The Constitution-Oriented DAO

While developing a DAO based on the Standard DAO Framework, I became familiar with opportunities to improve the Framework to better represent the interests of DAO participants. Two areas of concern (from my point of view, at least) with DAOs constructed on the Framework are fragmentation and lack of direction. Here I hope to offer modifications to the Standard DAO Framework to address these two concerns. (Note that these concerns may not be present in all DAOs)

Fragmentation is a result of the Standard DAO Framework mechanism to address an attack vector and provide flexibility in the presence of dispute. This mechanism is known as the DAOSplit.

Lack of direction results from an absence of agreed-upon direction among token holders. Any Contractor can submit any Proposal, and the community (token holders) may vote to confirm or reject any of these proposals. By the DAO’s inherently decentralized nature there is no guide that can be used to determine what the majority of token holders will vote to favor for product development, nor what proposals will be presented.

One mechanism I have adopted during recent DAO development is the inclusion of a Constitution. One role of a DAO Constitution is to provide a guiding document explaining the mission statement of the DAO and the obligations of the Curator to abide by the mission statement. Another role of a DAO Constitution is to provide operational guidelines. To see an example of such operational details, you can view my DAO constitution here.

The DAO Constitution provides a guidepost and enforcement mechanism for what DAO participants (in other words: Contractors, Curators and Token Holders) are to expect — providing transparency of intent and focus — reducing the perceived lack of direction.

Addressing the issue of fragmentation is distinct. In any DAO envisioned to include multiple avenues of product development that must integrate with each other, a more complex mechanism than the DAO-Contractor relation should exist. By creating DAO-Contractor intermediaries with defined, flexible rules of interaction we have a scalable DAO. A scalable DAO is one whose product management capacity can grow or shrink as necessary and where token holders can focus their voting power up and down various product pipelines without splitting from the DAO.

The DAO-Contractor intermediary with defined, flexible rules of interaction is called an Orbit. A DAO — an AnchorDAO — creates a first degree Orbit for each product pipeline. Each first degree Orbit makes decisions specific to its Orbit. Any Orbit can create an Orbit of a higher degree. This mechanism allows the Orbit to handle complexity by spinning off tasks of a lower magnitude. A high degree of Orbits will result in orbits of Orbits above the AnchorDAO.

The Orbit is based on organizational concepts found in Holacracy. The rules of Orbit interaction are found in the DAO Constitution (again, for an example see here). With this flexibility, competing ideas within the AnchorDAO compete in first-degree Orbits. Competing ideas within an Orbit compete in an Orbit of one degree higher. Orbits of any degree may or may not interact directly with Contractors.

A benefit of this approach is a potential reduction in fragmentation. If DAO token holders have an avenue for their competing ideas within the DAO they are not incentivized to split. The Orbit mechanism allows DAO token holders in dispute to compete with their votes in opposition Orbits existing at the same degree.

An additional benefit of this approach is a high level of visibility and transparency. The structure of the DAO itself (consisting of the AnchorDAO and Orbit vertices and the relations between them, as well as the tokens in each Orbit) tells us a lot about the DAO’s overall activity including where resources are being expended, projects in dispute, and where the management complexity is represented. The changing structure of the DAO can be rendered to demonstrate which token holders are making decisions at which levels of the Organization and when.

Presented here are opportunities to improve the Standard DAO Framework to better represent the interests of DAO participants. Two areas of concern with DAOs constructed on the Framework are outlined, fragmentation and lack of direction. Modifications to the Standard DAO Framework have been presented that address these two concerns. Additional advantageous properties, such as dynamic scalability and flexible managerial structure, were found to be associated with these modifications.