Proposal for the Establishment of the Impact Oracle DAO to Fund Public Goods in the Algorand Ecosystem
This is a draft proposal. Please share, discuss and leave comments. Your feedback is invaluable and will be incorporated into the final proposal.
Overview
This proposal presents the establishment of an Impact Oracle within the Algorand ecosystem to oversee the allocation of funds for public goods. The foundational principle of the Impact Oracle is to align profit with the creation of impact, encapsulating the ethos that impactful contributions should yield financial rewards. It aims to ensure that only the concrete outcomes benefiting the ecosystem are rewarded, while potential future contributions or the resources spent on a contribution are not considered.
Central to this initiative is the concept of Retroactive Public Goods Funding (RPGF), which is predicated on the notion that assessing what has happened is more straightforward than predicting what will happen. We outline a mechanism designed to operate efficiently, transparently, and with credible neutrality to assess each nominee’s impact. This process involves collecting votes from members to determine the allocation of ALGO to nominees based on their contributions. To aid in the decision-making process, voters will be provided with relevant metrics, which will be refined over time based on feedback, ensuring that the most valuable information is available to inform their choices.
A feature of good governance is the ability to swiftly identify and rectify mistakes. This approach is heavily inspired by the success of Optimism’s RetroPGF program. Through this initiative, we aim to establish a system that not only rewards past contributions but also incentivizes ongoing impact within the Algorand ecosystem.
Financial Overview
Total Request: 600,000,000 ALGO.
Duration and Emission: The emission plan spans 10 years, broken down into 3-month epochs, with a linear emission strategy of 15,000,000 ALGO per epoch.
Long Term Sustainability: We recommend allocating half of all fees collected in the fee sink to the DAO to allow additional epochs to occur after the 600m ALGO is distributed. A main point of impact a project can make is transaction fees as that will one day be the only source to sustain the network.
Establishment of the DAO
Community Controlled: The community has banded together to create this proposal as well as all the necessary technical implementation details. If this proposal is accepted, work on the DAO contracts and front-end will begin immediately by experienced community volunteers. The Foundation will not be responsible for the design of the DAO, creation of the DAO, or the selection of the DAO members.
Funding Mechanism: A DAO, controlled by a smart contract, will be funded quarterly by the Algorand Foundation treasury with 15,000,000 ALGO. Additionally, a certain percentage of the fee sink should be dedicated to ensuring the long-term viability of public goods funding. Changes to the fee sink allocation are not part of this proposal, but we feel it’s essential to making this program work long-term and should be included in the next whitepaper or roadmap.
Governance and Stake: Control of the DAO will be vested in its members, each awarded a non-transferable voting token (with freeze and clawback) as their stake in the DAO. With 115 members, each member has 1/115th voting power to start. As more members are added to the DAO each member’s voting power will effectively go down.
Composition and Dynamics of the Impact Oracle
Initial Composition: The DAO will initially consist of 30 community members, 70 builders/creators, and 15 members from the Algorand Foundation. I have selected the 115 people that I believe would make a high quality starting group. Please find the proposed group below. Trying to include everyone (Xgov approach) isn’t as important as ensuring these are highly qualified and engaged members who deeply care for the ecosystem. This is why I suggest handpicking the initial group over a governance vote, as a governance vote is unlikely to elect the best members, but rather the most popular / loudest members. I am certainly not the best judge and would appreciate the community guiding me towards the initial 115 members. However, leaving this to the Algorand Foundation would lead the community to feel it’s not genuinely decentralized. If a community member picks the group with community feedback, it seems like the least worst way to go.
Membership Evolution: Mechanisms will be in place for the democratic election of new members and the expulsion of current members. Every round 5 new members will be eligible to join the DAO. If any members have failed to vote or have been kicked out then those spaces will also be available to fill.
Engagement and Nomination Process: A streamlined, on-chain process will enable any individual to express their desire to join the DAO. This will be a very simple contract that allows users to ‘register’ their interest. At the start of every round, current DAO members will hold a vote to fill the DAOs vacant and new positions from those who expressed a desire in being a member. The DAO will use rank-choice voting to come to consensus on new members.
Expulsion: Members can kick other members from the group with a 51% majority vote. These votes can be held at any time and for nearly any reason (corruption, dishonest voting, etc.). The only programmatic way to be kicked out is to completely abstain from voting (not doing your job). When an expulsion vote passes or an epoch passes and you haven’t voted in (abstained), the DAO contract claws back the members voting token, removing them from the DAO. Members are not allowed to vote for their own projects. Members will need to self-attest the projects they’re involved in. If a member is caught voting for their own project they will be removed from the DAO through an expulsion vote.
Operations of the DAO
Nominating RPGF Recipients: Anyone or anything can be nominated to receive RPGF as long as they have made an impact on the Algorand ecosystem and have an Algorand account. Simply send a note txn to the DAO wallet with the project name, wallet information or NFD. A form will be made available on the DAO portal to easily nominate people / projects. There will be no cost to doing this and it will be 100% permissionless. DAO members will gather metrics about each nominee to ensure voting members are well informed about each nominee.
RPGF Round Initiation: A new RPGF round is triggered once the DAO’s balance hits the 15,000,000 ALGO threshold.
Scoring and Voting: Each DAO member gets 15m votes, which they can allocate amongst the nominees with a cap of 5% (750,000 ALGO) for any one project. Each nominee should be judged by the DAO members based on their impact within the last 3 months (except for round 1 of RPGF, which should account for the past 4 years). To meet quorum, a minimum of 5% of DAO members must vote on a nominee for it to be counted. This is to prevent one DAO member from being able to single-handedly fund a project, making collusion or corruption more difficult. Members who completely abstain from voting will be removed from the DAO as that’s their only job. However, members are allowed to not spend all of their votes, which effectively is just lowering their overall voting power in the round.
Results: Results are scored using the median and voting 0 is allowed. For example: A nominee receives 10 votes with this distribution:
[0 / 100 / 1,000 / 10,000 / 40,000 / 50,000 / 100,000 / 150,000 / 250,000 / 500,000]
Median = (40,000 + 50,000) / 2 = 45,000 ALGO would be awarded
Visualization of the Process
Backwards Compatibility
This proposal does not affect the existing technical infrastructure of the Algorand network but introduces a new organizational structure and funding mechanism within its ecosystem. The Impact Oracle would solely focus on public goods funding for the ecosystem.
Security Considerations
The proposal outlines governance structures and funding mechanisms designed to minimize trust and ensure transparent and auditable operations. Detailed security audits will be required for the smart contracts involved in DAO operations. These contracts will be open-sourced, and shared with Algorand Tech and the Algorand Foundation prior to accepting any funds. Additionally, we recommend funding the DAO in tranches to reduce the risk of a contract exploit.
Conclusion
The overarching goal of the DAO is to refine the process of funding public goods within the Algorand ecosystem. The Impact Oracle aims to iteratively enhance the effectiveness of this process round over round, eventually reaching impact = profit equilibrium. Public goods funding is one piece within a larger network flywheel which drives value for users and builders, which drives more demand for Algorand blockspace, which drives more fee sink revenue, which can then feed into node incentives and funding.
FAQ
Will DAO members need to KYC? — No! Social and on-chain KYC is superior to traditional KYC as it’s trivial for AI to generate KYC documents. Members should prove themselves via thought leadership and actions on-chain.
Will nominees need to KYC? — No! This goes against the ethos of crypto. Anyone can make an impact on the Algorand ecosystem, regardless of where they’re from.
Why a 3 month cycle? — We believe there needs to be some adequate amount of time in between cycles so that impact can be measured and it’s not too administratively burdensome on the DAO members. The amount of ALGO is substantial and should be sufficient to fund the ecosystem for those three month periods.
How do you keep members from just voting for themselves? — DAO members need to self attest to the projects they have interest in. If caught voting for themselves they should be kicked with an expulsion vote for dishonest voting. DAO members and community members are responsible for policing this.
Are there term limits? — No but members can leave at any time, and if they abstain from voting for an epoch or get kicked out they forfeit their seat. New members are continually added quarter over quarter.
Do voting members need to allocate all of their votes? — No, but it’s encouraged.
Do voting members receive payment for their work? — I haven’t included it in this proposal but it probably makes sense for voting members to receive some small payment per epoch to incentivize participation. Up for debate still on this.
Supplemental Reading
https://medium.com/@fishermanalgo/musings-on-the-pond-f1c6f6deeb72
https://mirror.xyz/cerv1.eth/tCjpRODfiYpnKIgPLRplW0lAopVP3no_JmI34dNsAWk
https://mirror.xyz/cerv1.eth/CGS5QsqoX9k5_puYopug4SWODm06OAGwOPWiEil2v0U
https://mirror.xyz/cerv1.eth/HikrWg-CneYoHruCON5gCi6BL7R71TEBpdJjgqon9M8
https://medium.com/ethereum-optimism/retroactive-public-goods-funding-33c9b7d00f0c
https://community.optimism.io/docs/governance/citizens-house/
https://gov.optimism.io/t/retropgf-impact-profit-framework/7034
