Introducing Alchemy — Budgeting for decentralized organizations
What is Alchemy?
Alchemy is a budgeting and resource-allocation tool for decentralized organizations. It is an interface that enables thousands of individuals to coordinate towards a common purpose, by proposing and deciding on how to spend funds in alignment with their goals and values.
Some example use cases for Alchemy include decentralized venture funds, charitable funds, innovation funds, a budget proposal system (like Dash but more sophisticated), or prioritizing features for an open-source project.
Alchemy is a Dapp (decentralized application) built on top of DAOstack, a platform for decentralized governance of DAOs (decentralized autonomous organizations). It is proudly open-source and you are welcome to check out the source code.
How does it work? Alchemy makes it easy for DAO members to carry out three simple actions:
- Make proposals for the DAO to take a specific action. A proposal is equivalent to a project pitch and includes details about the proposal such as objectives, methods, costs and milestones.
- Predict whether a proposal will be approved or rejected by the organization. This helps guide the collective voting process by sorting and prioritizing the proposals.
- Vote on whether a proposal should be accepted or rejected.
While anyone can propose and predict, only people who hold reputation (voting power) can vote.
Alchemy is currently live on the Kovan testnet, and as of June 6th it is in QA testing on the Ethereum mainnet.
Why did we build Alchemy?
Alchemy aims to support an alternative method of allocating resources within large organizations. Today, it is usually a small groups of executives who decide on the allocation of funds within organizations. This traditional approach to budgeting has a number of limitations that Alchemy seeks to overcome:
- Slow & Rigid: Organizing meetings and committees is expensive, and often only a small number of decisions can be made. The larger an organization becomes, the more formal structures are typically put in place. These lead to a decrease in agility and less autonomy for employees, slowing decision-making and, ultimately, slowing innovation. For example, a survey of 400 corporate recruiters has shown that hiring decisions today take an average of 63 days, up from 42 days in 2010. This often serves as a bottleneck that reduces the decision-making capacity of an organization, or forces a very centralized structure where decision-making power is only given to very few people.
- Top-down: the drawbacks of hierarchical, centralized, decision-making structures are becoming very known in today’s business world. Although “flat” organizations, agile teams and employee empowerment are becoming increasingly common, these new concepts are often not implemented when it comes to resource allocation processes, and often involve complex human practices that are hard and slow to implement.
- Corruptible: When there are only a small number of decision-makers for a large project, bribery and influence on decisions by interest groups becomes easy. Research shows that the leading indicator of corruption in public megaprojects is first and foremost project size, whereas complexity, lack of transparency, and uniqueness are secondary causes.
With Alchemy, hundreds, thousands, and perhaps someday, millions of people will be able to contribute to an efficient decision-making process for allocating funds.
This will give contributors a real sense of autonomy, leading to a scalable collective intelligence that can truly tap into people’s experience, knowledge and skills at a large scale:
- Anyone can bring a proposal to the attention of the collective.
- Anyone can discuss, provide feedback and evolve proposals.
- Anyone can gain reputation and financial rewards by contributing to the organization in a way that is recognized as valuable by the collective.
Our first pilot: Genesis Alpha
Alchemy’s first release focuses on technical and UX testing with Genesis Alpha, the first pilot project deployed using DAOstack. Genesis Alpha is the first in a series of experiments designed to prepare for the deployment of the Genesis DAO, whose eventual purpose will be to steward an approximate budget of 40M GEN and $20M in order to support the development of the DAOstack eco-system.
During the Genesis Alpha pilot, an initial fund of 7 ETH will be controlled by ~40 staff and community members who will vote on which proposals to fund.
The final phase of Genesis Alpha will involve a public call for proposals, and control of additional funds. Those who submit proposals that get approved by Genesis Alpha will receive reputation and will be able to vote on the proposals themselves. We will publish more information regarding the call for proposals in a few weeks.
Following Genesis Alpha will be the Genesis Beta pilot in which many more people will have decision making power. Furthermore, proposing and predicting on proposals will be open to the general public.
Using this phased approach, the DAOstack team will collect feedback and iterate on Alchemy’s interface, the Genesis protocol, and how discussions around proposals are managed.
This is where DAOstack works together with the DAOstack community to provide us with feedback, ideas and proposals for improvement on every level. This includes the opportunity to submit proposals and receive funds to directly implement solutions. Special communication channels will be set up for this purpose, and contributors will receive special rights in return to their efforts. We encourage anyone who is interested in participating to register for updates on the DAOstack website.
Reputation distribution in Alchemy
DAOstack’s governance protocols, which are highly modular and customizable, act also as the mechanism by which reputation (and tokens) are distributed. For Genesis Alpha, we will be using the Genesis protocol, which includes the following parameters:
Contributors can increase their reputation by:
- Creating proposals that get accepted by the DAO
- Voting in favor of proposals that get accepted by the DAO
- Staking in favor of proposals that get accepted by the DAO
Contributors’ reputation might decrease by:
- Failing to follow through on a proposal that they created and has been accepted by the DAO
- Creating a proposal that does not get accepted by the DAO
- Voting for a proposal that does not get accepted by the DAO
A detailed document specifying the exact details of the reputation distribution algorithms will be released prior to the Genesis Alpha public call for proposals.
Prospects and roadmap
Alchemy offers a user-friendly interface from which thousands of people (or more) can coordinate towards a common purpose. Our plan to achieve this is by starting to “Dogfood” Alchemy ourselves and use it as the main interface to manage several pilots that will safely lead up to the creation of the Genesis DAO. Another path we are taking in achieving this goal is to release a set of features that will enable any group in the world to safely and easily create and manage their own DAO. We will continue to lower the adoption threshold by adding integrations with collaboration tools people are already using such as Telegram, Slack and other collaboration tools.
So now that you know a bit more about Alchemy, what’s next? You can explore Alchemy right now, where you can view and even predict on proposals. If you’d like to be more involved in the pilots, just go to DAOstack’s homepage and sign up to receive updates.
Learn More and Get Involved
- Experience Alchemy, currently live (in alpha) and in use on the Ethereum mainnet.
- Follow DAOstack on Medium, Twitter, or any of the other channels you’ll find on our website.
- Interested in joining the Pollinators, our official early-adopter community, and participating in the Genesis DAO? Message our Pollinators program coordinator.
- Part of an organization interested in creating a pilot DAO or building on DAOstack? Connect with us here.
- Developer? Check out the DAOstack Github, or jump into the stack with our friendly Hacker’s Kit.