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Goals

1. Create a secure open source customizable DAO solution that will form the basis for DAOs within  DAO Net.
2. Use the DAO solution to form the DAO Deployment Platform which will maintain and enhance the solution going forward.

Cardano Ecosystem Value

By having an open source customizable DAO solution that new DAOs can readily use on their own or as part of DAO-Net, the Cardano ecosystem will be the go-to choice for DAOs which will increase the number of members and transaction volumes in the ecosystem.

Action Plan Details

The base DAO primitive, which will be open source and customizable, is a set of smart contracts for  algorithmically managed DAOs. Blockchain ledgers will anonymously track membership and each member's votes towards two categories of votes (Technical and Budget). The blockchain ledgers will also track the budget amounts in various DAO project escrow accounts.

Technical votes refer to the process of upgrading the DAO smart contract software to implement new features, fix bugs or deal with security issues.

Budget votes refer to proportional allocation of token income to projects, DAOs, individuals, smart contracts or other wallet addresses. Any member can add a budget item to the budget list which consists of a title, description and address (which could be a smart contract or wallet). A smart contract budget item may contain several other budget items. For instance budget item Community Growth DAO Project A may be a smart contract that allocates tokens as follows 50% to Multilingual Translators DAO Project B for translation services, 20% to Developer C for development work, 20% to Developer D for development work and 10% to Communication & Outreach DAO for marketing. Members could direct their proportional allocation of funds to Community Growth DAO Project A which would then divide the funds up accordingly or they could directly allocate funds to any of the specific sub-budget items.

A DAO instance is simply a smart contract budget item that has variable parameters for its sub-budget items that are assigned by member voting allocation. Each member allocates all or a portion of their budget vote to the budget items which they would like funded. For instance a member could allocate their entire vote to a single budget item or they could spread 0.25 votes equally among 4 different budget items. Every hour the tokens received by a DAO are distributed proportional to the votes allocated to each budget item. If some members have not allocated their budget votes then that proportion of the funds are sent back to the DAO to be redistributed in the next hour.

Note that budget items may receive tokens directly from sponsors and other sources in addition to the DAO budget voting process.

Discussions about voting will take place in third party platforms initially although a future decentralized platform for such discussions may be created to prevent censorship and maintain privacy.

Each member is given 1 vote for each of the voting categories and each vote can be broken down into fractions of up to 1 millionth, to allow for future proportional delegation to more than one voting smart contract and for proportional budget allocation votes. The votes of a member who is suspended are also suspended until the member renews their credentials.

The DAO Development Platform will use this solution for its own operations with budget votes being used to determine which projects get funded for implementation.

Scalability

As a repeatable pattern of a DAO smart contract primitive the solution could theoretically scale to thousands of DAOs with millions of members, each of which self-organize into DAOs based upon areas of interest or expertise. In practical terms, the solution is limited by the performance of the blockchain on which it resides. The smart contract requirements are complex therefore the solution is likely to be resource intensive initially. Smart contract optimization and an eventual dedicated sidechain(s) are likely required to achieve massive scalability.

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

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/

Roadmap

February 2022

• Prototype algorithmic DAO smart contract

March 2022

• Prototype Backend API

April 2022

• Web interface for voting development (this action replaced by Voting Client development if Voting DApp proposal is funded)

May 2022

• Third Party Smart Contract Audits

June 2022

• Test algorithmic DAO smart contract on Testnet

July 2022

• Launch DAO Deployment Platform (an instance of the algorithmic DAO smart contract) on Mainnet

Key Performance Indicators

• number of DAOs using algorithmic DAO smart contract framework
• number of DAO members
• Total DAO transaction fees in ADA

Success Definition

3 months

• Prototype algorithmic DAO smart contract with voting interface created

6 months

• DAO Deployment Platform launched
• At least 6 DAOs using algorithmic DAO smart contract framework
• At least 1,000 DAO members

12 months

• At least 30 DAOs using algorithmic DAO smart contract framework
• At least 10,000 DAO members
• At least 30 DAOs using algorithmic DAO smart contract framework
• At least 1/4 of ADA budget received from this challenge, earned in DAO transaction fees (full repayment in 18 months)

Budget

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

Algorithmic DAO Smart Contract ($4,000/month): $24,000

Smart Contract Audits: $10,000

Hosting Services (1 year): $2,400

Total: $48,400

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

Related Links

DAO Net Proposal: https://cardano.ideascale.com/a/dtd/DAO-Net/380999-48088

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