Decentralized Autonomous Organizations (DAOs) have become powerful vehicles for community stakeholders to crowdfund and govern decentralized projects. Anyone tokenholder can create “Improvement Proposals”: these product enhancements originate as forum discussions for code changes or budget approvals, and require majority approval from the community to pass.
Though decentralized governance offers a transparent and welcoming organizational structure; the homogenous voting model has numerous limitations and vulnerabilities as recently discussed by Vitalik in his article “Moving beyond coin voting governance”. This post suggests a social-circle based sub-DAO solution, drawing on ideas from MakerDAO and Yield Guild Games in the context of The International Small Group and Tree Planting Program (TIST) governance structures.
Let’s step back from DeFi for a few moments: many agree that climate change is the defining battle for this and future generations. The burgeoning carbon offset market, which I discuss in more detail here, allows investors to indirectly sequester carbon by funding efforts such as forest conservation and tree planting. To accelerate these efforts, TIST continues to refine its “innovative time-tested forestation program led by the participants” using scalable governance structures that encourage personal development and information exchange. The following is from TIST’s published Best Practices:
“Small Groups are the foundational blocks with which the structure of TIST is built…6–12 people who want to improve their lives and environment by planting trees and adopting sustainable agriculture best practices. The formation of Small Groups helps TIST to service the needs of participants while allowing information sharing at the local level.
Small Groups are particularly powerful because they maximize accountability on a local, daily level. In large groups, people do not necessarily know what other members are doing. By organizing in Small Groups, each person is responsible to their neighbors. This is a more real and meaningful responsibility. The nature of Small Groups also facilitates change in traditional cultures that are hesitant to try new things. Small Groups allow for the success of a single ‘early adopter’ to be seen by other group members.”
Small groups be implemented on Celo using the ODIS phone number integration, and provides an additional “Layer 0” element of social accountability to known persons.
Just as DeFi uses money lego blocks to build larger financial structures, so too can we use governance lego blocks within larger decision-making structures:
[org chart diagram]
“Clusters are units of Small Groups that are within walking distance of a central meeting point. This strategy was first implemented in Kenya and has since spread to the rest of the TIST operations. Clusters are designed to provide services such as training, administration, payment, and newsletter distribution to Small Groups, easing some of the logistical challenges of a being spread out. Organizing in Clusters also helps keep costs low and helps create organizational partnerships. Each Cluster has 30–50 Small Groups, and thus consists of several hundred farmers. When it reaches 400 farmers, the Cluster splits in two. Each Cluster is responsible for specific quantities of trees planted and hectares reserved for planting.
Good Clusters meet every month for training, sharing of best practices, distribution of newsletters, and any other matters they have. Activity at Cluster meetings is recorded and submitted, along with Cluster accounting forms. A good Cluster is constantly working to improve the quality of the data it provides and the data it receives from its Small Groups. Cluster Best Practices also include making on-time payments, recruiting new members, and embodying TIST values. Every four months, Clusters will hold an election to choose new leadership.
A Cluster is led by a Cluster Leader, a Cluster Co-Leader, and an Accountability Person. A Cluster Leader should be a servant to the whole Cluster and exemplify TIST Values, while promoting a strong, unified Cluster. They are responsible for leading Cluster activities such as meetings and quantification trips, recruitment, and payment. The Co-Leader takes over when the Leader cannot attend, keeps minutes of meetings, and helps to train the Accountability person. The Accountability Person helps with budgeting, payments, and record keeping. Clusters rely on rotation, alternating genders, and democratic elections to determine leadership.”
Incredible — DAOs can definitely use some of these structures. [elaborate]
Rune Christiansen of MakerDAO in “The Case for Clean Money”
“Putting the internal structures in place that will support the external vision of Clean Money, a bureaucracy and political dynamic that is resilient enough to overcome all challenges and credibly produce an environment of long term stability, while still having the necessary flexibility to adapt to changes or unforeseen events as they happen over the next decades.
I propose to craft this new reality by starting from the governance politics perspective, by having MKR holders and delegates self-organize to create groups in a decentralized, transparent and politically powerful structure that I call Decentralized Voter Committees (DVC). The DVCs would be permissionless in that anyone can create them…follow guidelines that ensure they maximize their potential for having an impact and working on behalf of MKR holders interest”
- Keeping all critical communication and decision making fully transparent in open calls that can be joined and observed by anyone
- Proving the amount of voting power they have available to make it possible to assess how serious a committee should be taken and to what extent they can actually sway votes
- Be self administered through an internal, independent decision making process
- Focus on particular areas of expertise or interest that they can reasonably analyze and comprehend at levels approaching the Core Units
- Receive no compensation and have no direct special privileges in the governance process beyond their interests as MKR holders.
- [Other MakerDAO specific principles]
- Generate governance recommendations and Improvement Proposals
- Generate opinions about existing Improvement Proposals
DVCs are somewhere between TISTS Small Groups and Clusters. Not necessarily bound by geography, could also be by subject matter expertise.
From a16z investments:
What first stood out to us about the YGG team was their passion for creating the biggest virtual economy in the world in order to improve the lives of more people in more places. In order to scale its scholarship program, YGG introduced community managers — local leaders that help onboard new scholars and serve as their guide into crypto. Community managers receive a portion of scholars’ earnings for their services, and help scale YGG with a human touch. Their commitment to this community is at the heart of YGG’s phenomenal growth. For most scholars, crypto presents unparalleled economic opportunities and YGG will be the scholars’ trusted partner.
- Local leaders are crucial to the success of any initiative, DeFi, Climate, or otherwise. Note the key term “human touch”, which is often limited to Discord in the current DAO system
- Decisions are no longer just code merges or budget, its bringing people into the ecosystem and providing opportunities with assets, Dojo-style
- Read more about YGG scholarships
Grameen Bank microfinance “solidarity groups”
Bring it all together
- DAOs can’t be flat, its intrinsically not ungameable
- Draw on TIST Small Groups, Cluster, Leadership hierarchy
- Resulting governance boundaries and ability to make contained decisions of varying gravity
- Structure as a collection of Guilds, or small socially accountable groups rolled into thematic and/or geographic clusters
- Scholarships to provide additional voting power to valuable community members
- Embrace Layer 0, link off-chain credentials to on-chain reputation by socials
What might this look like for TIST?
- Small Groups connected by phone number
- Clusters or Guilds are multiple small groups with similar practices and resources
- Audits and pictures stored on chain as NFTs
- Faster payment distribution after 500 tree rule
- Social, natural, aggregate collateralization
