Automating Ostrom for effective DAO management

In this article, we will focus on how the technical aspects of the Cyberphysical Public Architecture align with Ostrom’s 8 Public Management Principles and help us achieve “Ostrom Compliance”.

This article is part of a series explaining the cyber-physical commons architecture built from the commons stack.

Few people have contributed as much to our knowledge of the sustainable management of the commons as Elinor Ostrom. Ostrom was awarded the 2009 Nobel Prize in Economics for her work on eight principles of public management that set the standard for community management of shared resources (which the DAOrayaki community will highlight in the next issue). These principles represent a lifetime of research on effective global commons and are a wonderful look at large-scale human cooperation beyond corporations and nations. While applying these rules at scale can be challenging, recent research has shown that blockchain technology can play a role in overcoming key barriers so that communities can govern themselves. Taking trust from the individual level to the protocol level opens up the space for experimentation with new forms of collective action to achieve common goals.

As a first step in this exploration, we have identified tools and processes that can help translate Ostrom’s code of conduct into DAO templates, resulting in a “cyber-physical commons” framework that allows goal-driven communities to effectively manage shared resources. By using blockchain technology to implement these principles where appropriate, commons stack hopes to contribute technical and cultural tools to help decentralize and democratize the current power structure and empower the commons.

Automating Ostrom for effective DAO management

Cyber-Physical Commons Framework (A Cyber-Physical Commons Framework)

In the commons stack, we use the principles of token engineering to create a library of customizable tools to facilitate the public management of public goods. So what is the Cyber-Physical Commons? Building on the existing literature, we propose that it is an extension of a Cyberphysical system (e.g., a power grid).

“Cyber-Physical Systems (CPS) are mechanisms controlled or monitored by computer-based algorithms that are tightly integrated with the Internet and its users. In a Cyberphysical system, the physical and software components are tightly intertwined, interacting at different spatial and temporal scales and in multiple ways, as the environment changes.”

The Cyberphysics commons is comprised of a purpose-driven community. The community uses a cyberphysical system to achieve a common purpose. It connects the commons to the evolution of digital networks and represents another step in the paradigm shift. This shift has revived interest in cooperative organizations, fostered the growth of the sharing economy, and the burgeoning open source and blockchain movements.

Clearly, any effort to align communities around common goals needs to take into account the cultural requirements necessary to make these efforts successful. Our focus on trusted seeds is a key element of cultural initialization, but these communities also need to establish standards, legal strategies, policies and procedures to ensure that they are well positioned to achieve their goals without succumbing to social pressure. Ensuring that there are established best practices in place to meet these cultural requirements is a key goal of the commons stack. However, in this paper, we will focus on how the technical aspects of the Cyberphysical Commons architecture align with Ostrom’s 8 principles of commons management and help us achieve “Ostrom compliance”.

Ostrom’s 8 principles and the commons stack toolkit

To address this issue, I can use existing public and digital networks to understand the overlap between these topics.

To quote David Bollier.

There is no commons without commoning (There is no commons without commoning). The commons is neither the resource, nor the community that gathers around it, nor the protocols that govern it, but the dynamic interaction between all these elements. Wikipedia is an example: there is a resource (a knowledge database), a community (authors and editors), and a set of rules and protocols formed through the community (Wikipedia’s content and editorial guidelines).

The sharing of Wikimedia comes from these three sources.

“To take this a step further, Shermin Voshmgir and Michael Zargham consider the many different types of resources that can be managed through crypto-economic networks, from physical (hardware, electricity) to financial (tokens, fiat currency) and social (attention, governance participation, code contributions, sermons). Managing these resources to achieve a common goal is the same challenge that Eleanor Ostrom faces when studying public resource initiatives on a global scale.

Let’s dive into Ostrom’s 8 principles, starting with the social imperative of each, and examine how the Cyberphysical Commons framework provides tools for each.

1 The commons needs to have clear boundaries

In the absence of defined community boundaries, access to the commons becomes free, leading to overuse and collapse due to free-rider problems. For example, the collapse of global fisheries due to the difficulty of drawing boundaries in international waters clearly illustrates this problem

One of the benefits of using blockchain technology in public management is that the boundaries included are clear: token holders are part of the system and non-holders are not. The owner’s contribution to the community is preserved, giving the group appropriate access and proportional decision-making rights, as well as partial ownership.

The Commons Stack’s Aaugmented Bonding Curve (ABC) extends this further by creating an economic boundary that isolates the internal economy of the commons from the external economic world. All interactions with the external world are achieved through interactions with the Aaugmented Bonding Curve.

Automating Ostrom for effective DAO management

For example, participants can choose to enter the boundaries of the commons, receive tokens by providing funds to the ABC (possibly in stable coins), or contribute time by proposing and completing tasks. The funds provided can contribute to the internal economy and can be used to incentivize the completion of tasks. Completed work is paid in tokens or converted into stablecoins through the co-curve. These tokens can then be used to govern the public ecosystem in proportion to each participant’s time and/or financial contribution.

By clearly defining the economic boundaries of the public ecosystem, ABC improves on traditional coordination tools and satisfies Ostrom’s first principle by clearly defining the system boundaries.

  1. Rules need to be adapted to local conditions

There is no one-size-fits-all approach to shared resource management. Rules and values should be defined according to the needs and ecological constraints of the participants involved, otherwise they may lose their connection to the parties and become irrelevant. Public structures must enable value-aligned groups (including trusted core communities) to coordinate shared issues relevant to them. It is worth noting that some digital technologies extend the definition of “local” from “shared geography” to “shared purpose”.

Many projects in the blockchain space offer platform-based descriptive solutions.

The commons stack takes a different approach to supporting localism by providing communities with more options for structuring their public spaces with software-assisted organizations that are highly customizable. commons stack’s interoperable library can be combined, parameterized, and simulated, making the commons stack library ideally suited to serve the diverse needs of different communities with different needs

Automating Ostrom for effective DAO management

For example, in addition to deciding which funding streams are appropriate for their particular context (e.g., whether to implement ABCs or alternative funding instruments), communities can choose appropriate governance templates (e.g., belief voting, or simple majority voting multi-signature multisig) and other custom features. the flexibility that the commons stack provides in defining an ecosystem of different types of commons satisfies Ostrom’s second principle of adapting to local conditions.

Automating Ostrom for effective DAO management

The future Commons Stack library will have interoperable tools and mechanisms to enable “local” customization of the Commons ecosystem.

  1. Participatory decision making is critical

Ostrom tells us that people are more likely to follow rules if someone is involved in writing and modifying them, and that involving stakeholders in the decision-making process is the best way to ensure buy-in from the broader community.

With new tools at our disposal, we can begin to think outside the traditional voting system and turn the dream of large-scale community decision-making into a reality. It all starts with a credible group of people committed to a common goal and inspired to guide these early commons experiments to success.

Belief voting offers the opportunity to eliminate time-based attack vector systems on community voting systems and increase voter participation. By designing the decision system using a modular approach, it allows the community to implement the right governance solution for each decision type, rather than reusing the same limited yes/no time-bound voting method each time. This is a radical approach/opportunity for communities to adapt their political processes to the evolution of social paradigms. Rather than taking social action against their existing political system, as we often see today.

Another benefit of using blockchain technology is that governance rights can be tokenized. When using cyber-physical public architecture, it becomes easier to be able to measure contributions to the commons across the board and to assign reputations that represent the decision-making power of that community. This allows us to overcome the inadequate “one person, one vote” system and allows members to express their strong preference for certain proposals, measured by their contribution to the group. This can be further improved by moderating the unequal distribution of voting power, for example by using secondary voting. Of course, we must do this carefully and allow each community maximum freedom in how these decision-making systems are defined.

Automating Ostrom for effective DAO management

For example, whether participants contribute time or money, their in-game skins will be rewarded with tokens from that community, meaning that more engaged members will have a greater say in the direction of the community. future iterations of the commons stack library will include voting mandates, enabling streaming democracy, and further expanding participation in these ecosystems. These tools satisfy Ostrom’s third principle of including stakeholders in the decision-making process.

  1. Public lands must be legally recognized in the jurisdictions in which they operate

Friction is inevitable when a community agrees on rules that are not recognized as legal in the community’s jurisdiction. In the absence of legal recognition, a commune may fall apart due to the exploitation of its resources by outside groups, or be unable to escalate issues to a higher level of authority because internal sanctions are insufficient to resolve a particular conflict.

The legal status of blockchain-based ecosystems should be a central consideration for anyone attempting to experiment with these new sociotechnical systems.

Without another legal name, commons and DAO are likely to be seen as general partnerships. Communities using the commons stack library can choose the appropriate legal structure for their jurisdiction and use cases, and refer to the legal and cultural offerings being made available by the commons stack.

Automating Ostrom for effective DAO management

For example, commons stack is exploring options regarding the legal registration of DAOs internationally, which would impose individual liability on participants, as many types of legal entities do today. By ensuring that communities are aware of the need for legal standing and are given options to meet their needs, we satisfy Ostrom’s fourth principle of legal recognition in the commons.

  1. Enforce rules through effective and accountable oversight

Once the rules are in place, the community needs to check that people are following them, and this remains accountable to those in the community. Contributors need good information to ensure that they are making the best decisions for the future of the organization.

The social science literature has much to say about the positive behavioral norms that result from transparency. Observability often encourages good behavior, and good governance requires that decision makers understand the interactions within the community. Blockchain technology, when used properly, can bring the governance characteristics of transparency and accountability to the management of the commons. two components of the commons stack in particular contribute to the successful monitoring of the commons: the Giveth proposal engine brings transparency and accountability to the funds paid for the work of advancing the cause of the commons, and the commons analytics dashboard ( The commons analytics dashboard enables all relevant community members to observe transactions and their impact.

Automating Ostrom for effective DAO management

For example, members who submit proposals for work to be done in the community are paid upon completion of verified milestones and are required to report to other members on the impact of that work on achieving community goals. The combination of these tools creates an efficient monitoring system that satisfies Ostrom’s fifth principle, that the commons must be monitored responsibly.

  1. Sanctions for violations should be graded

Outright bans on rule-breakers tend to generate resentment rather than promote community development. In contrast, a tiered system of warnings, fines, and reputational consequences is less destructive to an organization and allows punishment for wrongdoing to be proportional to the degree of the offense.

With the commons stack tool library and How To DAO wiki, communities can choose how to apply tiered sanctions to fit their use cases. It is important to consider the systemic impact of particular sanctions, which is why we see the use of cadCAD as a core component of the commons stack for the overall simulation of agent interactions. The difficulty of imposing sanctions should increase with the severity of the response to ensure that these decisions are not made lightly.

Automating Ostrom for effective DAO management

For example, the community could implement a reputation system that penalizes wrongdoing for loss of social credibility, while others might measure formality based on experience, in which case the history of failed proposals would lead to a higher threshold for adoption of future proposals. Other forms of sanctions are possible, including the extreme option of removing members from the blacklist of those involved in the organization. In other words, communities using the commons stack tool have multiple appropriate options to meet Ostrom’s sixth principle: graduated sanctions

7 Conflict resolution should be easily accessible and inexpensive

In other words, the process of overcoming problems that arise unexpectedly should be cheap and straightforward, and everyone should have the opportunity to seek mediation whenever a problem arises; no problem should be ignored because of the high cost of resolving it.

The automated nature of the smart contract system reduces the threat of participant “breakage”. When a user opts in to a smart contract, the agreement is based on programmed conditions. However, recalling the technical aspects, conflict resolution at the social level is still necessary. In addition to our trusted seeds, we are pioneering a set of cultural best practices, including creating a negotiated “space” for conflict so that communities using the commons stack can implement similar, customized solutions in their own projects. Other disputes that may arise – for example, the quality of work delivered – can be resolved in advance by requiring multiple signatories to sign off on completed tasks, which will ensure a higher degree of computability. In the most extreme cases, conflict resolution could be handled by a hierarchical level of future decentralized court systems similar to AragonCourt and Kleros, escalating to real-world legal systems when necessary.

Automating Ostrom for effective DAO management

For example, a low-level dispute could be resolved by a tribunal of five randomly selected “jurors” from the community, who are motivated to provide evidence, make informed decisions, and if this small tribunal is unable to achieve a just result without appeal, the next tribunal could call seven jurors, nine jurors, and so on. And so on, with the cost of each dispute layer rising. these future components of the Commons stack library will satisfy Ostrom’s seventh principle by keeping conflict resolution accessible and low cost.

  1. The commons should be in a nested ecosystem within a larger commons

Some resources can be managed internally, while others can be used for broader regional cooperation, with nested decision layers allowing jurisdiction to be extended to the appropriate level. For example, the management of a field may require only local stakeholders, while the management of a river should also involve downstream stakeholders. Decision-making power should flow to those most closely connected to the thing being governed.

Although the commons stack was originally designed for small community groups, our design is inherently fractal. Each participant in a community can be another community, thus creating a federal community structure, a strategy suggested in the DisCO manifesto. This promotes polycentric governance with a socialist structure, enabling flexible decision-making networks with nested responsibilities that can operate under a hierarchy, a horizontal level “leaderless” structure, or anything in between.

Automating Ostrom for effective DAO management

For example, local commons can participate in regional commons, and regional commons can work in partnership with global commons to help achieve shared goals. The fluidity of these shared resources is ensured by their respective enhanced association curves, ensuring smooth interaction between different groups operating under different structures, thus adapting to their respective situations. We foresee that the commons stack infrastructure will create a commons ecosystem, a “communal forest” in which each community plants its own “communal tree”. This fractal design pattern satisfies Ostrom’s eighth principle that commons work best when they are nested within other commons.

An “Ostrom-compliant” Cyberphysical Commons

As a collective, the importance of managing shared resources cannot be understated. Elinor Ostrom has laid the groundwork for establishing 8 principles for sustainable commons management, and we are exploring the existing possibilities for scalable adoption of these principles at the intersection of blockchain technology and cyberphysical systems. The commons stack will begin experimenting with community-level applications for the Cyberphysical Commons, starting with limited functionality but increasing in complexity as each iteration of components is added to the library.

We look forward to a future in which we can continually “automate Ostrom” and facilitate the application of these principles through the community’s quest to effectively manage shared resources. We believe that a templated Cyberphysical Commons/Public framework can be used by the community to easily enforce Ostrom’s rules, allowing shared spaces to connect and flourish through the emergence of a cyber alternative economy.


  1. tokens have the potential to be much more than just currency, as they can represent equity, decision-making power, fractional ownership, labor credentials, or community reputation. By recognizing contributions that are often not recognized (e.g., care work), the ability to tokenize and represent monetary and non-monetary values can be used to “resolve potential power relations” (Rozas et al., 2018). The self-enforcing nature of smart contracts forces communities to consciously develop and sanction rules that comply with local jurisdictional laws, while automating many cumbersome administrative aspects.

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