Overview of the dxDAO Reputation Distribution
The vote staking period to earn initial Reputation (voting power) in the dxDAO ended June 28th.
Most DAOs launching today have predefined members, but not this one. Absolutely no voting power in the dxDAO was pre-allocated. Instead, during a 30-day period from May 29th to June 28th, 2019, participants could earn initial Reputation (voting power) in the dxDAO.
How has the experiment to distribute governance of a protocol to its users turned out so far? Let’s recap. (Note: if you’re unfamiliar with the dxDAO, check out the dxDAO Resources for an overview of basic terms.)
At the end of the 30-day period, 980,000 Reputation in total was distributed. There were four methods by which participants could earn Reputation, each with a different percentage of the total distribution:
- 80,000 Reputation (8%): Temporarily locking ETH.
- 300,000 Reputation (30%): Temporarily locking ERC20 tokens whitelisted on the DutchX protocol.
- 100,000 Reputation (10%): Bidding GEN (DAOstack tokens) in auctions.
- 500,000 Reputation (50%): Registering Magnolia (MGN) tokens that are generated by trading on the DutchX protocol.
Participants earned Reputation by engaging in each of these four methods in competition with the amount locked, bid, or registered by other participants. When the vote staking period ended, a Reputation score for each participating wallet address was calculated, and Reputation was distributed accordingly.
What does the initial distribution of Reputation look like?
In total, 399 unique wallet addresses participated in the vote staking period.
Here is what that distribution looked like.
The x-axis here shows the percent of the overall Reputation that each participant collected. The y-axis represents each participant, ordered from the least to the most Reputation. (For this chart, the smallest three Reputation holders were severe outliers and removed for graphical clarity). There is also an interactive version of this chart which lets you look at each individual point.
How did participants earn Reputation?
Here is a breakdown of the participants for each Reputation category. In this pie chart, addresses which participated in more than one category are counted multiple times.
What does this chart show us? About 80% of stakeholders earned a portion of their Reputation by locking tokens, making this by far the most popular method of Reputation generation.
Registering Magnolia accounted for 50% of the total Reputation allocation. However, only 11.8% of dxDAO stakeholding participants used this method. Because the Reputation for each category is evaluated in competition with other participants in that category, Magnolia registration was therefore the most “lucrative” form of Reputation distribution for the dxDAO Vote Staking Period.
Results of the dxDAO Experiment
While the initial distribution of Reputation conforms to a power law, it is worth stepping back to evaluate both what this means in terms of the success of the dxDAO experiment thus far, as well as what it signifies for DAO and software governance more generally.
An absolute majority of Reputation (>50%) is held by the top 6 Reputation holders. Yet the dxDAO has 399 Reputation Holders, who actively participated to stake for their vote. Although this is far from a horizontal distribution, this statistic still confers considerably more decentralization than most software projects today.
More than a multi-sig with a few signers or a coin vote for token holders, the dxDAO promotes meaningful control of the protocol it governs. Reputation Holders will have the ability to update any of the DutchX trading protocol parameters.
Governance of the DutchX, however, is a start point not an endpoint. The dxDAO’s lifelong trajectory will ultimately be decided by what its stakeholders deem to be the most noble pursuits. Today a DAO can invoke any action that is normally possible on the Ethereum network. For example, the dxDAO could choose to deploy open source systems for which DAO governance might add value.
The need for meaningfully decentralized control of software projects by both users and stewards with proven track records stands in stark clarity today. As Oscoin co-founder Eleftherios Diakomichalis tweeted:
In summary, while the dxDAO’s initial Reputation could be more widely distributed, it is hopefully one more experiment in a much longer list of experiments to come, in distributing governance from a network’s center to its edges.
It’s not over yet — more Reputation will be distributed.
While the vote staking period has ended, the future of the dxDAO has not yet been written. The dxDAO Governance Phase begins on Bastille Day, July 14th, 2019. This means the DAOstack-designed interface goes live, and anyone can make proposals to be voted and predicted on by the dxDAO.
By default, the dxDAO governance protocol distributes further Reputation to participants. Additional ways to gain Reputation include:
- Submitting a governance proposal that is accepted by the dxDAO.Submitting a successful governance proposal will net the proposer 1000 Reputation reward in the DutchX Scheme; 500 Reputation reward in the Contribution Reward Scheme; 2000 Reputation reward in the Scheme Registrar Scheme. Once again, anyone can submit proposals to the dxDAO — you are not required to already hold Reputation.
- Passing a proposal to distribute more Reputation. The dxDAO’s autonominity means that its stakeholders can propose and pass a proposal to distribute Reputation outside of what has already been distributed during the Vote Staking Period. In fact, there’s still 20K Reputation on offer of the 1 million total Reputation. It has been suggested that this Reputation be given to “dao storytellers,” or those who were most proactive in promoting and engaging with the dxDAO during the Vote Staking Period. Ultimately, however, the distribution of this additional Reputation is entirely in the hands of the stakeholders.
So get proposing, and check out this tutorial how to submit and vote on proposals in the dxDAO. Be sure to also read up on the nuances of the dxDAO governance protocol and how predictors play a crucial role in the system.
We hope that the dxDAO proves one small step in the history of decentralized autonomous organizations and one large leap for the collective enthusiasm to keep experimenting.
Written by Kei Kreutler and Eric Gorski.