Level K Request for Nest Membership and Funding for Aragon Futarchy App

[jpkcambridge]

Level K Request for Nest membership and funding for Aragon Futarchy App (#93)

Team name: Level K

Proof of concept / research whitepaper: Proposed Interface | Tokenized Event Configuration | Futarchy Setup

Burn rate: $40k/month for three months

Legal structure: Level K, Inc., US C Corporation

Team and roadmap

Proposal

Futarchy is an alternative and relatively untested form of governance that uses prediction markets to determine which policies will be the most beneficial for an organization. Giving Aragon DAOs access to futarchy creates a low stakes and low barriers-to-entry environment for continued testing and experimentation. While there are many potential implementations of futarchy, we propose starting with a single implementation described below.

Futarchy Setup

• Success Metric - This implementation will use token price to predict and measure the success of a policy or decision. A price feed oracle for the DAO's token will be required when the Aragon app is added. If there is demand for other success metrics in the future, they can be supported fairly easily as long as an oracle can be provided.
• Decision Function - The decision will be made based on the outcome that has the higher predicted token value for the largest percentage of the decision period.
• Tokenized Event Configuration - For each futarchy decision, a categorical event for the decision being accepted or not accepted will be deployed. The outcome tokens of the categorical event will be used as the collateral tokens for two scalar events that will be used to predict the token price given that outcome. For more information on this setup, please see the first configuration described here.
• LMSR Markets - For each scalar event, an LMSR market will be started for the trading of the scalar event's outcome tokens. LMSR markets require up front funding to ensure a sufficiently liquid market. The burden of funding the market will lie on the user that creates the futarchy decision.

Integration With Aragon

The futarchy app will follow the patterns set by the voting app as closely as possible. Ideally, DAOs will be able to swap out voting for futarchy with minimal effort. The proposed interface for the Aragon futarchy app can be found here.

A UI will be designed and implemented to allow end users to launch new futarchy decisions, interact with markets, and gain insights on active futarchy decisions. It will consist of a screen outlining all current and past futarchy decisions, a detail screen for specific futarchy decisions, and a new futarchy decision slide out modal similar to the new vote modal.

[CLAassistant]

All committers have signed the CLA.

[jpkcambridge]

@lkngtn

Agree regarding liquidity concerns and Level K will work to keep the interface simple and flexible enough to be compatible with emergent market designs.

Level K has some experience working with DutchX, which is a nice solution, but automated markets seem desirable for the usability of the app, especially in light of concerns about limited liquidity. We think it makes sense to integrate with Uniswap as part of the scope of this grant. However, while we agree it would improve usability for organizations to have a separate Aragon App to integrate with Uniswap or other permission-less on-chain exchanges, we think that an additional UI would add more scope than we are comfortable with for this grant.

[jpkcambridge]

@bingen Appreciate the detailed questions. Let us know if this addresses them:

• Democracy vs TCR For the purpose of this grant, we don't intend to include a TCR, but it is something we think might be interesting for the future. The scope for the grant will be an app to create and resolve futarchy based decisions. We intend to emulate the patterns used in the exiting Aragon Voting app so as to make switching out a Voting App for the Futarchy App as easy as possible.

• DAO kit We intend to support implementing a DAO kit (or the equivalent of what that may evolve into) for futarchy.

• APM We also will publish the futarchy app to the APM.

• ACL We will consider using ACL where we see roles and permissions being defined. Are there good examples we could look to?

• UI The UI will be implemented using Aragon UI and will be integrated into Aragon Core.

[bingen]

Hi @jpkcambridge , thanks for your response, it completely addresses my questions. About TCR, yes, for sure, it's definitely out of scope and it would also be duplicating efforts as we are working on it. But as we move forward it may be interesting to have it in mind and think about the interface needed to make Futarchy work there, as you are already doing that, and if it's possible to have both interfaces in one app or how can we do the best way. About ACLs, you can have a look at any of our apps or even our DAO kits where ACLs are orchestrated. When you start woking on it I'll be happy to assist you if you need help with it.

[mariapao]

Hi @jpkcambridge. Just one last comment to make sure we understand correctly:

Regarding the liquidity concerns, you said the app will integrate with Uniswap as part of the scope of the grant. We imagine in this case you will provide a backend integration, right? And would it be possible for you provide instructions for the user to interact with the existing uniswap UI to set up the liquidity/price feed?

[jpkcambridge]

@mariapao

That is correct. We will provide a backend integration with Uniswap and instructions for the user on how to interact with the existing Uniswap UI to set up the liquidity for a Uniswap market and instructions on how to connect that market to the futarchy app so that it can serve as the price feed for the Futarchy instance.

[mariapao]

@jpkcambridge great!

We don't have more comments on the application. This is a very exciting project, we can't wait to see it built and start experimenting with Futarchy. You guys have an amazing team.

I'm pleased to let you know that your request for funding is approved. Welcome to Nest :)

Next steps: I'll schedule with you a call to go over some minor details to close this application process and start the onboarding process to the nest program.

[haydenadams]

@mariapao

That is correct. We will provide a backend integration with Uniswap and instructions for the user on how to interact with the existing Uniswap UI to set up the liquidity for a Uniswap market and instructions on how to connect that market to the futarchy app so that it can serve as the price feed for the Futarchy instance.

This is awesome! :) Working on some docs that should help out: https://docs.uniswap.io/

They should be much more filled out over the coming weeks, and will include some example integrations.