Open-Source DAO Framework

[GENERAL] Summarize your solution to the problem.

Create abstract structures which give each particular DAO broad governance design choices for accurately expressing their values through a hard-coded, but dynamic, incentive structure.

[GENERAL] Summarize your relevant experience.

1. Dr. Craig Calcaterra is a full math professor and co-developer of the decentralized reputation-based framework we are trying to build.
2. Jonathan Kung is a DAO researcher, a voting associate at DEVxDAO and is a graduate student at Johns Hopkins University.

[GENERAL] Requested funds in USD.

[IMPACT] Please describe your proposed solution.

Decentralized organizations have always existed and are not a recent discovery by technologists. Notable thinkers in decentralized governance like Dr. Elinor Ostrom and Dr. Sara Horowitz have crystallized their findings into modern frameworks and principles. But despite the push toward decentralization and the hype surrounding DAOs, W3 has yet to build adequate tools for decentralized organizations. They have yet to successfully build long-term sustainable DAOs, and in general, the community works in isolation, separated from existing decentralized organizations (everything from fisheries to unions to water basin and irrigation rights – many of whom have successfully achieved many goals). As such, their innovations are not yet useful. 

Nonetheless, thanks to the recent technological developments of P2P accounting, an unprecedented opportunity to create these tools exists in our era. These toolsets absolutely have the potential to help decentralized organizations – if they can surmount the problems that DAOs face. 

Where Existing DAOs Go Wrong:

Any governance token that can be bought or is fungible is highly problematic. (DAOstack’s Holographic Voting system is the exception, but not the norm.) Most ecosystems do not address the problem of eventual centralization from long term accumulation of tokens and the influence those individuals would have over the ecosystem. 

Say a Pharma DAO utilizes a one coin one vote (1C1V) system. The DAO is doing well and starts to get attention. How would the deep pockets of Big Pharma attack the DAO? They would be able to to do any of the following: buy 1/4 of the current circulating supply for ~ $50M; hire a free business intern or few to become DAO members; keep buying as much of their token as possible for 6-9 months at a time; or, have enough of a presence through people and tokens on votes to slow progress dramatically, and potentially bribe other members to do the same if their already extremely efficient methods weren't effective enough. This example is to showcase that any governance token that is tradeable or purchasable is easily corruptible. Single actors can accumulate influence, gain control over the voting system, and unilaterally shift the course of the DAO.

Therefore, another incentive, besides money or fungible tokens, are needed. 

What DAO Framework Offers:

 A functioning, thriving DAO needs a coherent goal in mind and a common set of values and principles. In order to collaborate efficiently and effectively, a DAO first needs to specify what their values are, with an overwhelming consensus of agreement. The DAO Framework framework is a system designed to capture these values and principles in governance. While the actual decisions belong to the DAO, the DAO Framework framework provides tunable governance structures that not only accurately reflect the DAO’s populace, but can evolve over time as that populace necessarily adapts, learns, and matures. 

In building a DAO, the governance process is the most challenging aspect of the task. Governance must be rigid, formal, and transparent, to ensure safety and fairness under pseudonymous open membership. Democratic governance is required to ensure decentralization, and members must be incentivized not by the accumulation of votes or tokens, but by performance as members of the DAO.

Therefore, in DAO Framework’s system, reputation NFTs are the main incentive. You earn reputation NFTs by doing good work and being validated for that work when others stake their reputation on the quality of your work. Each time someone posts new work to the ecosystem, new reputation is minted. The minting ratio relative to the amount of reputation distributed for validation purposes is hyperbolic (a more sophisticated version of quadratic voting). While open-source and quadratic voting are surging in popularity, the hyperbolic voting DAO Framework uses achieves the same goals in a more versatile, more elegant manner and maintains influence within a bound, preventing excessive influence gaps such that the system maintains decentralization.

The Importance of Reputation

The cornerstone of DAO Framework’s innovation in decentralized governance is in its use of reputation. A reputation-based economy, when properly designed, rewards real, long-term investment in the system, which ensures the longevity of the DAO and its ability to create meaningful, lasting, quality projects. The new IT tools available for decentralized accounting with domain-specific tokens allows us to represent reputation in a finely-tuned way and therefore make more sophisticated democratic governance than has ever been possible. Succinctly: we are creating a reputation NFT-based economy that uses a hyperbolic voting system to create an value capture system - a system designed to express and sustain the principles of a DAO, allowing them to be functional, efficacious and truly cooperative. 

In order to create a platform that accurately represents reputation (fractional reputation NFTs) we require the following:

1. Domain specific expertise. DAO Framework mints separate types of reputation tokens for every separate type of expertise.
2. The tokens must have a foundational meaning. DAO Framework mints tokens only in proportion to the fees that are added to the platform.
3. For security, the tokens must enter fairly. Tokens are distributed only after they are staked for and against a post and the bench of experts validates them.
4. For security from Sybil attacks, all decisions are made by weighted votes.
5. To prevent a centralized point of attack and to properly motivate all experts, all power is determined by sem holdings and all fees sent to the platform are shared proportionally in sem-weighted salaries. Since sem acquisition becomes the primary motivation for users, instead of immediately fungible currency, the incentive is to improve the platform instead of exploiting platform-damaging arbitrage opportunities.
6. The opportunity for review of reputation by referencing past actions prevents long-term gaming strategies; the threat of loss of long-term valuable reputation motivates long-term platform improvement and development from the opportunity for revaluating such actions once they are proven to be successful.

Power in the weighted democracy must be shared through the careful design of meaningful reputation tokens, instead of plutocratic financially fungible share ownership in the DAO. Reputation incentivizes future-oriented cooperation instead of zero-sum competition. To be meaningful, the reputation tokens must be grounded by connecting it to future power and profit in the organization—all DAO financial earnings are distributed to members in proportion to their reputation holdings. 

To be secure, reputation awards are subject to automated review by DAO membership. The natural inflationary nature of reputation combats the concentration of power that naturally occurs in zero-sum ownership due to the exponential growth. Pseudonymity is protected with public-key cryptography and other ZK proofs. Open source culture further encourages network growth, it is necessary for governmental transparency, it is necessary for security auditing, and it promotes interoperability. 

To guarantee harmony and security with such diverse members, different types of reputation must be awarded to the different talents that further the specific goals of any particular DAO. So there must be many incompatible, domain-specific reputation token types. Domain-specific reputation tokens also promote efficient matching of talents to jobs, just distribution of rewards, and prevent the DAO from devolving from the corruption of inappropriate distributions of power. Governance includes protocol upgrades (legislative governance), policing (executive governance), and review (judicial governance). With the proper governance incentive design, the tools described give a DAO the power to promote its values, such as maintaining its decentralization by rewarding diverse inputs instead of concentrating power within a few positions in the organization. 

Bureaucratic transparency is necessary in any strongly decentralized organization as the rules and behavior of the organization must be auditable by every member. Transparency further grounds the reputation tokens with historical inertia. Finally, to further promote cooperation with future-oriented incentives, review is built into these decentralized reputational systems to reconsider past actions to properly valuate all contributions fairly. This secures the tokens against many arbitrage schemes. Finally, review also makes it possible to design rewards which promote an economically justifiable open source culture, as the system can properly reward protocol development after it is implemented and evaluated—assuming the DAO chooses to properly encourages a tradition of fairly accounting and rewarding development after the fact.

Putting the Pieces Together:

To restate: what is still preventing the broad success of diverse types of DAOs is the lack of broad adoption of sophisticated governance as well as the proper design of meaningful reputation tokens. DAO Framework solves these two problems with two solutions: a dynamic and evolutionary architecture for driving collaboration and consensus in a decentralized network. The specifics of the architecture are summarized in the diagrams Figure 1 and Figure 2 below and detailed in the references.

Figure 1: There are generally 4-voting typologies defined by theEU, as shown above. Though each voting typology can be used individually, they can also be dynamically paired to create 2-vote systems, i.e., a binding vote follows a non-binding vote. Since no voting system can consistently reflect the will of its people and its experts, the dynamicity reflected in the validation pool improves those odds as the voting body learns different voting mechanisms to suit different situations. Simultaneously, the validation pool makes the system harder to game.

Figure 2: The Forum, which acts as a record of discursive truth, is the main product of the system. A way of thinking about it would be “Reddit (rather than Google) Scholar”: a mixture of Reddit’s upvote/downvote functionality visualizable as a graph to see bigger themes paired with a sophisticated consensus/voting mechanism. This creates a kind of “truth architecture” which promotes good decision-making. The Validation Pool is the integrity mechanism using reputation tokens. The Forum needs the Validation Pool to find tenable structures/connections and at the same time, the Validation Pool will need a buildout of the Forum to solve Wicked Problems.

In summary, for the DAO to be organized, it must be stable. This means the incentive structure must be fair, oriented toward the goals of the group, reflective of their values, and devoted to long-term health of the group instead of rewarding short-term thinking. Therefore a meaningful and secure reputation token is crucial. To be meaningful it needs to be grounded in measurably valuable power. Reputation-weighted salaries distribute any money the DAO earns, which solves the problem of grounding the reputation tokens with meaning, and the problem of securing the token against sock-puppet attacks under the assumption of pseudonymous members. To prevent centralization the system employs a hyperbolic voting system. This system can be used for a wide range of DAOs from a Science Publishing DAO, within departments, to building a gig economy etc.

Fully expounding the details of the system is the purpose of the book, Decentralization: Technology’s Impact on Organizational and Societal Structure. The DAO Framework outlined in the previous paragraph has a detailed program design specified in the article On-Chain Governance of Decentralized Autonomous Organizations: Blockchain Organization Using Semada. In implementing the DAO Framework, we have analyzed each governance design parameter to determine how each choice promotes different particular values, as explained in the article Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and Anonymous Systems. When creating a DAO, the Framework will guide architects to match their governance design choices to their particular values.

[IMPACT] Please describe how your proposed solution will address the Challenge that you have submitted it in.

Similar tools that offer superior features to those offered on other chains.

The current instantiation of DAOs don’t have a great way of attributing meaningful reputation while having a tenable on-ramp for monetary reward. Our solution is an abstracted DAO governance template that solves fundamental issues in DAO governance such that the DAO can remain decentralized. Aragon has moral roots in the struggle against bad government; DAOstack and Colony set themselves against the dysfunction of human organization; Moloch’s foundations are solidily rationalist and cryptoeconomic, rooted in, among other things, the trauma of TheDAO. The Semada framework focuses on values and provides an abstracted governance tool set that matches the values of the population.

Effective Collaboration Management Platforms to Organize Community Intentions and Actions

For democracies to work, Arrow’s Law states that no voting mechanism will consistently reflect the will of the crowd and its experts. For example, a 1P1V system is only useful when no one knows what’s going on. If there are experts on a topic, then it behooves the ecosystem to weigh an expert's opinion more than a person who’s background on a topic is thirty minutes of YouTube and Wikipedia. Though most DAOs are exploring different democratic processes, ie. futarchy, liquid democracy, weighted voting, quadratic voting etc. there is no platform that properly integrates governance, money, and reputation that adequately manages a backbone that is simultaneously fluid and flexible. Part of this is explained in the section above where the validation pool is a combination of 4 voting typologies managed by hyperparameters where both 1-vote and 2-vote systems can be implemented. In combination with a Weighted DAG (a Forum), where the governance is on the WDAG and yet the validation pool requires the WDAG, we have a proper integration of the systems that are generally built as separate. Though this setup is understandable, the rift causes problems and a proper integration is a breakthrough for the start of the kinds of social interactions that were part of the vision of the internet since Tim Burners Lee.

Additional not yet existing tools to give Cardano a distinct advantage

W3 has only created democratic smart contract sandboxes. This system advances the conversation such that we can say that DAOs exist. The idea is the focus on the Forum, where the validation methods are a form of integrity forging. The institution of science on a global scale, for example, is a naturally decentralized system. Discovery requires different structures than mature institutions. However, science also understands that there is no endpoint, only theorized endpoints. The conversation will always evolve based on new evidence, new tooling, etc. We can only ever find more adequate truth and likely never THE truth. That being said, knowing that we will always be wrong, how do be create a system to allocate meaningful reputation and resources to the people that have the ability and integrity to help push the boundaries of knowledge? 

The tooling we will offer are ways for people to better understand the messy the knowledge creation process and consensus-making process is, and this transparency will keep people honest, allowing for DAOs that maintain integrity.

[IMPACT] What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

We need to build a team from scratch and Haskell programmers are hard to find and good Plutus programmers are even rarer.

Creating the requisite network effects is unpredictable yet one of the most important tasks for the success of the project.

[FEASIBILITY] Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

MVPR-buildout 2.xlsx

[FEASIBILITY] Please provide a detailed budget breakdown.

MVPR-buildout 2.xlsx

[FEASIBILITY] Please provide details of the people who will work on the project.

1. Co-Founders (current team)
2. Dr. Craig Calcaterra
3. Jonathan Kung
4. Programmers (needed)
5. 2-3x Haskell Programmers
6. 1x Front End Developer

[FEASIBILITY] If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

Yes. The DAO framework we are building is ambitious. With a small group we can build out an MVP, however network generation and management is a different skillset we will need meet our KPI's. This will be more important than the buildout since the code will eventually be published under the Apache Open Source License.

[FEASIBILITY] Are you or any member of your team working on any other proposals in this Fund9?

[FEASIBILITY] Are you or your team working on any other proposals from previous Funds?

[AUDITABILITY] Please describe what you will measure to track your project's progress, and how will you measure these?

Preface 

1. DAO community collaboration:  
2. DAO creation
3. DAO operation
4. DAO governance.

1. Basic:
2. Activity
3. Growth
4. Voting 
5. Funds
6. Less Basic:
7. Nakamoto Score
8. Sophisticated:
9. These scores do not yet exist

[AUDITABILITY] What does success for this project look like?

We are interested in building truth economies amidst institutional diversity. Over the last 250 years, the world has been re-experimenting with various instantiations of decentralization, kicked off by the US Constitution. Now more than 150 nations worldwide are practicing some sort of democracy in government. However, though democracies have existed for thousands of years, we still only practice a few types of democracy, mainly 1p1v on paper. It seems that even with the advent of our digital technologies the paper format is safer at maintaining anonymity of the voter. Now with the sophisticated cryptography in blockchain, there is a possibility that we can experiment with different democracies to fit different situations.

[AUDITABILITY] Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

This is an entirely new project.

Sustainable Development Goals (SDG) Rating

NA