Rarible DAO Elected Representative Governance Experiment (v3)

Previous Reading

This is a continuation and refinement of a previous thread here and here. The scope below is intended to refine the scope ahead of a Snapshot proposal. This proposal incorporates some feedback from calls had with key stakeholders, while also moving towards the 100% NFT based system mentioned at the bottom of this post.

Note that below is v1. There are a number of future variations based on this base model.

Also note that the goal of this structure is GOOD GOVERNANCE, that leads to the maximal adoption of our protocol.

Overview

  • Membership NFTs are given to value added members of the community. This would include: DAO workers, Working Groups, RARI stakers, Apps building on the protocol (among possibly other groups).
  • Initial NFT holders will be Alex, Eric and Alexei, and will be added by vote (30% quorum majority vote)
  • NFTs will be held in a multisig, and send to addresses once the vote has been passed.
  • In order to remain in good standing, a member must remain active. As a group, we need to decide what this means. Initial thoughts include:
    • A minimum amount of RARI staked
    • a minimum level of participation and value added to our community / working group (s)
    • alignment with our values
  • For the time being, the staked RARI requirement be a fairly small amount (~$1000 equivalent). This parameter, for the time being, will be a variable which can be modified via a 2/3 multisig. The DAO will need to monitor (for the time being) once RARI becomes un-staked.
  • We mint an initial 100 NFTs, with a cool design. These are the OG Membership NFTs.

How many Membership NFTs do we want to distribute?

Fairly soon after launch, I would expect a number of RARI stakers, a number of community members, and a number of projects to receive Membership NFTs (15+ NFTs soon after launch?). As the number of projects building on the protocol increases, I do not think we should prevent these groups from having a voice, we should keep distributing NFTs as the number of value added contributors increase.

In my opinion, we could eventually have hundreds of NFT holders. My gut feeling is that things will move closer to what was in the initial proposal, with groups or segments having a certain allocated % representation (below), as we will not want one group (for example: app developers) to have a disproportionate % of voting power, since this won’t likely lead to effective governance.

The current v1 proposal will almost surely need to be tweaked as we execute on this vision, and seek to improve our governance process.

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I commented here but just missed this post going live! :slight_smile: I’m also aware I’ve not been in some important calls so lack context.

However, I think this discussion is exciting and inspiring - and the direction being aimed for and early stage execution model seem reasonable too. Congrats to @eric and all involved.

I’ll be interested to learn more re defining active, and inactive, and how fast NFT holders move from these states. Excited to see how the Snapshot vote goes.

Below are some more details around the processes to add and remove members, as well as some of the risks in this governance model:

Adding Members

  • I’ve been part of a few Moloch DAOs, and I really like the idea of “sponsoring” a new member.
  • We might have a form or a forum section where new potential members can submit their application, but in the end, I still like the idea of requiring a sponsor to join.
  • What is the process to add a new member? Likely a proposal in Snapshot, following the same process as other proposals submitted to the DAO, to keep things in one place.

Diluting or Removing Members

  • Option 1: We may want to have a set of requirements that NFT holders need to fill in order to remain in good standing, which if they don’t meet, would result if the burning of their NFT
  • Option 2: However, we could alternatively imagine a system where instead, we issue new NFTs over time, where an individual can accumulate a number of NFTs and earn more voting power by being an active contributor. In this variant, the NFTs really do play a role of “reputation”, which can accumulate over time. In this model, maybe we don’t worry about removing NFTs.
  • Both of these solutions are meant to address the same problem. In the first solution, the admin of the NFT contract would need to have burning rights. In the second, voting power would need to equal to the amount of NFT a user owns. The first solution would need a set of “good standing” principles, the second would require a process for distributing out new NFTs.
  • The nice thing about the second solution, is that we could use this process to add new members as well.

Risks

The biggest risk is likely governance capture: a group of NFT holders could decide to remove or dilute NFT holders, or a member could try to mint himself 1M NFTs, giving himself complete control of the DAO and treasury. A possible mitigation strategy here would be to take inspiration from the US political system, with different “branches” of government needed to enact certain kinds of changes. Would love to get thoughts on this though!

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From my experience in DAO’s I really like Option 2. Giving burning rights to NFT holders could make things complicated if there is a revolt. With option 2 this will help showcase continuous contributions and create a better balance of weighted voting power throughout the organization.

Great progress here! Can we add more clarity on processes?
0 - Alex, Alexei, Eric
1 - A process for adding people. Like the sponsor idea! Checking they have enough RARI, voting with Existing NFT Holders

  • What’s the cadence? How many people do we want to see there? We add someone and they start sponsoring people on a daily basis, holders turning that down? holders vote every day?

  • What if we introduce an interim upper limit on the number of nfs. Let’s say 20 for the first cohort.
    Then we vote on adding more and so on.

  • Keen to have absolule majority of NFT holders to vote for starters. Like 50% of supply needs to be FOR to add a new NFT holder.

2 - It seems like @g2entgroup is also against removing so might be lest keep removing aside for a moment. Might be keep it simple for the time being.

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These are interesting and important points you bring up @insider0x. Curious to hear additional insights on these subject matters :thinking:

NFT x gov is always fun :partying_face:

throwing some ideas out there to stir the pot:

Maybe stick with at-most-1 NFT per address/person. Option 2 (issue NFTs over time to dilute governance power and incentivize constant engagement) is good, but multiple NFTs might get a lil unwieldy per-person.

If we want to allow certain members to have more influence/votes, we could have a counter/indicator/value on the NFT that indicates this that can be updated over time. It could be a simple number (“Reputation”), or potentially scoped to a specific domain or skill (this makes it very similar to colony’s reputation system)


[devil’s advocate] if this is just “Colony, but with NFTs” … do we need to build this from scratch? What if we just used Colony and just built a custom NFT that was not transferable by the owner and featured some cool branding / dynamic SVG text (member #, date joined, etc)?


Also – maybe y’all can help me understand what I’d consider the primary lens I’m looking at this thru: what do we need to actually govern? Eg:

  • Funding grants via DAO treasury
  • Funding working groups via DAO treasury
  • Protocol upgrades (having the commercial dot-com side relinquish admin keys to the protocol is not something I imagine happening any time soon tho)

Do we anticipate getting more granular? That may get very clunky very fast (eg if basic payouts, reimbursements, etc become something the full DAO governance is involved with). Colony handles this with optimistic governance and their scoped domain model.

Are working groups likely to stay fairly autonomous? (eg, the DAO funds the WGs, WGs decide how to use that $ to pay contributors, fund activities, etc)


With all governance systems, I’d say some good goals are:

Governance minimization. Don’t create process where it’s not needed.

Organizational resilience. Can the DAO survive radical change? Shifts in leadership/personality/cultural? Is it robust enough to naturally allow active builders/contributors to become primary influencers if current voters are apathetic / RARI capital is inert in whales’ wallets?


just some unstructured thoughts. This is def an interesting thing to think about!

Following up on some of your comments:

  • What’s the cadence? How many people do we want to see there? We add someone and they start sponsoring people on a daily basis, holders turning that down? holders vote every day?

From what I have seen, this sort of thing is just social consensus, and can (should!) evolve over time. I think if someone starts sponsoring people on a daily basis… we might want to remove them as an NFT holder :). From DAO’s I’ve been part of with memberships, a new member can be nominated at any time, and there is usually a certain due diligence process. We can have a permissioned discord channel where we discuss proposals, simple enough.

  • What if we introduce an interim upper limit on the number of nfs. Let’s say 20 for the first cohort.
    Then we vote on adding more and so on.

I think this should change over time. I’m personally fine with a 20 person limit to start, but don’t think we should aim to keep this cap.

  • Keen to have absolule majority of NFT holders to vote for starters. Like 50% of supply needs to be FOR to add a new NFT holder.

I think a 50% majority will slow things down (even within a small group of 20). We are potentially talking about a constant slew of proposals to pay attention to, herding cats isn’t fun, and I don’t believe we can expect 50% of people to need to participate in all of them. I would aim for 30%, but if we want to be more conservative, I’m ok with 50%.

Thanks for your comments @bvalosek

I agree in regards to governance minimization, it’s a good point. Having many NFTs per person could add a certain level of administration since then you need processes outlining when someone should be able to earn more NFTs.

I propose we start with 1 member 1 vote, and use this as a starting point…with a minimum of 60 RARI tokens, with a 30% quorum. @insider0x if you really want, we can start with 50%, it should be easy to change at this early stage.

As we execute on this, we can think in more detail about how to avoid governance risks. I do like the idea of trying Colony out, but doesn’t look ready.

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totally – building it and trying it is a great way to see what feels iffy / weird / risky. Excited to see this!!

I do like the idea of trying Colony out, but doesn’t look ready.

ah damn. I had assumed it was at least live in beta based on some comments I heard on their Collective Intelligent podcast earlier this year. Just saw this on their site:

Due to the extraordinarily high Ethereum gas prices, we’ve decided to disable colony creation to prevent new users from incurring unexpectedly high costs. A new and improved Colony V2 will be available on xDai soon!

Thank you Eric & everyone for the thought you’ve put into this proposal thus far.

Here are some high-level thoughts on pros & cons for this proposal (h/t @AcceleratedCapital) :

Pros

  • The model would enable curation of additional delegates by engaged community members, hopefully leading to an outcome that addresses a common problem in DAOs where engaged members may not have as much voting power as whales.
  • The broader community of token holders still wield authority since they could choose not to stake on an elected delegate.
  • Since it is a liquid democracy model, a delegate’s voting power can be removed by the broader community if they vote unfavorably.
  • Since voting power is constrained to 1 delegate = 1 vote, no single member could have outsized influence on the outcome of a proposal (vote buying aside).

Cons

  • A wealthy delegate could stake their own wealth on themselves in order to reach the threshold to receive a vote. Notably, the delegate would have to be voted in first by existing delegates, but if the community wanted to remove authority from them, the delegate could potentially self-fund their own voting power unless their NFT is removed/blacklisted.
  • Vote buying would still exist.
  • If the NFT is transferable, there could be unilateral decisions made (e.g. I could send my delegate NFT to someone who was not elected and, if wealthy enough, stake tokens to provide this unelected delegate voting power.
  • Without some kind of incentive for token holders to stake, there could be voter apathy when it comes to delegating voting power. If a new delegate is elected, what incentive do I have to pay gas to stake or take the time to learn about that new delegate?

Below are several questions with the intention of clarifying the idea & impact for the benefit of the Rarible community. I might also be misunderstanding some elements of the proposal so please feel free to correct!:

  • What % of total governance power would the Initial NFT holders (Alex, Eric and Alexei) have?
  • What % of total governance power would the NFT holders have vs. RARI holders? Would 50/50 be too much to start?
  • What exactly could the NFT holders govern? Exactly the same parameters as RARI holders?
  • Who controls the multisig which manages the NFT distribution?
  • How many representatives per group/segment do we want? e.g. 10? if so, we would distribute 70 NFTs so what happens to 30 unissued NFTs? just sits in multi-sig for now?
  • If a model for demographics is used (i.e. x% must be investors, y% developers, etc.), who would approve changes to this model in the future?
  • If there are X delegates and they require Y threshold for voting power each, why would you want to have any RARI tokens above X*Y? Could RARI lose its governance premium?
  • Will elections occur regularly and, if so, at what interval?
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Catching up on this thread again! Dmitry, I think there might be some confusion here about what the proposal is.

The NFTs aren’t really a liquid democracy model since each NFT just grants a constant voting power as long as the staking threshold is met, and the threshold is relatively affordable (~$1k).

The idea is to make it affordable for all NFT holders to stake on themselves, which ensures every NFT has a minimum level of financial skin in the game. So wealthy folks wouldn’t have a big advantage there. Note that making the staking threshold very high would just turn these NFTs back into another form of token voting, which would defeat the whole point, IMO.

As far as I can tell, making these NFTs transferable would also completely defeat the point and turn the NFTs into more token voting. (which to be clear, isn’t the worst thing in the world, I just don’t think it’s worth doing this experiment if it’s redundant)

Since I imagine most NFT-holders will be able to self-stake and we’ll start with highly active people, I think this won’t be too much of an issue with this proposal specifically, at least to start.

Voter apathy and opportunity cost when staking a transferable token (i.e. should I delegate my RARI or lend it?) are definitely things we should address more in the future, though!

(late reply, might delete later)

see proposal here: Rarible DAO: NFT Governance Experiment PROPOSAL

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