DAO First: A new governance model.
Website | Twitter| Github | Whitepaper | LaunchDAO | Discord
For an overview on BarnBridge please read our introductory post.
When we started BarnBridge, we didn’t start a company, we started a DAO, otherwise known as a decentralized autonomous organization.
We went back and forth on a few options. Should we start a Delaware c-corporation? Should we open an entity in the Cayman (after all, they’ve become more friendly to cryptocurrency regulations recently)?
This tweet thread from Kain Warwick, a seed fund investor in BarnBridge, certainly set us in the right direction…
And we continued down the rabbit holes of tokenomics and governance structures that would fit our long term mission.
We looked into Aavenomics and how they utilize their token to re-supply the protocol with capital in the case that there is a net loss, inaggregate. We’re still working on the tokenomics and we may add an Aave like feature for re-supply on the network in the scenario of a smart contract bug or hack resulting in the loss of funds. In this scenario, governance decides to use a stake by slashing and making the protocol whole again. Since we’re primarily aggregating from other protocols, trustlessly, we have less of a need to have a liquidation network, however, we still are borrowing a bit from Aave and Synthetix.
All the while, we went through the normal motions of starting a new venture.
We talked to lawyers, we talked to accountants. We knew the headaches this DAO first approach could cause.
In the end, we did it anyway. We went DAO first.
What is DAO First?
“DAO first” means that BarnBridge, has never been, and never will be, a traditional company. Instead, BarnBridge will be a protocol that is governed by the BarnBridge DAO.
The first thing we did when we started BarnBridge was split governance among the “core team.” The core team consists of co-founders Troy Murray & Tyler Ward and the Q branch (the development team led by co-founders Milad Mostavi, Bogdan Gheorghe and Dragos Rizescu).
We then carved out a fair chunk for the seed round funders and pre-launch partners, ultimately maintaining the majority allocation for distribution to the community.
The allocations designated for “yield farming” and “community” will each be progressively distributed to network participants through the latest and greatest mechanisms for a fair launch. The 10% DAO treasury will also be managed by the BarnBridge DAO so it will be primarily voted on by the community what we do with those funds.
So, 68% of $BOND tokens will be distributed to the community, 10% will go to the treasury whose management will be voted on by the community, & 22% will be distributed to the core team, seed round investors, and advisors.
Splitting out the governance from the start helped us to have an equitable vote across numerous parties where no one person could commit a cardinal sin in the early stages for distribution. It helped keep us honest and avoid proposals that would unilaterally benefit a single party. It required us to vote in every seed round fund provider and that forced us to look into each one for the merit they brought to the project. We stopped thinking of capital as pure capital but as what the people who would be using their capital to fund the seed round, in turn getting a seat at the voting table, would vote. It forced us to think about what their incentives were and if we wanted those people involved early on in the project.
Going DAO first also gave everyone incentive and gave everyone a voice, via a vote. There was no leader, there was no CEO. It started as a community of five and grew to a community of more than five, quickly.
Soon enough the larger community will be able to vote. The founder, funders, and advisors will no longer be the authoritative vote on the DAO. We will need to work together as a community behaving as a cohesive mesh with incentive via voting power to push the protocol forward. Going DAO first allows more people to be involved in what we are doing. It allows the community to keep the founders honest. It allows for the community to keep the VCs honest. It also allows for us to build some really really cool things as a decentralized army of $BOND holders.
A word to the wise: don’t go DAO first & then distribute the majority of the governance of said DAO to the community if you are inherently greedy, selfish, or want recognition. The DAO first governance model coupled with a fair launch and community led distribution of tokens is designed to align incentives of founders, funders, users, $BOND holders, proponents, community members and anyone who wants to be involved in the project. It’s not designed to enrich the few.
The DAO-first approach is designed philosophically and mathematically to distribute and democratize, rather than centralize and protect, control over the project and direction of its evolution.
We sincerely hope that the result of this experiment allows for more founders to distribute governance to the community, faster, and that VCs and the old guard of wealth will come around to understanding the value in what we did. In some ways, what we did is risky. In most ways, for a strong team with a track record, it’s safer. And safety is paramount to our mission.
The LaunchDAO functions as a temporary coordination “transport vehicle”; which will ultimately deliver us to — and be succeeded by — the BarnBridge DAO.
The BarnBridge DAO’s sole purpose is to sustain and grow the BarnBridge protocol in the safest way possible.
However, to start, we needed a DAO to hold the $BOND tokens & seed round funds without all of the incentives, policies, and security needed for the BarnBridge DAO.
Confusing? We’ll break it down.
LaunchDAO
We will use the community contracts based on Aragon DAO Company Template to create the base of the core DAO. Because the contracts have already been in production for so long, we trust the functionality and features they provide.
We expect to do minimum changes to the initial source code. However, we will create tests for our most common use cases, make sure the user flow makes sense and the users have an easy UX to join in the DAO.
- Estimated time to build, test and launch: Completed
Why we chose Aragon for the LaunchDAO.
We looked through the ecosystem and decided to go with Aragon.
We think Aragon’s positioning on DAOs is simple and straight to the point so we won’t make redundant efforts to explain it.
DAOs are an inclusive, transparent and global model for human coordination.
DAOs bring superpowers to online communities, enabling them to:
1. Attract and incentivize contributors: DAOs incentivize contributors by giving them a say in the future of the organization.
2. Pool funds: DAOs use cryptocurrencies, allowing people all around the world to pool funds.
3. Govern those funds together: DAOs allow people to collaboratively channel common funds towards common missions.
Aragon’s founder, Jorge Izquierdo, was immediately excited when he witnessed the seed round close in the Aragon DAO itself via stablecoin contributions, but was truly blown away when we announced our commitment to going DAO first.
Even Aragon’s founders hadn’t seen anyone decentralize governance at the onset of inception in the same degree that BarnBridge has.
At this point, we’re just excited you’re excited.
BarnBridge DAO
This subsequent DAO will need to have multiple specific functionality that the Aragon DAO Company Template does not already have. This is why we will likely choose an upgradable smart contract system (such as EIP-2535), which will allow us to add, remove and upgrade functionality as the community sees fit.
The BarnBridge DAO will become the core component of the BarnBridge Platform as it enables decentralized decision making to enforce actions in the interest of the community.
- Estimated time to build, test and launch on testnet: 6 weeks
An additional external audit will push the launch on the mainnet by approximately 4 weeks.
However, the BarnBridge DAO will be released closer to our first product, the Smart Yield Bond.
The whole DAO setup is done to solidify the path towards Smart Yield Bonds. This is the first DeFi product of the BarnBridge Platform. The Voting DAO will be able to deploy pools that anyone can join if they want to take advantage of this core mechanism.
Because the DAO’s control the whole system, which means the community decides how the system will be used, the parameters for this DeFi product will be in part determined by the community. Some of the other parameters will be decided by the decentralized oracle system (such as Chainlink), which needs to set proper, real and attainable parameters for the pools to be valid.
This consists of pool contracts that the users interact with, the deployment factories that deploy & set up the pool contracts, and the complimentary back-end and front-end that creates a high fidelity UX for the community.
In short, this means that when the Smart Yield product is released, the community will govern the BarnBridge Protocol.
Our commitment to open source.
We are believers in the Fat Protocol Thesis. However, to further expand on the theory, we believe when you are talking about “value” we’re talking about tokens and not code. In traditional software, whether value is accrued at the protocol level or the application level, it’s still the software that is valuable.
In crypto-economic systems, it’s the community, and the infrastructure that is built around the code that is valuable.We embody this as the $BOND token. The $BOND token will govern the BarnBridge DAO allowing for the community to make protocol level decisions.
This philosophy paves way for our commitment to transparency and open source software. We’re borrowing from open source titans who came before us and, in many ways, we’re building BarnBridge on the backs of these titans. In return, we’re sending the elevator back down and open sourcing our software — making it easier to build similar products and to encourage “titanception”, or the next titans to build on our backs.
We also believe that our commitment to open source will encourage the community to feel more comfortable using the BarnBridge Protocol. By making everything transparent, you expose vulnerabilities to an ecosystem of stakeholders instead of a walled garden of stockholders. This ecosystem of stakeholders will likely own the $BOND token and vote on the BarnBridge DAO. We want to decentralize governance to the community. BarnBridge is the $BOND community’s protocol, they make the rules.
The Secret Service Multi-Sig
We’ve decided that we will need a Secret Service Multi-Sig in order to push forward the BarnBridge Protocol.
We still have to make decisions we need autonomy for. For instance, if the core team has to go under NDA with a TradFi firm, who has to comply with a different regulatory environment than we do in crypto, for a partnership that is not able to be shared with the community. In that scenario, we cannot act with full transparency without getting sued albeit what we work on would arguably still be in the best interest of the DAO. This has already been a limitation of the DAO first approach we have realized will be an obstacle without the ability to transact funds that have been voted on by the DAO to be spent with discretion by the multi-sig. It’s also unrealistic in the stage that BarnBridge is as a project, that we can vote on every single decision that needs to be made on a day to day basis. So we’ve come up with a compromise with the community to fund a multi-sig that has discretion to spend community funds and funds from the BarnBridge treasury.
All aspects from a business perspective will be managed by the multi-sig which will be managed by the 00 agents of the multi-sig. The first three 00 agents are the co-founders Troy Murray & Tyler Ward and the Q branch.
If one of the 00 agents fails in their duty for altruistic or nefarious reasons, or worse, an agent is lost in the field (RIP), the community will be able to elect a new structure of 00 agents to run a new multi-sig which will be funded by the DAO treasury (which can only be used for the purpose of fulfilling the mission of the BarnBridge DAO, even if it’s in the Secret Service Multi-Sig) or DAO community funds (which can still only be distributed to the community).
Nothing from the multi-sig can affect the protocol without the vote of the community. However, the funds allocated can be used for the BarnBridge DAO’s sole purpose to sustain and grow the BarnBridge protocol in the most safest way possible.
Actions made by the Secret Service Multi-Sig at discretion of the 00 Agents will be publicly revealed at later dates. We hope that as the community sees the 00 agents acting in good faith of the DAO, they’ll grant the 00 agents the funds to work in the field the way the 00 agents need to in order to fulfill the mission of the DAO.
Who Came Up With the DAO First Model?
Well, all of us collaborated on the DAO first approach. But to give credit where credit is due, it was Kain from Synthetix who championed the concept.
Then, in the truest essence of what “DAO first” is, it has morphed from the initial concept based on feedback from numerous parties who are stakeholder in the DAO.
When we originally talked to Kain we asked him one thing he would do differently in building Synthetix and he championed the “DAO first” model which we’ve adopted and adapted for BarnBridge. We’ll continue to work with Kain early on with regard to how we execute this strategy and how it affects the work we do externally with other companies and legal entities along with how it affects decisions that are made internally (and what “internally” even means at scale).
Stani from Aave has also been invaluable for DAO governance conversations and how we can handle deep risks for the ecosystem as well as unconsidered risks at the protocol level. As we code more and more and work towards the BarnBridge DAO, we will build out the parameters for how it works. We think Stani will continue to be invaluable in his insight which stems from his experience in the industry building Aave.
Our seed round funders also consist of tradFi risk & financial structuring veterans, fellow yield farmers & degens, industry leading liquidity providers, cross chain network bridge builders, and Ethereum & Bitcoin OGs who saw the most distributed communities in the world take hold and grow from 2014–2018. These resources are specifically gleaned from Fourth Revolution Capital, ParaFi, Kain Warwick (Synthetix), Stani Kulechov (Aave), Andrew Keys (DARMA Capital), Centrality, Blockchain Companies, Dahret Group, and our founders who have continued to work diligently with us after closing our seed round last week.
We’ve also shared insights about our DAO first approach, both pros and cons, with our advisors, atpar. Atpar is a development team building banking investment grade financial infrastructure on Ethereum.
All of these types of people will be a part of our community and their insight and input is as important in building a community focused organization as the insight and input of industry leaders like Kain and Stani.
Past the core team, advisors, & seed round funders, we’ve done our best to consult with industry leaders, from massive Cefi exchanges to mainstream players in the tradFi space, with what their thoughts are on the DAO first approach. We are open to hearing more, learning more, and fielding more ideas on how we can improve it and implement it. We hope you’ll get involved and vote in helping us shape our future and the future of DAOs and what you can do with them.
Conclusion
So what does this all mean?
It means that BarnBridge has released a new model of governance for the decentralized community.
It means that BarnBridge will never be a company. BarnBridge will be a fully autonomous organization where the community decides what we do and where we go. It means that the protocol will be as fluid and fast moving as the community.
This has drastic implications from a regulatory perspective that lawyers and law makers will argue over for years if the model is successful.
There will be difficulties we will have to overcome as a community and changes we may need to vote on. But rest assured, there are an ample number of able bodied individuals and brains working on this concept and we hope it paves a new way for governance for decentralized organizations that spans to allow for new models in gaming, media, messaging, storage… the opportunities are endless.
It’s a Brave DAO World. Led by $BOND.
