Custom Module for Governance - Introducing SubDAOs
Introduction
Hey everyone! I’m Shine, Head of Operations at Band Protocol. Currently, we’re working on implementing SubDAOs at the code level. I’d like to discuss an exciting concept called SubDAOs, which can address various challenges faced by decentralized autonomous organizations (DAOs). DAOs have become an integral part of decentralized projects, but they often encounter several pain points. SubDAOs offer a potential solution to these issues and can bring about significant improvements within the DAO ecosystem. Let’s explore some of the pain points that SubDAOs can help resolve:
- Complexity Management: As DAOs grow in size and complexity, it becomes increasingly challenging to manage all operations and decision-making within a single organizational level. SubDAOs offer a way to divide responsibilities and tasks into smaller, more manageable units. This helps in organizing and coordinating operations more effectively within the DAO ecosystem.
- Efficient Resource Allocation: DAOs often have limited resources, including funding and human capital. SubDAOs allow for more targeted resource allocation by focusing on specific tasks or functions. This ensures that resources are allocated efficiently and effectively, avoiding duplication of efforts or misallocation.
- Specialized Expertise: DAOs can greatly benefit from specialized expertise in various areas such as development, marketing, governance, or community management. By creating SubDAOs, DAOs can tap into the knowledge and skills of participants who possess expertise in specific domains. This enables better decision-making and execution within those specialized areas.
- Flexibility and Experimentation: For DAOs to thrive in a rapidly evolving environment, they need to be adaptable and open to experimentation. SubDAOs provide a framework for experimenting with different approaches and strategies within the DAO ecosystem. They allow for testing new ideas, governance models, or incentive mechanisms without impacting the entire organization.
- Inclusivity and Participation: DAOs aim to foster inclusivity and active participation among community members. However, in large DAOs, it can be challenging for every participant to have a direct say in all decision-making processes. SubDAOs enable greater participation by providing avenues for individuals to contribute to specific areas of interest or expertise. This encourages active involvement and ownership within the DAO community.
- Scalability: As DAOs grow, scaling operations becomes crucial. SubDAOs allow for the delegation of responsibilities to different teams or individuals, making it easier to handle a larger number of participants and tasks. This scalability helps DAOs grow and expand their operations while maintaining efficiency.
Who Controls Each SubDAO?
The control and governance structure of SubDAOs within a decentralized autonomous organization (DAO) can vary depending on the specific design and implementation. Generally, SubDAOs are governed by the participants or stakeholders who are directly involved in the operations and decision-making of that specific SubDAO.
One common approach to governing SubDAOs is through the use of councils or committees. These councils are typically composed of elected or appointed members who represent the interests and expertise of the participants within the SubDAO. Council members may be chosen based on their contributions, reputation, or expertise in the respective area. Initially, the selection can be made by the community based on these criteria, and subsequently, elections can be conducted to ensure community representation. Council members can also be voted out by the community through proposals.
Transforming the Cosmos Group Module into Councils
The Cosmos Group module, which is part of the Cosmos SDK blockchain development framework, can be transformed into councils to enhance its functionality. This module enables the creation and management of groups of accounts within a Cosmos network, similar to a multi-sig wallet on the EVM chain. It offers flexibility in assigning policies to each council.
To better understand this concept, let’s consider three example councils and their corresponding policies:
- The Treasury Council is responsible for initiating proposals to transfer assets from the treasury to various decentralized autonomous organizations (DAOs).
- The Grants Council is responsible for initiating and voting on Grant Proposals, which involve approving grant applications. They also oversee the allocation of funds from the grant treasury to support grant contributors.
- The Tech Council is responsible for initiating and voting on Improvement Proposals, which involve implementing changes on the blockchain.
These policies are designed to be clear and direct, allowing council members to utilize their expertise and knowledge within their specific areas of responsibility, enabling them to fulfill their duties effectively.
Responsibilities of Delegators and Validators in this Governance System
The proposed system enables individuals to participate in a democratic voting process. Validators and delegators have the opportunity to initiate Veto proposals and cast their votes against council decisions. The rules and parameters of the system will follow the same principles as Cosmos Governance, with the exception of a shorter voting period, reduced to 7 days.
The New Governance Framework
In this system, each person who delegates their voting power will have it divided for two specific purposes:
- Elections:
- Delegators can assign their voting power to candidates who volunteer to be council members.
- The tokens used for voting will be locked for a period of three months until the next election cycle begins.
- The longer the tokens remain locked, the greater the multiplier applied to the voting power and delegated rewards.
- Veto Proposals:
- Delegators can initiate Veto proposals by using 1000 native tokens and utilize their delegated voting power to vote against decisions made by the council.
- Delegators will receive rewards similar to those in the existing Cosmos Governance system, but the amount will be adjusted proportionally.
Proposal Process
Here’s an overview of the proposal process:
- Once an agreement has been reached through a vote in an off-chain forum, a council member will act as the proposer and open a proposal on the blockchain.
- The voting period commences and lasts for a duration of 3 days.
- Council members utilize quadratic voting to cast their votes on the proposals, where the voting power is determined by the amount delegated by the delegators during the election. If the number of “YES” votes surpasses 50%, the proposal will be approved.
- Following the voting period, there is a waiting period of 4 days during which delegators or validators have the opportunity to initiate Veto proposals.
- If no Veto proposal is initiated and the 7-day veto period comes to an end, the proposal will be implemented. However, if the Veto proposal is approved during that period, the proposal will be rejected.
Conclusions
In my opinion, the proposed subDAO treasury system has tremendous potential to bring significant benefits to projects looking to implement SubDAOs/Council systems. It would foster faster and more efficient growth within the ecosystem, addressing the current challenges in governance. One of the great things about this system is its emphasis on transparency, allowing everyone to easily track actions and have a say in proposed changes, promoting a democratic decision-making process.
Moreover, this system encourages active participation from delegators, making them essential contributors to the success of the community. By getting more involved, they can have a direct impact on the development and progress of the ecosystem.
Additionally, the system provides incentives for grant contributors to unleash their creativity and come up with exciting innovations and use cases. With streamlined and efficient processes, ideas can be implemented more quickly, driving the ecosystem forward.
By implementing this subDAO/council system, we can anticipate remarkable growth with fresh ideas and increased speed, all while maintaining the core principle of decentralization that we hold dear.
I’m excited to hear your thoughts and start a conversation about how we can further improve governance within the subDAO/council framework. Let’s discuss the next steps together and work towards enhancing the system’s effectiveness and efficiency.