DAOs.
4. To provide a collective Treasury with an egalitarian scalable voting framework that facilitates rapid continuous funding of DAOs and projects.
5. To facilitate the rapid incubation, growth, evolution and cooperation of DAOs.

Cardano Ecosystem Value

DAO Net will facilitate the rapid growth of the user base and DID usage on the Cardano network.

Action Plan Details

DAO-NET proposes to onboard a minimum of 10,000 DIDs to the Cardano ecosystem primarily consisting of existing members of the Project Catalyst and Cardano communities. Note: this represents less than 25% of the Project Catalyst members who voted in Fund 6.

The value propositions for users to onboard are:

1. Every member receives an equal vote on the distribution of DAO-NET Treasury funds.
2. Members may participate in the DAOs within DAO-NET, while enjoying legal liability protections that are not found in the typical member managed DAO.
3. DAOs within DAO-NET will be part of an audited ecosystem to ensure tax code compliance which will reduce legal liabilities of members and increase DAO resilience in the face of possible legislation to target DAOs on the basis of tax evasion.
4. DAO-NET will seek to maximize privacy of its members by only applying Know Your Client rules in the absolutely minimum cases required to remain compliant with legislation.
5. DAOs for communities, causes or interests receive funding from the DAO-NET Treasury with the amounts dependent upon the proportion of votes for that funding.
6. A DAO's funding has a direct relationship with the number of members supporting it therefore DAOs have a powerful incentive to network to onboard more members.

In addition to meeting the challenge goal of accelerating DID adoption, this proposal will go another step and also take up the challenge to register as an algorithmic DAO under the new Wyoming Law mentioned in the challenge.

Most of the other DAOs being proposed under this challenge would likely be considered "member managed" DAOs" under the Wyoming Law however DAO-NET will seek to qualify under the alternative category as an "algorithmically managed" DAO. Despite this difference, it is believed that sharing the DAO-NET experience in wading through the legal uncertainty that makes up current legislation will be of benefit to the Project Catalyst community as a whole therefore the processes involved and lessons learned will be transparently shared.

As part of the process of being legally compliant, DAO-NET will also engage with tax advisors and accountants to ensure applicable tax codes are met and will have a Tax Pool set aside to pay applicable taxes, fees and fines.

DAO-NET is being setup as a DAO of DAOs under the belief that DAOs formed within DAO-NET can transfer funds between each other, like departments within a corporation, without incurring a taxable event unlike transfers between separate DAOs.

Finally, DAO-NET seeks to use the technology and knowledge gained, and improved upon over time, to become an incubator and accelerator of future DAOs either within or outside of DAO-NET itself.

Scalability

DAO-NET uses a repeatable pattern of a DAO smart contract primitive to be able to theoretically scale to thousands of DAOs with millions of members, each of which self-organize into DAOs based upon areas of interest or expertise.

Project Catalyst recently announced a bicameral governance model experiment with the Catalyst Circle and a Catalyst Technical Council with Community Oversight and a trajectory of forming more Technical Councils in subsequent funding rounds. This is essentially the same concept however DAO-NET is a couple steps ahead on the evolutionary process in that instead of top down creation of a few technical councils, DAO-NET envisions a bottom up creation of technical DAOs as desired by members. DAO-NET achieves community oversight by giving members direct proportional control over DAO-NET Treasury disbursements.

Project Catalyst has the restraint of having to manage millions of dollars of assets thus requiring cautious incremental steps however by starting from scratch DAO-NET is free to experiment with a much more ambitious jump towards full decentralized governance.

Market

The initial DAO-NET target market are advocates for decentralized governance in the Cardano ecosystem, which can be approximated at 44,000 individuals based upon Project Catalyst Fund 6 voter participation. The target market expands as more DAOs are brought online with additional areas of interest.

Acquisition Plan

Theoretically a 25% market participation rate for the above tightly defined market is plausible however membership acquisition is expected to be mainly driven by the creation of new, and recruitment of existing DAOs into the legal protection and funding mechanisms of DAO-NET. Access to funding is expected to be a larger incentive for DAOs than legal protections.

Skills Required

Product Manager

• have a holistic understanding of the DAO-NET suite of proposals
• experienced in managing multidisciplinary teams in up to a dozen projects simultaneously
• ability to articulate and fluently translate between business and technical requirements
• able to manage large complex budgets
• experienced in hiring consultants and third party contract negotiations

Lead Developer

• Full stack developer experience
• Plutus development, especially algorithmic DAO smart contract primitive
• Define technical requirements
• Integrate multiple software components into a larger solution

Atala Prism Developer

• Atala Prism pioneer
• Plutus smart contract development
• Decentralized identity management for membership management applications

Partners:

Legal Firm

• Wyoming DAO LLC legislation experts, including Articles of Organization
• ability to be a registered Wyoming agent for a DAO
• experience in regulatory compliance requirements for crypto and blockchain companies in the US and internationally

Tax Accountant

• experience in Wyoming, US and international tax compliance requirements for DAOs, crypto and blockchain companies

Team

Product Manager: Dwayne Collard - 20 years+ IT Consultant, Solutions Analyst, IT Manager, Community Advisor https://www.linkedin.com/in/dwayne-collard/

Lead Developer: Jude Ben - 9 years+ Software Development , Plutus Smart Contract Development , Cloud and Infrastructure Engineer https://www.linkedin.com/in/judeebene/

Atala Prism Developer: Contractor to be determined

Partners:

Legal Firm: Partner to be determined

Tax Accountant: Partner to be determined

Roadmap

February 2022

• Prototype algorithmic DAO smart contract (only required if DAO Deployment Platform proposal not funded in which case cost is shared among funded DAO-NET proposals)
• Engage legal counsel for regulatory compliance of design, requirements for algorithmic DAO LLC filing under Wyoming Law, Articles of Organization amendment requirements when underlying smart contracts are amended, registered Wyoming agent, minimum Know Your Client requirements, payment in ADA and public disclosure of legal advice
• Engage tax accountant for tax code compliance of design, taxable status of internal DAO-NET transfers versus external transfers, payment in ADA and public disclosure of tax advice
• Design Atala Prism DID integration for DAO membership management

March 2022

• Prototype Backend API

April 2022

• Web interface for voting development (only required if DAO Deployment Platform and Voting DApp proposals are not funded in which case cost is shared among funded DAO-NET proposals)
• Prototype algorithmic DAO smart contract modification to add DAO-NET Treasury and Tax Pool
• Prototype Atala Prism DID integration for DAO membership management

May 2022

• Third Party Smart Contract Audits

June 2022

• Test algorithmic DAO smart contract with modifications on Testnet
• Test Atala Prism DID integration for DAO membership management

July 2022

• Launch DAO-NET (a modified instance of the algorithmic DAO smart contract) on Mainnet
• File for algorithmically managed DAO-NET LLC under Wyoming law (DAO smart contract must be operational at time of filing)

Key Performance Indicators

• number of DAOs created within DAO-NET (repeatable pattern of use-case)
• number of DID holders
• number of legal challenges, encountered by other Cardano ecosystem DAOs, avoided due to filing as a DAO LLC under Wyoming law

Success Definition

3 months

• Prototype algorithmic DAO smart contract with DID integration created
• DAO-NET Treasury and Tax Pool created and integrated

6 months

• DAO-NET launched
• At least 6 member DAOs in DAO-NET
• At least 1,000 DID holding members
• DAO-NET LLC paperwork filed under Wyoming law

12 months

• DAO-NET has official DAO Limited Liability Company status
• At least 30 member DAOs in DAO-NET
• At least 10,000 DID holding members

Budget

Legal Services: $15,000

Accounting Services: $5,000

Atala Prism DID Integration ($4,000/month): $24,000

Smart Contract Audits: $10,000

Product Manager ($2,000/month): $12,000

Algorithmic DAO Smart Contract*: $10,000

Total: $76,000

* Algorithmic DAO Smart Contract budget is for a very scaled down unaudited DAO solution, including hosting services, which is required to make this proposal deliverable in a stand-alone funding scenario however if the DAO Deployment Platform proposal is funded then this budget will be used to cover additional contractor expenses if required including for smart contract audits otherwise it will be added to the DAO Token / ADA reserve pool mentioned in the DAO Token Market proposal. If the DAO Deployment Platform is not funded however 4 other DAO-NET proposals are funded then the DAO Deployment Platform will be fully implemented with the combined funds of the 4 DAO-NET proposals.

Future Funding

• Subject to legal review, DAO-NET intends to have a Bootstrap Funding contingency as further incentives to contractors, in which a small percentage of the DAO-NET Treasury can be set aside in a smart contract to retroactively fund contractors.
• Proposals for additional enhancements to the DAO-NET ecosystem and new DAOs will be submitted in future Project Catalyst funding rounds.
• If the CryptoFusion Funder proposal is funded then DAO-NET is expected to be self-funding when launched on the mainnet including the ability to fund other DAO proposals.

IP

• All intellectual property is intended to be freely shared with the world so that any insights can be duplicated in other experiments to rapidly advance decentralized governance therefore:
• All software developed as part of this proposal will be Open Source under Apache License, version 2.0
• All documentation will be licensed under the Creative Commons Attribution 4.0 International Public License

Challenges/Risks

1 ) Likely regulations hostile to DAOs and decentralized blockchain applications

• Factions within the global elite publicly seek to thwart decentralization, as seen in recent and proposed legislation that is overtly hostile to decentralized blockchain ecosystems
• Most likely lawfare attacks against DAOs will be tax evasion and know your client requirements to comply with anti-money laundering and anti-terrorist financing regulations
• Typical member managed DAOs use a herd defense strategy in which there are so many anonymous members that individuals feel safe that they will not be identified and targeted however these DAOs normally have identifiable influential members managing some aspects of the DAO
• Traditional law enforcement strategy against herd defenses is to identify the prominent members of an organization and make an example of them through prosecution to deter the rest
• The dominant legal position is that DAOs are considered general partnerships, exposing members to personal liability for any of the DAO's actions and obligations
• Therefore there is a significant risk that prominent members of many successful DAOs will be subject to legal prosecution in the foreseeable future

Risk Mitigations

• DAO-NET to attain DAO Limited Liability Company status under Wyoming law. If funding for the DAO-NET proposal is not approved then contingent funding strategies are available including reapplying under Project Catalyst Fund 8, using standalone DAO smart contract funds in the event multiple proposals are funded and offsetting labor costs using a retroactive payment plan from the DAO-NET Treasury to free sufficient capital to complete DAO LLC filing.
• DAO-NET to use a totally algorithmic solution to reduce the number of identifiable influential members as much as possible
• All DAO-NET software developed will be open source allowing others to replicate and expand upon the decentralized solution in the wort case scenario of DAO-NET being legally disbanded

2 ) Bias by some Community Advisors and Voters against large solutions being divided into multiple proposals

• Current Project Catalyst funding process has a known limitation in which large proposals are unlikely to be funded unless the proposal is ranked number 1 in voting
• A solution to this limitation is to break a large proposal into smaller proposals funded under multiple challenges however some members view this as gaming the system or argue that large proposals should be funded by incremental funding in multiple funding rounds so that funding can be based upon achieving milestones
• This negative view of parallel funding is slowing innovation and making it more likely that projects are not completed due to lack of later funding regardless of success in achieving milestones up to that point
• Project Catalyst process already has auditing requirements for achieving milestones before funds are released which would apply to each proposal individually so that line of argument is not really valid
• Another known limitation of the Project Catalyst funding process is that there are insufficient funds to pay competitive living wages for labor costs in developed countries which results in jobs being shipped overseas to developing countries or requires workers to take on multiple gigs simultaneously however this wage gap can be addressed using the multiple proposal approach
  Risk Mitigations
• This proposal seeks to change the discussion from whether or not multiple proposal solutions are a valid approach, to what are the proposal elements and challenges that need to be addressed in multiple proposal solutions
• As an experienced Community Advisor, with industry experience in the writing and assessing of proposals, this proposer has included all the elements required in the CA guide plus contingencies  for the various funding scenarios like a single proposal being funded up to all the proposals being funded with the intention that CAs objecting to the idea of multiple proposals will provide feedback on what elements or concerns are not being addressed from their perspective so that future solutions will be more complete
• With the exception of the Product Manager and Lead Developer, who are required to participate in every proposal for integration purposes and have manageable workloads, no contractor will be involved in multiple proposals to prevent resource contention as being a reason to doubt feasibility of the solution overall

3 ) Recruitment of contractors required

• While the core integration team is filled, several specific proposal roles remain to be filled
  Risk Mitigations
• Skill requirements have been clearly defined
• Labor budgets in the proposal are competitive with similar Project Catalyst proposals, with contingencies for higher wages if required including using standalone DAO smart contract funds in the event multiple proposals are funded or offsetting labor costs using a retroactive payment plan from the DAO-NET Treasury
• A number of Cardano experienced consulting firms have been identified that offer development services

Related Links

CryptoFusion Funder Proposal: https://cardano.ideascale.com/a/dtd/CryptoFusion-Funder-DAO-Net/381146-48088

DAO Deployment Platform Proposal: https://cardano.ideascale.com/a/dtd/DAO-NET-DAO-Deployment-Platform/381386-48088

Sybil Defense DAO Proposal: https://cardano.ideascale.com/a/dtd/Sybil-Defense-DAO-DAO-Net/381401-48088

Legal Defense DAO Proposal: https://cardano.ideascale.com/a/dtd/Legal-Defense-DAO-DAO-Net/381392-48088

Community Growth DAO Proposal: https://cardano.ideascale.com/a/dtd/Community-Growth-DAO-DAO-Net/381398-48088

Voting DApp Proposal: https://cardano.ideascale.com/a/dtd/Voting-DApp-DAO-Net/381003-48088

DAO Token Market Proposal: https://cardano.ideascale.com/a/dtd/DAO-Token-Market-DAO-Net/381431-48088?submitted=1

SPO DAO & Sidechain Dev Proposal: https://cardano.ideascale.com/a/dtd/SPO-DAO-Sidechain-Dev-DAO-Net/381422-48088?submitted=1

Communication & Outreach Proposal: https://cardano.ideascale.com/a/dtd/Communication-Outreach-DAO-Net/381415-48088?submitted=1

Multilingual Translation Proposal: https://cardano.ideascale.com/a/dtd/Multilingual-Translation-DAO-Net/381405-48088?submitted=1

Auditor DAO Proposal: https://cardano.ideascale.com/a/dtd/Auditor-DAO-DAO-Net/381404-48088?submitted=1