The Collective DAO Archives by Justine Humenansky

okay all right GM governance nerds thank you I know it's early thanks for being here I'm super excited because today I'm going to share the collective Dao archives with you all um I work at the optimism Foundation which is stewarding the development of the optimism collectives governance system so in my role I do a lot of governance research and I realized that there were two key resources that I was missing the first were governance timelines which most are road maps which most owls don't publish and the second was a library where I could search policies programs and procedures across Dows so in order to do my job at the optimism Foundation I created these resources and because supporting open source public goods is a core value of the optimism Collective today we're open sourcing these resources as the collective Dow archives so that anybody can use them as a public good to advance the development of Dao's across the ethereum ecosystem so in creating these resources I read thousands of forum posts so that you don't have to these resources are organized into 10 categories I'm going to walk you through my takeaways for each so the first category is voting how is the Dow decide things and the takeaway is that we need to match the decision-making model to the decision type most early Dows started with systems that looked like direct democracy so all token holders vote on all things that can be very decentralized it can also be inefficient and for certain types of decisions it's sub-optimal so then we saw Dao's transition to a more representative democracy model usually via elected Council so 70 percent of the Dows I analyzed had implemented some form of delegated decision making this streamlines operations but it also does increase concentration so you don't want all your decisions to be delegated and you don't want everybody voting on everything right different decision different decisions require different levels of decentralization sometimes you need maximum decentralization and sometimes you can actually tolerate less what you want to do is match the decision type to the decision making model and some helpful Frameworks for thinking about that are vitalik's convex versus concave decision making and what we think a lot about optimism is plutocratic versus non-plutocratic so now that we know how the Dao's making decisions what does the Dow do and anybody who's worked in Dows knows this is really hard question to answer collectively because everybody has a different answer to this question the takeaway is to create prioritization Frameworks so strategy is hard to Define collectively but if we don't Define it basically the Dao tends to be directionless as attention and spend is increasingly divided and short-term decisions are going to dominate so Focus Dows usually set strategy via prominent leadership or a core team that has a high degree of influence the problem is as the Dow decentralizes and this leadership phases itself out we run into the succession problem so you can use prioritization Frameworks as a tool to teach the community how to make these strategic decisions themselves and these can be really high level like values guiding principles or scope or they can be more granular like okrs and kpis uh this sounds kind of basic but only 55 of the Dows I analyzed had a formal mission statement Vision Values or public roadmap only 40 percent had published anything that looked like a kpi but these Frameworks are really important because they empower the community to make these decisions themselves which is going to increase the resilience of the Dow over time so now that we know what the Dow is doing how are we funding it and this is a great quote from left Terrace who among many other things is a delegate for our optimism Collective and he's basically saying that if funding isn't tied to strategy you're going to have a bunch of different initiatives that are going to drain your Treasury so the takeaway for this is that funding structure should be flexible and most owls are not set up this way most Dows organized by creating working groups and these working groups usually look like business units that are funded indefinitely that have full-time employees and are organized by domain they usually have individual budgets that consolidate into an overall Dow budget that's unsustainable and can be three times higher than a startup at a comparable stage worse they tend to over fund non-strategic initiatives and underfund core initiatives so we're starting to see very few dows test this hypothesis that maybe funding would be more effective if it were tied to the Dow's goals instead of being allocated to these domain-specific working groups and ens is leading the way on this front with the experiment they're running around their RFP program so I would love to see more Dao's experiment with flexible funding structures now that we know what we're funding how do we make sure that we do it and this is accountability is a big problem and most Dows and that kind of makes sense because Dows are built on proposals which are basically promises to do things this problem was so acute that Aragon has a really fascinating Forum post where they had to designate themselves the executor of Last Resort because so many proposals were passing that did not specify which party was going to execute what was in The Proposal uh so unsurprisingly Dao's expressed concerns that competitors are out competing them on execution so it's pretty we know how to incentivize execution we need to enable competition experimentation and speed so how can we do that in the context of a Dao cap and Dao has experimented with something called duocracy that's basically any initiative below a certain threshold automatically gets funded you just go and do uh yearn governance 2.0 introduced the concept of constrained delegation that's basically you meet a set of criteria you're equipped with a multi-sig budget you don't need any votes on what you do with that budget and more recently we're starting to see Frameworks like makerdau's endgame and atom 2.0 which propose a separation of powers between the the parties that make decisions about strategy budget and execution and the hypothesis is you can have a more neutral allocation of budget that incentivizes more competition among the parties executing so this is basically what the Dow is doing uh you know what is the structure this is happening in and this is one of my favorite categories roon Christensen from maker Dao is a great quote and he says the really big problem with the complexity of maker Dao is that it's not explicit it's not written down you don't even really know it's there until you see it in action and that's a problem because power dynamics exist within all Dows but we're like we're uncomfortable with it so we resist defining it the problem with that is undefined power is unchecked power vacuums or the perception of them result in factions and then we get dow drama and nobody wants that um defining power is going to be harder at Dows that push governance to the social layer and that's because there's two types of power hard power that one's easy to see that's positional Authority and token ownership and soft power which is harder to see and harder to Define and that's influence and decision making ability which may not be explicit uh 30 of the Dows analyze had published something resembling an org chart usually after about a year only 55 percent had published a code of conduct so it's it's going to be hard to have any kind of checks on power without one of those so the takeaways Dows can't entirely avoid bodies of power what's important is that they don't have more power than they need to accomplish their goals and that the power be defined so you can put checks and balances around it all right so who's doing all the work the contributors um it's hard to be a dow contributor and part of why is because many contributors have been faced with publicly defending their roles and salaries up to every three months that's that's brutal like nobody wants to sign up for that um in a completely transparent direct to Dao hiring model the main mechanism for accountability is public firing by token holders there's not really an opportunity for softer accountability mechanisms like performance reviews or Improvement plans basically most Dows still need to incorporate pretty basic HR practices in the Dows I analyzed only 20 percent had codified hiring practices 40 percent had formalized compensation policies so it's not really surprising that contributor burnout is super prevalent and retention issues surface after only seven months I think we can a part of this problem if we make a distinction between contributors and representatives so Dow Representatives directly manage the Dow's resources or make decisions on behalf of token holders they should be elected and they should be held accountable publicly contributors do work for the Dow they make t-shirts they host hackathons they you know do a bunch of things but they don't need to be elected and they don't need to be held to the same level of public scrutiny as a representative the path to decentralization is something any doubt that's progressively decentralizing struggles with because it's hard to find the balance between the core and the community on the community side this transition looks like a struggle for gradually more autonomy on the core side you're trying to transition your operations over to the community and the main challenge is this mindset shift that has to occur when you go from being an employee to a contributor is you're moving from a position of authority to a position of service and it's not intuitive and it's hard balance between these two parties the tension that arises is not usually around the existence of control it's usually because there's ambiguity around it so the best way to prepare the community for this transition is to provide transparency around where the control exists and what the path is to transfer it to the community and some doubts involve the community in defining this path the part that we don't talk about as much is how to prepare the core team for this transition and my recommendation on that is to start hosting educational workshops well before this transition has to happen so that employees can start to understand what it means to be a contributor what is the Dallas operating system how is what are the rules that are governing this whole thing this is policy and it's really important this is a great quote from Jing who's a director of the optimism foundation and she says systems need to be both capable of change and capture resistance which is a much harder problem to solve than a static capture resistance system Dows tend to Define policy reactively and that's okay Dows are emergent we don't really know what's going to happen before it happens the problem is when we do so we over correct and over specify I'm not advocating for structurelessness we know that that results in collapse and when you don't Define important parameters what happens is you create this sort of common law system where Norms are developed by precedent you create this path dependency of the Dao and it's really hard to change so what we need to do is Implement something in the middle which is a minimized governance system that's as flexible as the Dao is itself so when you're designing process and policy you need to make sure you ask yourself what is the process to change this process rather than prescriptive rules which are going to break in the face of a million edge cases that are going to arise every day we should be thinking about Frameworks that teach the community how to make decisions in the face of uncertainty and in my analysis the healthiest Styles actually had minimal policy you can see this in the in the timelines and instead they were redesigned to prevent exploitation of the system in the first place what are the tools everybody's using to do all this all these things um and I like this quote because it basically says organizations are communication structures so it's not surprising that the majority of initiatives I identified in the tooling category were focused on communication so Dows are pretty good at top down communication so from the core team to the community we're really lacking in Bottoms Up communication from the community to the core team user research remains rare some Dows admitted they didn't understand at all the profile of their own community members um data-driven analysis kind of exists but it's mostly constrained to risk and financial analysis so we need to prioritize mechanisms to collect and incorporate contributor feedback and to use data to analyze Dao operations and decisions this is the last category and it's my favorite it was the most surprising to me when I was doing my research okay concerns arise all the time in Dallas no I'm sure everybody here is no stranger to Dow drama but how do we survive it and my takeaway was the difference between crisis and collapse was legitimacy so the presence of conflict whether it was created internally or externally did not seem to be a distinguishing factor in which Dao succeeded and which failed my hypothesis is the difference was legitimacy vitalik outlines this framework where legitimacy can be established in six ways by Brute Force continuity fairness process performance and participation since Dao's are closer to sovereigns than corporations that means their legitimacy is created endogenously right entirely within the Dao so if that legitimacy is negated there's no external mechanism to reinforce it in the Dow collapses so if there's one takeaway from this presentation you remember is that you need to do everything possible to avoid negating any of those six sources of legitimacy because it's an existential threat to your Dao if you do so after all this research how do we feel about Dallas we feel good uh Dows are evolving at a rapid rate experimentation iteration and shared learning via initiatives like the collective Dao archives will only accelerate this this these are now an open source public good I use this every day to do my job these are the things I've learned I'm super excited to see what you do with them and what you learn um so if you want to get further involved with the governance experiments and the governance research we're doing at the optimism Collective you can join by registering to be a delegate at vote.optimism.io if you want to help maintain update correct add to uh these resources you can just get in touch with me foreign