What’s Next For The Genesis DAO?
With the imminent launch of the HOPR liquidity farm on Uniswap, the final part of the Genesis DAO’s proposal will be complete, and along with it the HOPR token launch.
The obvious question is: what next?
We’ve talked a lot about our overall approach to governance, notably in the Book of HOPR, but we haven’t discussed many details of the implementation. The ultimate goal is for the HOPR Association to become a full-fledged DAO, one which gives token holders control over both on-chain and off-chain governance decisions. But this is a long and complex process, one which will have to be approached incrementally.
At HOPR, we’re not just building decentralized technology; we’re committed to running our entire project in a decentralized way. Technological infrastructure like HOPR is fundamental to a free and privacy-respecting Internet, and control should lie with the users, not the creators. It’s enshrined in our manifesto that the HOPR project is owned not by one, but by all.
Together with our lawyers, we’re developing a groundbreaking new system we call decentralized, community-enabling governance (DecenGov), of which the HOPR Association is the first practical example. We’re working within regulations to build a compliant entity that people can engage with simply and confidently, without exposing themselves to liability. We hope this will provide a template that other decentralized organizations can follow easily in the future.
DecenGov: The First of Its Kind
With DecenGov, we’re pursuing practical ways for globally distributed groups of people with a common interest to connect, build things and reach decisions in a way that’s effective and, crucially, compliant. Effective projects can’t just operate in a bubble on-chain: they need to be able to transact with real-world entities in multiple jurisdictions without participants being worried about personal liability.
The DecenGov model is centred on Swiss associations. Associations are legally simpler than share corporations or foundations. In fact, they’re about the simplest entity you can get in Swiss law. They’re super easy to establish and extremely flexible, which is why they’re used by everything from local hobby clubs to large commercial enterprises. Crucially, liability is clearly established: an association can enter into legally binding business relationships at the instruction of the membership, but members themselves are not personally liable for its actions. (This liability issue has sunk several DAOs in the past, and would have likely destroyed The DAO, if it hadn’t been hacked first.)
The flexibility of Swiss associations allows us to experiment with alternative governance mechanisms like quadratic voting (QV) and liquid democracy. QV is an exciting hybrid between one-person, one-vote democracy — where everyone has a voice but it’s limited — and share corporations, where voting power is linked to spending power. Liquid democracy is a way to mitigate voter fatigue by allowing people to flexibly delegate their votes when they want to exercise their voice but don’t have the time or don’t feel informed.
All of these innovations are easily integrated with Swiss law, making associations the perfect blank slate for building decentralized governance on top of. In addition to association-based votes like selecting the board, HOPR holders will be in control of network parameters like fees and cover traffic and all the other things which will need to be tweaked as HOPR grows. This isn’t just a pipe dream: it’s written directly into our articles of association.
Ok, Enough Law. When Do We Get to the Smart Contracts?
Not so fast! In the past, people have been so excited about blockchains providing the new ability to codify decentralized governance that they’ve rushed to put literally everything on chain. But creating all the smart contracts needed for exclusively on-chain governance is a Herculean task. I know, because I led a team that tried it before, and after months of programming we still only had the minimal viable DAO in place.
This isn’t a criticism of some very innovative code; it’s just a really hard problem due to the fuzzy edge cases that the law does not commonly have to define. Can we schedule a general assembly 200 years in the future? Can there be 100 tied rounds in a vote for president? These and other edge cases all need to be explicitly defined in your smart contracts before you start. When you enshrine code as law and that code is the final arbitration layer, you have to consider everything. It has to work when the project is three people and a dream, and when it’s a million people all working together to support vital Internet infrastructure. It has to consider every possible edge case, from now until the end of time.
We shouldn’t shy away from difficult coding challenges, but you need to make sure you’re solving the right problem. The fully on-chain approach turned out to be difficult, impractical, and frankly not that useful. Does every vote really need to be on chain? The entire proceedings of the general assembly? Every decision related to every interaction between the project and outside entities? That’s just not practical (or affordable — have you seen gas prices right now?).
What about when the DAO needs to negotiate with external providers, or run a tendering round with bids that need to be kept confidential? There are many areas of business which legitimately can’t be conducted exposed on-chain for the world to see.
To take a practical example: it’s clear from our social media channels that at least part of the community is very keen for HOPR tokens to be listed on centralized exchanges, and for the HOPR Association to actively pursue this. That’s the sort of broad question that could be put to a vote, even with the current Genesis DAO framework, but the actual procedure of getting listed involves private negotiations and a million small decisions that can’t all be sent back to the membership without causing untenable delays.
This isn’t an argument for less decentralization or accountability, just for being smarter about how governance tools are used, and how often. For example, the blockchain should be viewed as a settlement layer of last resort, not the go-to tool for every single decision.
With DecenGov, were taking a different tack in four very important ways:
- Enabling communities to build a digital commons, prioritizing adequate liability protection for supporters
- Limited-scope governance experiments to gather information on what tools are appropriate for the final DAO
- Stepwise integration with the chain
- Only putting essential governance on chain, while maintaining transparency.
What Has Been Done So Far?
This isn’t just theoretical. In addition to the Genesis DAO experiment, a huge amount of practical groundwork has already been laid on the legal side.
Since its founding, the HOPR project has been divided into two distinct entities:
HOPR Services AG, a Swiss for-profit which is responsible for building HOPR technology.
The HOPR Association, a Swiss association which we’ll be working towards making a fully decentralized autonomous association.
It’s the association which will be responsible for overseeing and maintaining the HOPR network and which will ultimately be in full control of the HOPR token reserve and how funds are allocated. We’ve also completed our articles of association, which have been written with on-chain governance firmly in mind.
The ultimate goal is that anyone who holds HOPR tokens will be able to vote on proposals which affect the HOPR network as a public good: so things like HOPR fees and other technical parameters. Anyone who holds HOPR tokens will also be able to apply for membership of the association and vote with their tokens in general assemblies.
Members will be able to vote on association-specific things like how the association spends its money and who gets to be on the board of directors. Finally, those board members will be the ones who oversee the association’s interactions with the outside world.
It’s impossible to be a member without holding HOPR tokens, and holding any tokens at all will mean that you have a say in the decision-making process of the association, which is as it should be for a public good like the HOPR network.
What’s Next For The Genesis DAO?
The Genesis DAO was completely separate from both of the legal entities described above, tasked solely with creating long-term stability for the HOPR token and the HOPR Association. This was the first of our governance experiments: one with narrow scope but real-world consequences.
We do expect to return to the Genesis DAO, or perhaps an evolution of it, within the next few months for another experiment. We’re also looking at expanding membership of the DAO to include all HOPR token holders, or perhaps establishing a parallel DAO to investigate the differences between different membership requirements for the voting base. Neither of these will be the final HOPR Association DAO.
If that seems like a vague answer, that’s because it is! The team is working hard on developing the criteria for our next governance experiment, but we need to be cautious: these experiments need to have real-world consequences to be meaningful, but of course that increases the stakes and the security risks.
I’m as excited about technological solutions to the governance problem as anyone. We just need to take things one step at a time. One concrete goal is that we want the first general assembly of the HOPR Association, scheduled for Q3 2021, to involve tokenized voting open to HOPR token holders. To achieve this, we’ll be proceeding on two fronts: building smart contracts for the HOPR Association DAO and running further governance experiments like the Genesis DAO to determine what tools are right for the kinds of governance decisions the Association will need to make.
A huge thank you to the thousands of you who participated in the first stage of this journey. We look forward to calling on your decision-making abilities again within the next few months!
Dr. Sebastian Bürgel,