tttroyyy
commented
3 years ago NFT-DAO: OUR STRUCTURE
SOCIAL CONSENSUS: COLLABORATIVE CULTURE & SHARED GOVERNANCE
This is an excerpt from the NFT-DAO Draft Business Canon (Draft 4 - in decomposition): https://github.com/NFT-DAO/Governance-HOLON/tree/main/Business-Plan. This section will need to be posted here: https://github.com/NFT-DAO/Governance-HOLON/tree/main/Business-Plan/10-Our-Structure.
This section will outline the conceptual underpinnings of the NFT-DAO’s organizational model and governance structure, and then discuss how a tokenization strategy can be employed to support community governance, incentivised collaboration and stimulate the growth of Cardano’s NFT economy.
DECENTRALISED AUTONOMOUS ORGANISATIONS (DAO)
Ethereum blockchain co-founder Vitalik Buterin coined the term Decentralised Autonomous Organisation (DAO) in a 2014 blog-post [1] that discussed decentralised organisations. In particular he describes a spectrum of organisational structures that vary in their degrees of machine and human-driven interactions, and that are also defined by whether or not that organisation supplies its own internal capital, such as native tokens.
Figure: DO, DAO, DA & DC matrix (Buterin, 2014)
In Buterin’s definition, an ideal DAO is ‘an entity that lives on the internet and exists autonomously, but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do.’ He contrasts this with a Decentralised Organisation (DO), which replaces the hierarchical organisational model and instead ‘involves a set of humans interacting with each other according to a protocol specified in code, and enforced on the blockchain.’ For Buterin, the difference between the two is that ‘in a DO the humans are the ones making the decisions, and a DAO is something that, in some fashion, makes decisions for itself.’ This definition points more toward machine consensus (or governance) so that the human participants are there to support the non-machine implementation of the code. Machine first, human second.
As addressed by Buterin himself, the terms are complicated and unclear. In today’s blockchain environment, DAO’s and DO’s appear to be somewhat synonymous, and range in varying degrees of interpretation and human-machine interaction. The term DAO has tended to become an umbrella concept in the crypto-space to describe any kind of decentralised organisation including co-operatives, heterarchies, P2P networks, holarchies, sociocracies, collectives, collaborations or those named by Buterin. Either way, it is clear that there is a growing demand for alternatives to hierarchies, monopolies or oligarchies that concentrate power amongst the few.
HOLONIC MODELS
Ulieru et al. describe holon structures in their paper The Holonic Enterprise as a Collaborative Information Ecosystem (2001) [2] as first being introduced by Arthur Koestler in his book The Ghost in The Machine (1967). They describe holon’s as ‘an amalgamation of the Latin word “holos” meaning whole, and the suffix “on” which implies particle or part. So, holon = whole & part. The term comes from a recognition that any entity in a natural or organizational system is simultaneously a whole entity comprised of sub-entities, and a sub-entity portion of one or more super-entities.' (p. 2). They further describe ‘[o]ne main characteristic of a holon is its multiple granularity manifested through replication into self-similar structures at multi-resolution levels. Such a heterarchical decomposition turns out into a nested hierarchy of fractal entities—named a holarchy' (p. 1). The authors go on to propose the holonic enterprise as a new business model or ‘a holarchy of collaborative enterprises, where the enterprise is regarded as a holon’ (p. 1). This enterprise ‘enables participants in the global market to enter strategic partnerships via the web-enabled cyber-playground by harmoniously managing the workflow throughout the nested holarchy of the collaborative information ecosystem' (p. 12).
Experience within the NFT-DAO’s founding team has included teaching holonic architectures for many years, and adding to the academic literature on heterarchical approaches in the field of peer-driven (P2P) production. Since holonic enterprises are complimentary with DAO’s in the blockchain space, the NFT-DAO has opted to bridge the two approaches to support a scalable machine-assisted collaborative economy.
NFT‘S AND THE DAO: A HOLONIC APPROACH
Nonfungible.com describes 'Non-fungible tokens (or “NFT”s) are a special class of assets on the blockchain characterized by being unique and non-interchangeable with one another for equal value ... a non-fungible token can be a video game asset, a work of art, a collectible card or image, or any other “unique” object stored and managed on a Blockchain' [3]. March 2021 saw a staggering 67,157% increase in NFT market valuation from the previous twelve months [4]. At a time with piqued interest in NFT’s throughout the crypto community; when Project Catalyst is now the world’s largest decentralised community fund (Project Catalyst Townhall, March 3 2021) [5] and when Cardano is on the verge of supporting both native token and NFT minting, there is an exciting opportunity to support a holistic approach to NFT implementation across all assets and industries: from collectibles to contracts to real estate.
A larger question then arises: in what ways could NFT’s be integrated with the DAO itself?
There is a possibility to conceptually bridge NFT's (on the micro-layer) and DAO's (on the macro-layer), through holonic modelling. Holons may have fixed or variable functions, like NFT's, which can be written into smart contracts and triggered. This is based on principles of Machine Consensus. As outline by Buterin (2014), DAO's were originally founded on machine consensus, so that contracts could be executed trustlessly. However, some DAO's (like our own) require trust since we are composed of a series of working-group holons involved in collaborative decision-making (a DO, in Buterin’s sense). Social Consensus requires some degree of trust. It may be desirable to design a holonic infrastructure to contain the same fixed variables at the micro-scale (machine consensus) and macro scale (social consensus), so that (IF) a social consensus is reached (THEN) a smart contract is triggered (as per a DO). It naturally follows that (IF) a machine consensus is reached (THEN) a social contract is triggered (as per a DAO). Both are possibilities. You would of course need a consensus mechanism to capture, collate and trigger the smart and social contracts.
A master contract might be written and applied to all transactions and holons within the network, with fixed and/or variable functions (ie, when the social consensus is made that x% of every transaction will go to Holon-y. Since each holon could potentially have an infinite variety of functions/consensus-splits, then these unique variations could be attached to an NFT. The outcome may be a step toward a fully integrated and holistic tokenization model founded on both machine and social consensus.
COLLABORATION: A DISCUSSION WITH RICH KOPCHO (NFT-DAO FOUNDER)
“We have a long-term view of the viability this asset can become for the Cardano community and are wholly committed to seeing it to fruition”
As the core team of founders started to work together, several great ideas emerged. We have a lot of background in social systems, P2P and holonic architectures. It was natural to start thinking about how we are organized. The Decentralized Autonomous Organizational (DAO) structures, while not perfect, were presenting several opportunities. Catalyst itself is a DAO. Our collab is meant to gather all the NFT proposals together and save community resources by building the common elements they will all need. Instead of funding every NFT proposal to create the same thing over and over, we felt we could consolidate the efforts to everyone’s benefit. Modelling holonic nested heterarchies, we are creating a focused NFT DAO within the Catalyst DAO. Our hope is the community will see the benefit of building this kind of architecture to focus Cardano NFT efforts and gain explicit experience and speed to market at scale.
Figure: Holonics visualisation (Rich Kopcho & Andy Shaw, NFT-DAO).
“We are growing an NFT-DAO from the ground up, learning and training all who join us in the process.”
A DAO is simply a means of organizing the work (the O in DAO). It’s an organizational model. It provides guidance for who does what, when, how and why through well-established communications and a set of rules or functions. Thus, our very first task was defining the work to be done and assigning owners. This is not the first our team has experienced implementing this kind of structure. I personally trained thousands of individuals over ten years in holonic systems deployments worldwide. Troy is writing his PhD. thesis on a similar P2P topic. DAOs have their roots in holonics. By modelling these processes, we will in time become a well-oiled DAO focused on NFTs.
“We will be learning from Catalyst and hopefully Catalyst will be learning from our experiences as well.”
On the social layer, we aim to work together as a community to build the frameworks, scaffolds, schemas, patterns and integrations required for a robust NFT offering. Once the tech stack is launched, we will charge an appropriate licensing fee (as justified by community service) to fund the DAO treasury and to maintain and enhance the technology and sustain the DAO ecology. We will build the canon or rules of engagement as we accomplish our core goal of creating the BOXCAR.
DAO GOVERNANCE
The governance and tokenization model for the NFT-DAO is emergent, and includes iterations as expressed by member input, team-building, prototyping, testing and evaluation. A series of group consultations have been held using an online townhall format, as well as online discussions between DAO members concerning issues pertinent to community growth and engagement. Issues surrounding the organisational and economic structure of the DAO will be discussed here.
Tiered Engagement Program (Holon Levels)
To support the incentivization of meaningful engagement in the community, it is envisioned that the NFT-DAO will employ a tiered engagement program that will incentivise levels of engagement by members. This tier structure will build upon the DAO’s broader tokenization model and incentivisation strategy as follows:
Level 1 Holon (Tier 1 Engagement)
Includes entry into the NFT-DAO and unlocks access to community holons, and general proposals and voting. Like the general retail market, Level 1 Holons can purchase NFT-DAO tokens (NFD/NFD1) as an equity investment, but higher levels of engagement will be required to unlock various utilities of the token. Sub-tiers will include the amounts of Investment Equity held;
Level 2 Holon (Tier 2 Engagement)
Includes completion of a light KYC form (AirTable) to receive a Social Equity token (this may need to be verified by a minimum number of community members). Unlocks Social Equity token utility (NFD2) which can be rewarded by community members for appreciation of community contributions. Sub-tiers will include the amounts of Social Equity accrued over time;
Level 3 Holon (Tier 3 Engagement)
Includes completing a community task or bounty to an agreed upon standard of satisfaction. Unlocks Sweat Equity token utility (NFD3) which can be received for pro-bono task completion within the community. Sub-tiers will include the amounts of Sweat Equity accrued over time;
Level 4 Holon (Tier 4 Engagement)
Includes completing Levels 1-3 to unlock proposal, feedback and special voting access (to propose and vote on special proposals). Unlocks Special Voter token utility (NFD4). Voting will be weighted by the volume and ratio of Investment Equity (NFD/NFD1), Social Equity (NFD2) and Sweat Equity (NFD3) that a holon has. Sub-tiers will include the amounts of Voting power accrued over time (based on special proposal, feedback and voting engagement);
Level 5 Holon (Tier 5 Engagement)
Includes application and successful selection into a dedicated team role that unlocks Paid Equity (NFD5) through PTE, FTE or contractual employment. Level 5 Holons also receive increased Voting power and are able to submit formal (paid) bounties/jobs on the platform. Sub-tiers will include breadth of leadership positions or roles of responsibility within and across holons.
Incentivization Strategy
It is proposed that five incentivization metrics be tokenized within the network: 1) Sweat Equity (for casual pro bono work contributed within the community); 2) Social Equity (through a trust score metric shared between community members); 3) incentivization’s for BOXCAR trailblazers whose markets are stimulating growth within the community; 4) incentives for governance voting contributions; and 5) dividend payments in the form of one-off or recurring token drops. (There is also be a sixth metric in the form of Paid Equity for rateable hours completed).
Equity Weightings (draft)
It is proposed that equity weightings be patterned directly after the NFT-DAO token distribution model in a self-replicating, holonic manner. In the following chart, weightings are distributed so that Investor Equity (Level 1) holds a 50% voter-weighting; Social Equity (Level 2) holds 15%, Sweat Equity (Level 3) holds 15%, Voter Equity (Level 4) holds 15% and Paid Equity (Level 5) holds 5%. This means that for every vote, a Level 1 holds a maximum of 50% weight, a Level 2 65% (max), a Level 3 80% (max), and Level 4 95% (max) and a Level 5 100%. A secondary weighting depends on the amount of equity a member has accrued.
Tiered Engagement Pathways
It is also of note that members will not necessarily move up tiers in a linear manner. Some may accrue sweat equity before social equity, some may choose against a KYC and forego social equity altogether, while others may be contracted to receive Paid Equity without being a member of the DAO. In all these cases, a members Tier Level will still be determined by the number of tiers they have engaged with – not the order of engagement.
Examples: A contractor receiving paid equity without being a member of the DAO will have a 0% equity weighting; a contractor receiving only paid equity (and nothing else) but who has chosen to join the DAO (as a Level 1), will be a Level 2 Holon with a 55% Equity Weighting (Level 1 & 5 combined). A member who declines a KYC (Level 2) can accrue Sweat Equity with a 65% Equity Weighting (Level 1 & 3 combined). They can vote on general proposals/polls but they will be unable to vote on special proposals (Level 4: requires Level 2). A member who joins at the same time and accepts a KYC (Level 2) will then be able to access Social Equity tokens and have the same voter weighting of 65% (Level 1 & 2 combined). However, once they engage in Sweat Equity (Level 3) and meet an adequate target, they will qualify for Voter Equity (Level 4) beginning at 80% (minimum) to 95% (maximum), and be able to engage in special proposals and voting.
Tiered Engagement Gamification
It is also proposed that the tiered engagement process be gamified so that members receive unique and rare digital collectibles as they progress through the Engagement Pathway. These collectibles may range from unique Level 1-5 Holon Characters, or in-game assets such as property, clothes, pets, land, vehicles, treasures and possessions that can be traded amongst members. It may also be envisioned that a platform Dapp be created that measures Equity accrual and milestones; stores assets in a unique wallet; enables NFT marketplace formation and trading; and provides access to proposals, voting mechanisms, project tools, holon chats – and all presented In-Game.
CITATIONS
[1] https://blog.ethereum.org/2014/05/06/daos-dacs-das-and-more-an-incomplete-terminology-guide/ [2] https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.467.1762&rep=rep1&type=pdf [3] https://nonfungible.com/about-us [4] https://cryptoart.io/data [5] https://youtu.be/CHdEoOMHihI?t=308
(DRAFT VERSION IN BUSINESS PLAN V3)