Governance Thinking: Token and DAO

The Monolith and the Ape Men 2001 A Space Odyssey, by Hal Hefner

DAO is what the community should look like in the Web3 era, so the following content will not emphasize DAO, and they are all called communities.

A community is a gathering of people who share common values ​​and visions, respect each other, support each other, and work towards a common goal, while benefiting all members (spiritually and materially).

The community builds and transmits our cultural consensus. If the community only had money transactions, no one would really love this community.

I have a wish to build a real community, and I will work hard for it all my life. But what should the community look like specifically, and how do we achieve it? This is a relatively ambitious subject, and today I want to talk about governance rights.

I have been thinking about a question, for the community, what kind of governance is more perfect, what do we use to represent our governance rights, and how to quantify it, how to obtain it, and how to use it.

If we only use Token as and exercise our governance rights in the community, then we will never be able to build a sustainable and healthy community, and we will never be able to build a cohesive and vibrant community. Otherwise, it will become a Only the “group” of Chatcoin remains.

Groups are not communities.

Governance troubles

At present, the representatives representing our governance rights in a certain project or community are generally divided into two categories: Token and Share. Aragon and DAOhaus provide typical frameworks for these two types respectively.

Token means that as long as you hold Token, you will naturally become a member of the community, and at the same time have a corresponding proportion of governance rights (Aragon will automatically add you to the list of Aragon DAO). Share is to assign members the Share representing their governance rights through collective consensus.

Token provides a relatively open market channel, so the way to obtain governance is very fast. However, an open market will also lead this governance right to the other side, that is, more Token chips will be concentrated in the hands of traders (even speculators), and the proportion of true community co-builders/promoters/contributors Always in the minority, community governance can easily become a power game dominated by money. I am not against the transaction attributes of Token, but how to balance transactions and governance at a healthy level is a question that requires us to think deeply.

Share solves the problem of Token transaction attributes. It provides us with a fairer and healthier representative of governance rights, but it also brings new problems. The acquisition of Share is a process in which the “organization” grants governance rights, and this model is relatively closed. It can run perfectly in certain application scenarios, such as VentureDAO with fund management as its core. But if we want to build a relatively open and fair community that minimizes subjective factors, there are obviously some obstacles to Share, because subjectivity is always one-sided. If the rights and interests of a community are determined by the subjective consciousness of a small number of people, there is fairness Confusion on the. At the same time, from a certain perspective, recognition and contribution to the community does not require the permission of current members.

Although the two existing schemes have made great contributions to advancing the development of this era, it can be seen that these two schemes are not perfect schemes. We are still in the very early stage of this era. We need to continue to explore more optimized solutions, optimize the shortcomings of existing solutions, and try new ideas.

My thinking and DAOSquare’s practice

In my opinion, community governance is not management, but to build a mechanism for people to link and interact, so that participants are more willing to walk hand in hand. Regarding governance rights, I think the following two points are very important:

  • The governance power of the community cannot be represented only by Token, but should be composed of multiple factors. Token is one of many factors.
  • Recognition and contribution do not require permission, and governance rights cannot rely on subjective factors, but should be independently obtained through an open and quantifiable mechanism.

The first point defines what the power of governance should be represented, and it determines who is truly walking with you. The second point defines how we obtain the right to govern. It determines how these peers can join you without barriers and move forward hand in hand with you.

So we have an idea to build a permission-free contribution agreement. Anyone can gain his rights (interests and governance rights) in the community through independent contributions in any community. All this is self-running.

Let’s see how to implement it.

What should be represented by governance

The goals of the community are different, the representatives of governance rights are different, and everything needs to be around your community goals. For example, if your community is a decentralized trading protocol (like Uniswap), your goal should probably be to provide a better trading experience for the decentralized world. Then, in addition to the agreement Token, the representative of governance rights is also necessary to consider LP contributions and product contributions (such as code contributions). Therefore, if Uniswap is taken as an example, its governance power may at least consist of the following factors:

  • Tokens (UNI)
  • LP Token
  • Product contribution

How to package these factors into governance rights

How do we convert these governance factors into final governance rights? This is the “permission-free contribution agreement” I just mentioned. It should include quantitative standards and redemption channels. Please allow me to explain this process with the example of the permissionless contribution agreement DKP being developed by DAOSquare.

DKP is a module of DAOSquare Incubator, the full name is “DAO Kontribution Pool” (you can imagine DKP in World of Warcraft). Anyone can convert their contribution to DAOSquare into rights and interests here. This is an open, permissionless contribution and redemption site.

In DKP, the business path is simple:


Contribution is where the factors of governance rights are collected. For DAOSquare, donating to OVO Grants is a contribution, Stake $RICE is a contribution, and of course there are more community contribution factors, such as completing the DAOSquare Incubaotor 101 course, participating in community meetings and actively discussing it is also a contribution. In the “Contribution” section, we first need to quantify each contribution category. For example, OVO Grants, we set a 1:1 ratio, which means that if you donate 1 XDAI to OVO Grants, you will get 1 OVO Grants points. It should be noted that different contribution categories need different points, so that you can get better combinability in the “revenue” and “governance” parts. It should be emphasized that DKP is all on-chain, including points.

Revenue is the place where contributions are converted into revenue (remember that sentence? Benefit all participants), revenue includes:

  • Investment opportunities to participate in the project’s private placement/public placement (e.g. CCO share)
  • Limited Edition NFT
  • Brand surroundings (for example, the trendy brand T-shirt we are launching in cooperation with MetaFatory)
  • Event tickets
  • Community permissions

When you have obtained enough points in the “Contribution” section, you can go to the “Profit” section to redeem some of your benefits, for example: Use 100 OVO Grants points plus 300 Stake $RICE points to redeem for a certain item CCO share of 1000 USD.

Governance is the focus of this article. On the whole, whether you participated in the donation of OVO Grants in the “contribution” section or exchanged the share of CCO in the “income”, you are helping to promote the development of DAOSquare. Therefore, governance rights collect all the behaviors of “contributions” and “profits”, and package these factors into governance rights NFTs that represent different governance weights. Of course, a special factor is also considered here, that is, the total record of your contributions. For example, you donated 100 XDAI to OVO Grants and got 100 OVO Grants points, but you used it to redeem a CCO share of a certain project in the “revenue” section. The points are consumed, but not because of your points. Being consumed erases the fact that you have contributed to DAOSquare.

How to package contribution factors to obtain governance NFT? To give a simplest hypothesis, a governance NFT representing 1000 voting rights needs to mortgage 1000 $RICE plus 5000 CCO shares of participation history plus 500 OVO Grants points plus 100 community meeting points Plus… (how many more factors will depend on how many factors your community needs to include).

In addition, we can see that in the DAOSquare community, other contribution factors are as important as holding $RICE, but $RICE is always a prerequisite for everything. Any rights provided in the “income” or “governance” part must be held. There is $RICE (Pledge required). As mentioned in an article I wrote at the beginning of DAOSquare’s creation, DAOSquare requires three main roles, missionaries, mercenaries, and merchants. Only by balancing these three can we achieve community drive and promote the development of DAOSquare, and a good Token design is a community-driven “spiritual pill”.

Some time ago when I told Dekan of DAOhaus about these thoughts, he shared with me Chuck E. Cheese (a household name for children’s games in the United States) that James Young mentioned in an article titled “Curation Economies”. For example, in Chuck E. Cheese:

  • You can buy tokens with money
  • Then you can use Token to play games
  • Then you can earn various tickets in the game
  • Then you can use the earned tickets to redeem prizes

Games change lives, community governance should be THE BEST FUN YOU CAN HAVE!

Governance Thinking: Token and DAO

Present and future

In a DAO wave in 2020, many people around me started to enter the DAO world, some people started their DAO, and some people actively participated in different DAOs. But I saw a very obvious phenomenon, and most people left in varying degrees of complaints. Two of the most common complaints are:

  • I have no idea what DAO can do
  • DAO tools are too difficult to use

For the first type of complaint, I think the problem lies in two aspects: The first is that we started when we didn’t know enough about DAO, which can easily cause confusion. The second is because we blindly started a DAO. Everything needs to be done with a clear goal, and the same goes for DAO. What you want to do is very important, rather than being excited to create a DAO in DAOhaus and then completely ignorant of what to do with it. Tools cannot point you in the direction of progress, tools can only help you reach the other side better. Think clearly, then act.

As for the second complaint, I must admit that the current DAO tools are really not easy to use, especially for those who are not skilled. This is also the direction I hope to work towards, to make participating in DAO easier and more interesting, and to let DAO enter the lives of more people, just like Chuck E. Cheese.

I hope that DAOSquare can not only help the innovators of this era, but also work hard to advance the development of this era. DKP is a practice that we have worked hard for. The DKP you see is only the first stage of the construction, and there are many interesting features to be gradually developed and delivered, such as Discord bot, community red envelopes, Homeland, etc. At the same time, we will also implement more through our API A good combination line will connect more modules that can be used as contribution factors to DKP (such as POAP, games, etc.). In the future, we will open DKP to all communities and project parties to provide them with more interesting community governance solutions.

However, I must admit that the current mechanism we have constructed is still not perfect, but we are moving forward. On the other hand, whether it is DKP or not, there will be a better community governance plan in the near future to replace the existing Token-speaking model. I firmly believe in this trend.

When it comes to future trends, I am always very excited, especially the “community” that is emerging in this era. I once wrote a paragraph in the “meTokens Incubation Report I”:

We are welcoming the best era of individual values. More and more people are leaving mechanical work and embracing more dynamic communities to realize the construction of individual value. In the future, collaboration between individuals with communities as the main scene will become more and more popular. At the same time, more great innovations will also be produced in individuals and communities. This is the evolution of the social structure. As the buzzword at the beginning of the Web2 wave:

Youth explore Databases, find friends in forums.

Has been updated by people of this era to:

Youth explore Ethereum, find friends in DAOs.

Governance Thinking: Token and DAO

Are you ready for this era? If not, please:


Always stay young, always explore before others, you will reap the rewards from the future!

Author: Typto

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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