The Evolution of Governance and the Ownership Economy

Transcript

the course of my life essentially i had a startup that had to do with communities i started a community in china that became like one of the largest group of communities in china um eventually i joined daostack after i was kind of advising and working with them and in dao stack i did two projects the first one is dhak and then uh the builder collective which was essentially decentralizing the decision making of ethereum uh hackathons um a part of uh a part of uh uh um dao stack was dx dao um which was kind of like a the birth child of gnosis and and dow stack and i've been a member of the exile essentially since the inception

uh and recently i joined collider ventures which is an early stage crypto um venture fund uh out of israel um and yeah i'm very passionate about this space i really believe that like this is gonna bring uh the future um and yeah i think we took some a couple of wrong turns um yeah let's maybe start with a brief history of taos uh right so we had as we said like the dao hack in 2016 which kind of blew up and made everyone scared about daos for a long time um in 2017 and 2018 we had the aragon and daostak icos uh and then uh in east denver 2018 yeah 2018 we had the first like muller implementation um and that was you know super interesting uh in 2019 we

had a sort of like a moloch cambrian explosion with metal cartel leading and lots of like small dowels coming up that are using like the molok framework in 2020 um you know we had the d5 summer right um what started sort of a compound uh issuing a token uh expanded into so many different um uh projects releasing their tokens um and most of them were either using the snapshot sorry the compound governance made by compound or the snapshot.page which is essentially a very centralized server that aggregates votes and yeah and then in 2021 the standard has become

a token voting quote unquote where you have snapshot and gnosis safe and that's what everybody is using and some are considering doubling down on that so wait before i continue who is the part of a dao here nice and a part of a doubt does that mean that you hold their token do you actually vote to participate in governance or stuff like that anyone yes no all right it's good lots of doubt people um so yeah the ownership economy this is i took this straight up from uh jesse walden's uh uh paper in 2020 early 2020 there was a uh this whole uh move from the ownership economy

uh sorry from like uh um uh what do you call it uh essentially like the legacy systems into you know the notion that rather than a platform's inner circle of founders and investors taking you know home all the all the value created you know all the users who are participating will also be able um to gain some value from their contribution um so that's kind of uh that's what was essentially promised and we're going to talk in a bit about uh whether we actually fulfill this um yeah maybe i want to ask a question of like what makes thous tick what makes them work anyone sky

yeah me okay yeah memes make the house work yeah what else what makes uh i guess dao's drive forward i guess in traditional organizations there's you know there's like a ceo and you know he sets a path so what what makes dao's work like how do daos make progress sorry community active community okay that's nice um so yeah i think like sky said this because the sky's heard me on so many like uh like the style calls like say this you know the initiative makes those work um so yeah and i'll give a few examples for initiatives and this could come from like community this could come from um you know people who are inside the

dao so there's the famous um andre proposal to stop minting any wi-fi which literally sent it to the moon uh making uh giving wi-fi the meme of being a finite coin just like bitcoin so that was kind of incredible uh index co-op had uh uh like a community proposal to add the metaverse index after they had dpi and this became like one of their you know most successful uh products um you have uh on the bottom here with ave uh you have the sushi community uh asking the ava community to list ex-sushi and be able to you know get collateral from it so um that's you know that was kind of an amazing

proposal and you have uh the bonsai proposal um from a bunch of devs to build uh sushi on rust uh like with rust on solana uh which was also very interesting and then um the last one here is uh um a dao talk proposal in dix dao down for where one of the members actually criticizes fairly badly uh some of the actions that the dx dao has done like around uh uh providing liquidity from the treasury which essentially takes out tokens from the treasury and you know puts them in the open market um yeah like what happened after this is that you know uh this pope machina guy uh or girl or both

um eventually joined uh the dekes dao and became like a full contributor after you know the dick style really welcomed their feedback um so yeah so um yeah who has made and passed uh like a governance proposal that's not too many really that's it yeah what did it take to pass the proposal not much all right yeah as anyone like went to like a different community and started proposing them something work with that community to

pass a proposal basically it's not an easy thing all right well i'll have a meme to describe it can you read it yeah so it took like a forum topic discord ama three community calls one-on-one calls with stakeholders answer questions proposal revisions more calls and a hundred dollars in gas so we're on the right track right you know this bottom-up collaboration communities can go to other communities and you know participate in the governance um there is uh you know we have this event where i share with the star where you know someone comes and criticizes the doll criticizes the community and eventually

ends up joining them um so i'm going to talk about the problems and i'm going to do this in memes because it's i think yeah a meme is worth a thousand explanations so this is oh sorry yeah so this is on the top you see like the ownership economy this is from the original jesse walden um uh paper about the ownership economy and then what's that a16z polychain bain capital gauntlet paradigm and robert lesner have like all the voting power like there's no way to pass a proposal without them poo so yeah we have uh you know we're gonna

do some ownership economy and then we decided to make a sharp turn and recreate the existing capital economy right this is like oh we wanted we wanted to do like crude governance stuff but you know we got co-opted basically and then we have this one who here is in a multi-sig of one that you know essentially governs i don't know billions of dollars is there anyone yeah we have some hands we have some

hands maybe maybe put down your hand you know um yeah and then this is like the last thing that has happened who is aware of the unit swap uh like d5 fund stuff that's happening right so you have like this proposal that comes up in the forum from um harvard uh business law or harvard law school i think um you know they come up you know we're gonna you know give us 1.5 million uni and you know we're gonna have we're gonna do this it started as an education fund and then it became a defense fund and you know there's this guy chris black from um defy watch

i highly urge you to like you know check him out check the website but he goes and he asks all these questions and you know people are in the forum asking all these questions and they they they don't give a like they don't answer anything they just you know continue put the proposal up and what happened eventually is that you know they pass it you know these are like the top uni holders uh the community you know you see like lots of comments are like i'm going to vote against it but obviously the community doesn't really have a voice yeah sorry in the governance sorry they may not have responded exactly to chris's things but there was a whole dialogue there were steering committee members that like twitter space very few people

got on so i don't think that's entirely yeah i mean chris black did hold like okay interesting so what do you think about this entire thing was it like community fair okay uh i it's it's not like oh a16z pushed it through it's like gauntlet yes was a big like had big voting power but there were also tons of

people with very small voting power who passed it through so i do think it was actually um a very strong community run um proposal and you know voting process chris black has a very strong voice for sure um and but he wants what he wants on his terms and i think there's a way like that's fine and there can always be strong members of a community with a loud voice but i think there was a bigger dialogue and he muted that okay interesting um so you see there are a couple i mean i'm assuming the truth is somewhere in between but uh the feeling was from the community that this wasn't like adequately

addressed like all the questions that happened in the community so um so yeah so what are some of the issues that we showed in memes here anyone yes anyone yes sorry centralizing is that what you said all right yeah so we have like centralized stuff we have like not really ownership economy right like you have you know vcs and team members that are still owning most of the voting power so yeah how can we fix this um and i have two ideas like

the first one is to actually practice the centralization on you know sidechains and l2s uh because you know the problem and some will say you know this is why we went to use snapshot because you know i don't want to pay 50 to vote on a proposal like no one's going to do that and yeah and so instead we use snapshot and it's like it's it is a server at the end of the day that's what snapshot is so if someone could corrupt that and i mean i don't want to predict that someone's going to hack the snapshot servers and you know turn the proposal into a passing one but yeah it might happen and then yeah the second thing that maybe we're going to talk about is you

know to empower those who work and use the products with reputation or you know karma as you can also call it uh so reputation-based voting power so what is reputation reputation is like or karma can be gained by working for the dao uh participating in dao activities and contributing uh to the ecosystem and important to say that reputation is non-transferable um and then daos can gauge you know like foreign participation call attendance discourse uh and other like intangible contribution um and you know there are a couple of tools that do that i think source grid is like a very interesting one that kind of like grabs the participation

um and then yeah convert that into actual voting power um and yeah that's kind of like on the other side and then uh we have reputation versus uh token-based voting um so in reputation-based voting you don't own the voting power right um this is controlled by the dow the dow gives you a value uh that you know gives you a voting score uh as opposed to like controlled by the individual in token voting where you can sell by whatever as we said like it's untransferable it is resilient to vote buying like you know if i want to sell you my reputation i actually have to sell my private key which is going to be problematic and then

the last thing is we're talking about like objective and non-objective decisions where you know with token-based voting you're looking at the monetary value that can be produced by you know essentially the proposal um so i'm not saying you know we should go all the way to reputation or wait or yeah basically you know eliminate token voting completely because it's an important part of you know governance but instead you know we utilize both token voting and uh um and reputation voting uh to create a unified formula that incentivizes participation uh and now i know there are a couple of projects that are working on that um i'm going to be talking about uh like some work that's been done by dx dao um

this was i think about a year ago uh there was a working group it had people from delphi from geeksdale from dao stack and from 1kx working essentially on how to structure the governance and the voting power better in the future and we had you know there are a couple of uh like primitives um dxd was or dixie is uh like a financial representation in the dxdow but it holds no actual voting power um and you know we're looking into uh you know how to incorporate both of them and you know it's going to be a bit oh sorry it's uh primitives first so the decision that we made is how uh that rep or reputation is earned

um uh dxd is the you know the liquid financial value of the extel um holding the excel does not necessitate uh governance participation and reputation should remain non-transferable um and we're talking about like using it as a multiplier or constant or applied as a denominator to uh basically your voting power um yeah and dxd um guarantees like the financial claims on the external future revenue so like i'm not going to go like into like this entire thing but um there was a proposed equation that includes both dxd and um reputation uh that calculates your voting power and

so digs that was an organization that started from like pure reputation and now it's moving towards voting power uh token voting and i think most of the other governance systems are fully token voting and now they should move at least with baby steps towards uh reputation voting um i know there's like a lot of interesting stuff here everything here is open source and this hopefully will be started to code we will start decoding that soon um and yeah like um you know dxd should be locked in in a for the future uh which gives you um voting power this is like kind of borrowing from what curve is doing and then reputation sort of like is the influence

uh uh that you know would give you like more voting power and the goal of this is to incentivize anyone to have reputation anyone to actually go and do tangible work for the dao yes that's it open discussion does anyone have any questions do i have more time no any questions thoughts yeah oh yeah um i guess um i'm wondering the usage of snapshot and like other tools that like are not you know ideal because the reasons you

pointed out they are popular because people find them easy to use and when you're kind of starting a community you know you have to do everything to get that engagement from from users because it's really hard so how do we balance that kind of like making it easy and free for people to engage with governance and maybe exciting um with the you know like hardcore security and parameters and like everything on chain and decentralized yeah i mean this is this is an important question and i think you know what we're doing with snapshot is we're using like we're using 90s forum voting technology and we're calling it decentralized it's like that specifically is kind of a joke

at least let's not fool ourselves and let's say okay we're using a completely centralized method um and you know this is the way to get signal to get to gauge participation to get an understanding but this is far from like on chain voting um and this is uh yeah i mean i think the first that would be to be honest with ourselves about like what we're doing um and then you know try to move to like more scalable systems and hopefully you know with layer twos and um side chains any of that like it will be it would make a bit more sense to um yeah actually practice on chain governance yeah yeah well in this case i guess it's more common

i i would disagree here so snapshot has issues that can kind of the data data availability issue so it can censor votes but then it all is all it can so otherwise the uh um voting obviously has a signature so you can't kind of just create votes it's far and it's quite different from web 2 server structure where they can just claim anything and the second element is what we yeah i noticed we created this connection called safesnap to make safe yeah snapshot votes um yeah trustlessly executable uh via a safe so kind of the current setup where you have to trust the logistic

owners there will be a nice bridge kind of to eventually get rid of them yeah so what happens in safe snap where you know someone is able to censor votes and you know the outcome was supposed to be yes if all the votes were counted but the ui shows it's no because someone was able to censor votes and then you have safesnap which bridges that and it bridges essentially a faulty reality right yeah so i mean this is you know these are all problems hopefully we'll solve them but yeah i think we need to be honest like with what we're doing um and yeah i think there are lots of like the external people here if you

want to ask them about like their governance which is like completely unchained from a to z um and it's a very interesting experiment um so i don't know any other questions yeah hi i'm jade this is a great talk thank you um right now i'm building a dao with a bunch of other founders in the crater economy so bridging web 2 to web 3. so one of the things that you know we're starting is non-transferable with reputation i like that phrase we don't call that we have another name but that's cool and then i know you mentioned token-based voting in the dao helps kind of scale it however i guess you get this question a lot and not everyone wants to see that whole spreadsheet of equations but i'd actually like to know a little more clarity

on how you created this token based governance because you know how do you part of a dow is having values beyond just financial incentive because then you get bad decision making so i guess my question is how do you you know when you migrate to token based voting like how do you make sure you incentivize the right reasons right decision making um and if you're able to lightweight explain that last slide to be cool thank you yeah um so i guess the question of you know how do you migrate to token voting like you're assuming because someone holds the token and they are staking it for let's say two years then they are aligned for at least those next two years with you know the success of the token so they will vote for things that they

believe will cause the token at least to increase in value that's kind of like the like the simplest um like assumption um so can you remind me like the beginning of the question sorry um how did you go how did you go from like the like the exact transition between reputation to token was it just like you slowly onboarded you announced like what was that migration looking like and then like how did you create the tokenomics for so like the way this actually started is that you know dxd holders were complaining they were like what is this this is like a bureaucracy organization that only reputation holders can vote we have no say we have invested in this project and you know they were pissed

and i think digs that was very good at like taking criticism and feedback um and yeah from that it basically we decided that we're gonna start um um what do you call it uh um like like a working group to address this and we had many different proposals from like many different people um like delphi 1kx um and dow stack um and it was kind of like a back and forth like we were trying to understand like what we want and you know at the start we are because the external is like a reputation first organization we're like okay so reputation should be the basis of voting power and you know dxd or lock dxd should

you know influence that um and then we're kind of like what went back and forth and it was i think it was like a two month long process uh or yeah probably even more um and yeah like there's you know i can send over the full proposal because it explains a lot more like the results of that working group um so yeah like i can send that to you anyone else yes last question okay last question yeah last question so just a short question um so what do you think about the approach to do a web of trust instead of using the reputation as um so basically using

the trust between people who work on the project um this they say the idea is super simple you you you block money on your friends as a proof that you trust them they do the same on their friends and you use it to to be sure that one person has one vote and and so you can do a complete a more decentralized governance but you have to take the time to to block money on your friends so that's the question if you want to do one person one vote is that the right system if i'm a full-time worker and you know you just join the monday calls and you're available sometimes then should we have the same voting power

how can we quantify my contribution as opposed to yours and this is like this is an interesting question like um in that kind of realm it's not really web of trust but you have like the orca guys which are ex-aragon people and they're building like essentially a network of multi-sigs that are building on each other with like you know different permissions for each multisig um like this is i i believe this is going to be an interesting uh one to look at and how like a dow would function with just you know a collection a big collection of multi-six so okay okay thank you all right thank you