HAUS Party LIVE — Anticapture: a Model for Capture Resistant Governance 🎉!
Season 4 Episode 6 (3/3/2022)
Join us for 🎉 Haus Party Live 🎉 every Thursday at 2pm EST on the DAOhaus Discord!
Synopsis
Spencer joins us this week to discuss his thoughts on Anticapture, referencing his recently published article. Anticapture seeks to understand the fundamentals of capture-resistant governance by examining how organizations — modeled as networks of agents — take actions to manage resources in service of their objectives. How susceptible are our communities to capture? What shared resources do we own and how do we manage them? How distributed (or concentrated) is the executive power?
Anticapture, you say?
Anticapture is concerned with managing shared resources in a way that prevents capture of those resources by bad actors. It is a framework that gives language and a mental landscape to processes through which groups can spread power wider and “remain resistent to capture.” If power is shared then it is harder for a central agent to take over an organization. This alludes to some larger questions we might ask ourselves. What is a DAO? Where do we draw the line between distinctions? One essential component of a DAO is its antifragility, its capture resistance. This is a feature that decentralization can help us with.
Background
This conversation came about in the last six or seven months, coinciding with the proliferation of DAOs that are defined by tokens and projects referring to themselves as DAOs without having a strong argument that they were truly decentralized or autonomous. Spencer has been investigating the question of What is a DAO while working to figure out why they aren’t DAOs. This investigation took several directions and led to the notion that a definitive characteristic of DAOs is recognizing that these are groups of people taking actions together.
“It’s a little bit easier to talk about verbs instead of nouns or things that are action oriented rather than the organization that’s doing the action itself.” It’s easier to reference and think around the actions instead of the organization doing these actions. Questioning if an organization is a DAO might trigger folks to become defensive, which makes it difficult to have a meaningful conversation. Focusing on actions unlocked a thread of considerations.
The foundation of any group getting together and doing anything implies: 1. They are taking action; and 2. They are taking actions that use, leverage, or impact shared resources belonging to the organization as more than a mere aggregate of individual resources. In a DAO, shared resources are anything in the treasury as well as the governance mechanisms, as DAOs are self-owning.
Actions Framework
Now that we have established the DAOs are “networks of people that are taking actions that impact their shared resources,” we might begin to explore the 4 phases of these actions. They are cyclical and recursive, since each phase comprises other actions and phases of actions within itself. In a network of people, all individuals are taking actions that bubble up and aggregate into organizational actions.
The four phases are described as Propose, Decide, Execute, and Evaluate. Propose puts options on the table for what the action will be. Decide determines what action to take, but this decision isn’t the end stage. Execute signals the rollout of the action, followed by Evaluate where the organization measures feedback that informs the next action.
Levels of Capture
When we’re talking about Anticapture, what is it that is resisting capture? Is it the treasury, the organization, or the governance? We might consider that it is all of the above, as they are all shared resources of the DAO. Capture resistance is important as reduces the risk to the individual pooling their resources with others, which means more people are willing to join the collective and increase the amount of shared resources for the organization.
We can do exponentially more when we do things together as there are increasing returns to capital and other resources when pooling together and collaborating. If members become stuck within captureable organizations the risk of entering into mutual engagements with others is far higher and therefore we would see less of the overall benefits. The more capture resistant an organization is from the perspective of its members, the easier it is to trust each other without additional context
Addressing issues of trust allows for increased coordination. “If an organization is capture resistant then you can operate together with other people without having to trust them.” The higher the capture probability, the more trust is required for successful coordination. Capture can happen in lots of ways, such as 51% attacks. and code exploitation.
The Fractal Nature of Actions
Are there similarities and differences to the OODA (Observe, Orient, Decide, Act) Loop? There is feedback at each step in the loop so the actors can break out of it if required. At a high level, there are differences in the Anticapture phrases and the OODA Loop. Anticapture phases are more observational. They are different frameworks for different purposes. Anticapture is more about identifying where an organizations operations can break down or where they need to be strengthened.
In every motion there is the cybernetic process we have to learn as large groups of people and each of these contain opportunities for capture. Fractal and recursive nature of actions came from conversation with Tracheopteryx. We hope that the Anticapture framework can become a shared vernacular and understanding where folks can discuss topics with a shared language. It might even evolve to a community-driven framework with “Wiki style” bi-directional links hosted on Radical that individuals can fork and read to establish a shared vernacular that we all can reference as we engage in a larger conversation.
The Execute Phase
How does the need for consensus relate to the decision making processes? Anticapture creates the linguistic tools to describe this in a non-prescriptive way. It makes sense to focus on first principles so that folks can build things without having the framework prescribed to them. The Execution phase is the most important phase for capture resistance. If someone has unilateral power to execute it doesn’t matter if there was discussion in the Decide phase. For this reason, Execution is the most vulnerable to capture and it is critical that executive power is decentralized, distributed, and autonomous so that it can’t be changed by an outside actor.
Distribution of power (decentralization) is one of the most impactful ways to resist capture threats from within the organization. Another approach is accountability. Delegation and splintered consensus can happen provided that there is a degree of accountability.
There are levels and layers of capture risk. If someone has all the executive power, then there is already a huge degree of capture. Even if the power is distributed, there is a potential risk of individuals extending influence to capture in the Decide or Evaluate phases. There are domains of influence with regard to who can do what. One reason DAOs have taken off is because governance and finance are two very high consequence domains in executive power and smart contracts automate to remove the need for trusting single actors.
The Evaluate Stage
This is a potential attack vector that requires less forcefulness. Evaluation is about how a community comes to understand its own consensus and if it’s good or bad. This occurs in DAOs where individuals use the force of reputation or charisma to drive the agenda even without abusing smart contracts. “The evaluate stage is the propaganda stage.”
Among the layers of capture risk, executive power is the most impactful. We protect against this by distributing executive power, but people can still influence others for their own agendas and capture through the Decide or Evaluate phases.
What defines the people who are able to make a decision for a DAO? If half of the DAO disagrees, who decides what decisions should and shouldn’t be made? This depends on the DAO protocol and what stage the decision making takes place. Usually this degree of split is an exception in DAOs.
If someone makes a decision and then onboards others onto the decision, who decides what direction the DAO takes? Nobody and everyone! There isn’t a single person in power to make such a decision. We need to aggregate all of our signals and one way that this can happen is with Moloch DAOs. Topics are discussed in prior stages and there is often a high degree of consensus even before proposals go on-chain. If there is a 50/50 split on a proposal, there are a few things that can happen. We can put the proposal to the DAO so every person can vote with their membership weight. Such a split might lead to Rage Quitting and a community fork where the dissenting members create another DAO aligned with their values.
Permission and Permissionlessness
Moloch DAOs have a reasonably unique feature in that they’re permissioned and the question of who gets to decide things is a lot easier in a permissioned DAO. One tradeoff of permissionless DAOs is that the game theory becomes more difficult to reason since it creates an adversarial environment. For example, one person onboarding others to swing sentiment toward their favorable outcome is possible in a permissionless DAO and this is a capture vector that those types of DAOs need to be aware of.
How could a C-Corp structure work as a DAO? DAOs are flexible tools for serving the needs of the community. With the Yeeter, people join a DAO by staking their support and getting Loot (non voting share) in return. This allows Shareholders managing proposals to incorporate Loot via a Snapshot, for example. LexDAO GitHub has resources that might be helpful here.
Are DAOs Democracies? This is ultimately up to whoever set up the DAO. DAOs can be designed to be highly democratic — such as one person, one vote — and can have different intents, such as being product-focused or process-focused. We might comparing DAOs to governments, as there are lots of different government structures. How do DAOs relate to democracy? Can you have a system that is democratic some time, but also reverts to non-democratic when the stakes change? Are there ways to change governmental structure? There is a perception that DAOs are plutocratic, but that is open to interpretation. For DAOs with token voting, whoever has the most tokens has the most power, but this is often a two body structure with multi-sig signers and token holders. Perhaps DAOs are even better than democracy because they’re composable.
Someone with a token or an NFT might feel like they’re in a DAO, which is interesting if the community is forming for a purpose, but what happens when there is an NFT reveal and everyone is upset that it didn’t meet their expectations? Should folks have exit rights after the reveal? Might malice or incompetence be considered a form of capture, even if it is unintentional? In one sense it evokes the adage of buyer beware, but we could also provide an exit opportunity for buyers who don’t like what is delivered that would reduce their exposure to this kind of capture. How might we consider asset capture compared to ideological capture? What would a Rage Quit refund policy for NFT reveals look like?
With the recent Ukrainian token drop, the Ukraine government was hinting at a token drop from the first state sponsored DAO, but then they changed their minds and moved away from the idea. What happens if people want a refund? Is this a form of capture? Perhaps there are elements of reputational risk, but this might also be considered reasonable when your existence is at risk.
“This space has created a culture of distributed power — a DAO culture — but unless we embed that culture, those concepts, and that philosophy into the structure and technology of what we’re using, then that culture will be captured by other people who swarm in and call things DAOs that aren’t really DAOs and do other things to rug other people or capture organizations.”
It’s imperative that we get more explicit about how we’re distributing power in a structural manner beyond cultural habituation. Having an anticapture mission is critical, as are developing the linguistic tools for different stakeholders. There are a lot of cultural and intellectual values, but we need to ensure that these are ingrained in the tools so that we don’t need to blindly trust in each other to successfully coordinate.
