Marketing DAO Primer

The Marketing DAO has been set up to surface, fund, and execute the right marketing efforts to benefit Ethereum and its thriving ecosystem. The purpose of this post is to introduce you to some Decentralized Autonomous Organization basics and explain how you can onboard yourself and participate in the decentralized marketing effort. We are forking a version of the Moloch DAO for this purpose.

First off, why a DAO?

A Decentralized Autonomous Organization (or DAO) is a new type of organization that attempts to coordinate group activity and utilizes some form of “on-chain” governance. This is achieved through placing a variety of standard organizational functions into smart contracts, such as multiple signatures required for fund distribution, a process for creating, debating, and approving or denying proposals, and a recorded voting system. On a blockchain platform like Ethereum, votes on governance proposals are recorded on the blockchain as a historical data set of governance proposals, their outcome, as well as their related activities and funds used.

Using a DAO is a way for a group of people to align around a cause and pool their funds together, knowing absolutely that no one can distribute funds without first giving the DAO members an opportunity to vote on the proposal. This is also true of proposals for marketing activity. For a community built on diversity and decentralization, what better way to coordinate and focus the Ethereum community than as a DAO?

Why Use a DAO to Market Ethereum?

Each DAO is focused on a particular purpose, a reason for self-organizing together, which can be as broad or specific as a DAO decides. While there certainly will be ‘Super DAOs’ that fund and coordinate many things, those would likely still share some purpose.

While some DAO frameworks are looking to solve for every use case and build technology suitable for large organizations, the structure of a Moloch DAO is built more upon the idea of a DAO as a primitive solution to human coordination and for testing real-world use-cases. The Moloch framework is relatively tech-neutral and can be combined/enhanced with many different currencies, functions, and extensions. Its contracts are simple, secure (audited), and battle-tested in the real-world. The governance framework also allows participants flexibility by both not requiring quorum to take action and allowing members to exit with their funds if they disagree with the direction the DAO takes. Due to this combo of simplicity, security, and ease of coordinating action, the Moloch framework was determined to be a good fit to iterate on for the Marketing DAO. It is a form of MVP decentralization that we can test and iterate on while operating within real world use cases.

Let’s get into a bit of how the Marketing DAO works, as it will help you coordinate within the DAO.

Cancel Membership Enables Coordination

The Cancel Membership mechanism of the Marketing DAO is essentially a rebrand of the Ragequit function inherited from the Moloch smart contract. The Cancel Membership function further lowers the coordination cost by ensuring that if you, a member, dislike a proposal, you can exit with your funds before the proposal goes through. This lowers the coordination cost closer to ‘0’. 0 maybe an unrealistic target but certainly the closer we can get, the better.

Cancel Membership burns Shares and returns the equivalent amount
of value back to the user, based on current share value. It is used for
two purposes:

To Express Dissent

If a member does not like a proposal, they can Cancel Membership and burn their Shares at any time as long as they do not have a ‘Yes’ vote pending on a proposal.

To Withdraw Funds from the Bank

Grantees receive Shares through proposals. They Cancel Membership and burn their shares to withdraw funds and execute on the proposal’s purpose in the real world.

Types of Proposals

There are three main types of proposals that can be submitted to the DAO
that are brought forward to the membership for voting. These proposals
all move through the same process flow within the DAO but are used for
different purposes.

New Member Proposal (Ex. 10 Pledge, 10 Shares)
Prospective Members prepare their Pledge (ex. 10 wETH) and request the same amount in governance (10 shares). Typically, some other form of documentation is provided to inform the members on their decision, such as a description of interest and relevant skills, links to social profiles to determine identity, or other justification for joining the DAO. An existing member champions the new member, submitting their membership proposal to the DAO. The DAO members then vote yes/no to accept/reject the new member.

Grant or Marketing Action Proposal (Ex. 0 Pledge, 10 Shares)
To submit a grant or marketing action proposal to the DAO, a Member
simply sets Pledge to ‘0’ and requests the share amount equal to the funds
requested. (Ex. 10 shares for 10 wETH) Alice needs 10 wETH to design and place orders for swag for an event. Or Alice needs 10 wETH to pay for a marketing campaign or action. Alice, or a DAO member if she is not a member, submits a proposal offering 0 wETH as Pledge and requests 10 shares. If the proposal passes, Alice receives the shares and can Cancel Membership and burn the shares, withdrawing the funds. Alice then carries out the marketing action described in the proposal.

Donation Proposal (Ex. 10 Pledge, 0 Shares)
If a member submits a proposal for 10 wETH Pledge and requests 0 shares, they are donating to the DAO’s bank while not requesting any governance power as an act of altruism or charity. To be clear, this type of proposal has not appeared yet. However, it is possible to simply send funds directly to the Bank if an individual or entity wishes to make a donation to advance the DAOs purpose and activity.

Proposal Process

It doesn’t matter how many votes are cast in the Voting Period, submitted votes are counted against each other, and unless more than 50% vote yes, the proposal will fail. There is no quorum required for a proposal to be approved or denied, simply >0 votes.

If 1 share votes ‘Yes’, and 0 shares votes ‘No’, the proposal will pass.
If 0 shares vote ‘Yes’, and 1 share votes ‘No’, the proposal will fail.
If 1 share vote ‘Yes’, and 1 share votes ‘No’, the proposal will fail.
If nobody votes, the proposal will fail.

Intention of the Marketing DAO

There have been several forks of the original Moloch DAO, adapted to achieve specific goals or mandates. The Marketing DAO is a Moloch fork explicitly intended to foster marketing efforts and to help better communicate Ethereum and Ethereum projects to the world. These efforts are intended to be both internal and external facing, but ultimately, the direction of the DAO will be decided by those with shares and therefore reputation in the DAO. We are always looking to support and partner with any aligned voices of the broader Ethereum community, be it startups, podcasts or publications and encourage their onboarding and participation in the DAO.

Using a DAO greatly lowers the coordination cost for a group of people to self-organize and distribute capital. Moloch’s ragequit mechanism and no quorum dependency lowers that even further. Only a DAO’s smart contracts are autonomous, the organization that’s formed is not. Actual coordination within benefits significantly from a good Summoner who acts as community builder and facilitator. Due to the simplicity of operating a Moloch DAO, it’s become much easier for people to understand DAOs and give them a try; this gives DAOs more real-world users to gather feedback from. The Marketing DAO is no different, and the experience gained through it can be used to iterate future DAOs or successors. At the same time, it is explicitly intended to coordinate marketing Ethereum activities in the process of iteration.

Closing

The Marketing DAO kicked off on 6th October at Devcon V meetup in Osaka, Japan with the support of the Moloch DAO team. It’s an initiative by a group of aligned community members. There was a design thinking session held on Mural and the top 3 concerns that participants thought could be addressed through a Marketing DAO were:

The perception that Ethereum will deliver too few real-world applications too late, allowing newer blockchains to dominate.

Ethereum is complex and has numerous value propositions.

Tied for third were:

• It is difficult for people to know which Ethereum decentralized applications to trust.

• Not enough simple memes for average people to share.

The Marketing DAO aims to address these through a focus on presenting Ethereum in a simplified and non- technical way, enabling it to reach a wider audience and to grow Ethereum as a brand.

The Marketing DAO code was deployed to the Ethereum mainnet on October 18th, and introductory material for DAO explanation and onboarding to the MarketingDAO has been drafted (of which this is a part). Please also see our Medium post introducing the DAO to the world, our social Hello World. You can also join the conversation on our supporters Telegram channel.

We hope to see your proposals appearing soon alongside ours in the DAO.