The Octopus DAO: Risk Mitigation and Early Designs
Exiting-appchain assistance is part of the Octopus Network design
Octopus Network recognized that the DEIP product team was in distress from statements made by unpaid employees over a period of two months. Marketing, operations, and core team members at Octopus Network reached out during that period but received no reply. We’d hoped to meet them at NEARCON 2022 but DEIP appchain leadership did not attend.
On October 7, 2022, DEIP Founder, Alex Shkor, posted a statement that DEIP would cease to maintain the DEIP token on NEAR Protocol and redesign their project. [Screenshot of DEIP statement below]
Octopus Network’s core team responded with the following actions:
1. Changed the DEIP anchor contract to disallow new validators/delegators
2. Disabled cross-chain transfers between the DEIP appchain and NEAR
3. Advised validators and delegators to unbond their OCT stakes immediately
These actions resulted in the staked OCT returning safely to delegators and validators outside the standard unbonding period of 21 days. In this emergency state, OCT token holders were restored manually by the Octopus Network core team in less than seven days.
DEIP token holders were not given a public statement by the DEIP team prior to that referenced above; the community responded with confusion and concern.
What happened?
While the Octopus community was surprised by this announcement, it was not entirely unexpected. It had become apparent to the community over the last few months that DEIP was experiencing internal struggles of some nature — communication from the DEIP team was rare.
While the DEIP team remained silent in their community channels, the community witnessed their CEO sustain open criticisms repeatedly for uncertainty around raised funds and the future of DEIP. When one validator left the DEIP validator set, some community members began to re-examine their stakes with DEIP, leading to allegations of unreported fundraising.
Exiting-appchain assistance is part of the Octopus Network design
Octopus Network has always anticipated that appchains will change to facilitate growth and expansion. This is why Octopus Network provides tools to support an exiting appchain should it choose to transform into a completely independent PoS blockchain, become a parachain, or exit Octopus Network if it deems necessary.
However, in order for Octopus Network to assist in a smooth exiting transition, we must be made aware of an appchain’s intentions. As DEIP chose to make this decision and announcement without notifying the Octopus Network Team in advance, we weren’t given the opportunity to assist with any support.
DEIP also announced it’s moved its community communications to DEIP’s Discord Channel to manage this transition — and has stated it will be forthcoming with transparency measures hereafter. All DEIP token-related questions should, therefore, be directed to DEIP’s Discord.
Related: “Many web3 startups will fail, but not all,” Octopus Network — Startup Fortune
The Importance of Appchain Transparency
Octopus Network does what it can to support Substrate appchains with direct technical and community support. In case of distress, all appchains are entitled to a 30-day coaching period from the core team, where no public validators are necessary, but an adjustment in the product, go-to-market, or business model is expected.
In some engagements on Twitter and Discord, DEIP had promised a transparency report (when challenged) to show the status of funds and legal registrations for DEIP. If you follow Crunchbase and the DEIP website, you’ll see that $4.3 million USD is their recorded investments.
However, DEIP leadership has not provided an update for initial investors, many of whom had their early investments locked into the protocol. Therefore, Octopus Network has committed to hosting the DEIP explorer for another two weeks to aid users.
Appchain stability was a key topic in the latest Octopus Dao Community Call:
“…Once a project is launched, a lot of unforeseen things can happen that may affect an appchain project’s success — depending on its founders, development team, budget, community, markets, and other external factors. …
We are bound to encounter a situation where a launched appchain runs into difficulty that impedes its ability to continue to operate. … Again — It’s strongly recommended that the appchain founding team keep an open and transparent constructive dialogue with its community.”
The Octopus DAO
The on-chain governance of the Octopus Network will be implemented based on AstroDAO. Octopus Network is committed to moving multiple decision-making processes into the Octopus DAO and therefore seeks participation from a wide range of community members on key issues — including the topics of appchain entry and exit.
More than 80% of small businesses fail in under 5 years, a rate seen in greater density in cryptocurrency and tech startups. The Octopus ecosystem was built on mitigating risk. While the project’s core team takes direct responsibility for onchain audits and utility, as a service provider, Octopus Network can’t take direct responsibility for appchains themselves. However, it is our responsibility to mitigate risk in the ecosystem and to help participants do the same.
The Future of the Octopus DAO
To assist validators and delegators in mitigating risk, an appropriate level of transparency from all appchain candidate teams to the Octopus community must be available to the community prior to launch — and remain agile and accessible throughout an appchain’s development — so that validators and delegators can perform their due diligence.
In designing this upgraded appchain transparency standard, we are requesting feedback, design comments, and feature requests for discussion during the Community Call with validators and delegators.
The next Octopus DAO Community Call will take place on November 8, 2022, where the Octopus Network Core Team will introduce new proposals to upgrade appchain onboarding with specific transparency requirements that must be met prior to launch and maintained throughout development.
In addition, we’ll discuss the importance of exiting-appchains in following the appchain exit protocol, which clearly requires transparent communication from the appchain team to avoid ecosystem disruption and community confusion. Whether an appchain fails or moves on, it’s incumbent upon the appchain team to make its intentions and challenges known for the mutual benefit of all parties.
Be the DAO
It’s up to the community and the pending Octopus DAO to begin the long-term goal of forming a set of social contracts that embrace promising projects. We are excited to find ourselves at a moment in our developmental history where the tangible hand of experiential knowledge can now guide the construction of these social contracts as they pertain to risk mitigation in early designs.
Do not miss the next Octopus DAO Community Call.
November 8, 21:00 GMT +8
To join:
- Open the link: https://discord.gg/BEQrN4Ya7C
- Enter the Discord channel and follow the prompts to verify your identity.
