6-month anniversary of EffectDAO

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The EffectDAO’s 13th cycle began last week, marking its half-year anniversary! While the first steps felt like an experiment, the DAO has quickly grown to be a connecting element in Effect Network. Over 50 community proposals have been submitted, and the collaboration between its members is growing every week.

In the time that the DAO has been operational, many questions have arisen about its future and its relationship to the rest of Effect Network. This blog post will focus on the purpose of the DAO and answer some of these questions.

The DAO so far

The core of EffectDAO consists of members that submit proposals for funding. Every 2 weeks a new cycle starts during which a selection of proposals can be voted on by Guardians. Proposals that have enough votes by the end of the cycle are then funded from the treasury.

Now let’s look at some numbers. The inaugural cycle started on the 1st of January and we’ve seen 50 proposals get created since then. In the first cycle there were 61 Guardians that participated, which has grown to 108 in the most recent cycle. In total 23 proposals received funding for a total of 94K EFX and over 940K EFX was distributed in rewards to Guardians.

There are some amazing initiatives among the funded proposals, which have resulted in several essential additions to the DAO. Most notably there now is a dedicated organizer for the DAO calls (thanks to scarletalpha!), a website for community guides, and a tracker that shows the status of active and past proposals.

Duties of the DAO

The EffectDAO was created so that the community could govern the Effect Network. With the DAO’s initial cycles behind us, there has been an ongoing debate about what role it plays in the network and how it relates to The Effect Network Foundation (a non-profit organization) and Effect.AI B.V. (a commercial enterprise).

A DAO is an organization of people that operate under programmatic rules defined in smart contracts. These rules allow Guardians to interact with the DAO by voting and creating proposals, and these interactions have a direct effect on the system. This means that the power of EffectDAO is limited to the extent to which it is currently programmed:

• It can distribute a bi-weekly budget to proposals
• It owns the treasury funds
• It owns the collected network fees
• It can decide on network parameters like proposal costs and recycle strategy

The first steps of the DAO have been extremely successful, meaning that it will soon be assigned more and more responsibilities. Some examples of the DAO’s future duties are:

• Approving network smart contract updates
• Approving which dApps get whitelisted on the platform
• Adjusting the network fees model for dApps

This also means that EffectDAO has no influence beyond the smart contracts that define it. At the same time, as the Effect Network grows to become more decentralized, the role of the DAO will become more important and influential.

Entities within Effect Network

The EffectDAO’s Phase 1 goal is to fund community initiatives with treasury and network fees. The Effect Network Foundation bootstrapped the treasury, which holds more than 25% of the total token supply. Clearly, a significant portion of the Effect Network exists outside the DAO, such as commercial applications (dApps), tokens, smart contracts, and the core-team. This is a summary of the entities that frequently appear in the community:

The Foundation

The Effect Network Foundation is the entity that created the EFX token in 2018 and manages the funds raised during the token sale. The foundation has 100M EFX tokens in reserve and manages an allocation of 80M EFX tokens that are earmarked for liquidity and partnerships (see token map).

The foundation also has the ability to upgrade the underlying software of the network, so in a sense it’s in charge of the direction of the project. It will perform this role as long as the base smart contracts of EffectDAO and the core product are still in development. This important responsibility will later be handed over to the DAO by setting the owner keys to daoproposals. After that, the only way to update the network will be through an approved proposal.

The BV

Effect.AI B.V. is a privately held company based in the Netherlands. The company develops technology for Effect Network, builds its own products on Effect Network, and has a number of commercial clients. The BV initially received funding from the Foundation to develop Effect Network, but it now operates primarily on its own revenue streams. The BV’s products include Effect Translate, Effect Socials, and Effect Captions

The way forward

In 2021 Effect Network has set its course to become as decentralized as possible. The network will soon feature multi-chain worker and requester accounts, as well as a decentralized task creation system. It will be simple for developers to create their own dApps and use Effect Force’s workforce, algorithms, and services. Because all these elements are part of the decentralized network, the EffectDAO will govern them for a large part.

During the next 3 months, we will release a three-part technical blog series that will lead up to the Effect SDK. After the technical foundation is established, the EffectDAO will receive a number of updates that will give it a more central and authoritative place in the organization of the network. We see a bright future for EffectDAO and its Guardians, and look forward to seeing it mature further over the next 6 months!