From Incubation to Growth
Activating the Engine for Sustainable Open Finance
PrimeDAO’s mission is to facilitate wide adoption of open finance by coordinating and cultivating projects that promote safety, reliability, liquidity, and open access, while avoiding centralized appropriation of critical financial infrastructure through decentralized governance.
On September 17th, 2020, PrimeDAO was introduced as a builder collective committed to the systemic advancement of open finance — a.k.a., DeFi. In response to this, media outlets, ecosystem enthusiasts, and builder squads passionate about DeFi have approached the early members and stewards of Prime asking the same question: “How can I get involved?” Answering this requires an understanding of Prime’s development phases, and the governance challenges that must be solved to seamlessly transition from Prime’s Incubation to Growth phase.
Onwards to On-chain Governance!
Prime’s projected development is segmented into three separate phases, each with its own characteristics, objectives, and strategies. These phases form the scaffolding of an ever-evolving strategy that guides and aligns stakeholders. Although decentralized autonomous organizations (DAO) like Prime are architecturally decentralized, they still require leadership and orchestration to accomplish common goals and generate value. Without shared strategy — and skilled communicators to herd value creators — Prime’s ecosystem participants can’t be expected to understand where and why to focus their energy. This type of confusion is a form of organizational myopia called the tyranny of structurelessness.
The Incubation phase did not start with the announcement of PrimeDAO, but began Q2 2020, with the creation of a working group at ETHDenver. The initial stakeholders collectively created the PrimeDAO litepaper, and aligned on a general outline of how to initialize Prime. This founding working group has coordinated via private group chats, private meetings, and alignment through mutual contribution. With the public revealing of Prime, we take the first step from off-chain governance to on-chain governance by deploying the first version of Prime to the xDAI chain. This deployment creates an on-chain forum for its ecosystem governors to collaboratively align and legislate agreements. This first DAO is deployed on the DAOstack framework and utilizes holographic consensus for governance. At this point, there still isn’t a PRIME token, but only Reputation (REP) — which is non-transferable voting right — as the source of governance truth.
This step from off-chain to on-chain governance is a big one. As an on-chain entity, Prime can govern a treasury, where funds can be exchanged to workers or service providers for their efforts. It can govern smart contract protocols and interfaces, where parameters can be adjusted, contracts can be updated, or decentralized ENS websites and applications can have their content managed. Or it can simply align on proposals that formalize a social consensus, such as norms and organizational protocols — like a code of conduct. Prime can do other things, such as call smart contracts, but let’s let this sit for now.
In Incubation, Prime will not have significant funding — so no significant treasury is at risk. This makes xDAI the perfect chain to use, because of the tradeoff made between its low cost transaction speediness and security model. That is: xDAI is quick, and cheap to vote on, but it is not well-suited at this time for securing PrimeDAO’s expected post-IDO treasury. Furthermore, in Incubation, Prime does not explicitly need to govern any smart contract protocols or interfaces — although the primedao.eth domain could be immediately transferred to a mainnet deployment, it is within the mandate of the Prime Development Foundation to maintain its content until the Growth mainnet DAO deployment.
With this on-chain deployment, a second cohort of ecosystem governors have been invited by the founding working group members to join Prime based on two criteria: first, their exposure and proven expertise with DeFi or DAOs, and second, their passion for the project and alignment with its aim to support the values of sustainable open finance. They are skilled domain experts who will add value to Prime, cementing its industry position as a builder collective and open innovation network.
Compared to the litepaper, there is one key difference between what was planned and what has been put into practice: the Foundation’s share of Reputation has been considerably reduced. After thinking it over, it seemed appropriate and in the spirit of Prime’s mission to democratize DeFi. There is one other thing to consider with this distribution: the earliest contributors of Prime have received higher voting weights compared to the newcomers, to fairly represent their historical contributions to the project. It’s expected that the second cohort’s share of authority will increase over time as they actively contribute to the project, and formalizing this process is an immediate legislative need for the Incubation DAO.
A final note: when Prime transitions to the Growth phase, a planned doubling of REP is planned for participants of the upcoming IDO, who will be able to lock PRIME to generate REP. This will fully democratize the DAO, synergistically aligning this preliminary forum of builders and domain experts with its upcoming skin-in-the-game token holder community.
Upcoming Proposals
In any governance system, the earliest legislation shapes the future of the organization, creating path-dependent outcomes that are difficult to adjust. In order for Prime to put to practice democratized open finance, it must formalize and align a set of policies and objectives that align it, transforming from an ad hoc assembly of experts into a coherent governance body.
Prime must ratify proposals concerning:
Rewards for early ecosystem contributors
Certain individuals and builder groups have already begun to contribute to Prime by helping recruit and organize its early ecosystem, such as its team of ecosystem stewards, or early builders who are already simulating, developing, documenting, and auditing its launch mechanics, protocols and products. These persons and groups should be duly compensated.
Joining Prime as an Incubation governor
As Prime gains momentum in Incubation, more individuals and groups will want to join and shape its formative governance. To this end, an onboarding protocol is needed that fairly and transparently outlines expectations for each individual and group. A proposal will be submitted to Prime that formalizes this onboarding process, offering an organized and straightforward process for contributors to get involved.
The mechanics and offering of the upcoming token offering
A proposal will be submitted to lock the mechanics and distribution of the PRIME IDO, expected to occur in Q4, 2020.
A code of conduct, proposal submission protocol, and other social consensus agreements
Social consensus is the process where proposals are ratified on-chain that enforce an off-chain consensus. While these proposals don’t trigger any on-chain mechanics, they create a culture of accountability by creating shared expectations. Prime needs a number of social consensus proposals to solidify its desired values, culture, and architecture in Growth. These include a code of conduct, to help define and align its governors, and a structured proposal submission process, to avoid the tyranny of structurelessness. In the Growth stage, Prime is expected to not have one, but two DAOs running in parallel on the xDAI and Ethereum blockchains, and an agreement is required that binds governors to follow the governance mandates of the xDAI DAO for the Ethereum DAO — unless, of course, an alternative architecture is proposed.
The redistribution of Reputation in Growth
All early ecosystem partners who have joined Prime’s first and second cohorts have done so with three conditions of participation outlined: first, one designated member from their project or team should participate in Prime governance as an active governor, second, they will support Prime in public channels, and third, a dedicated member will interface with the DAO’s collaborative network to help solve development challenges as it advances its DeFi suite of products and protocols. The DAO must collectively determine how to hold accountable free-riders who do not adhere by these criteria, as well as determine the appropriate REP rewards to empower its most active and advantageous supporters.
Refrain: Call For Collaborators
Prime is a coordination engine for systemic DeFi advancement. While its first iteration revolves around its first product — its smart router, also known as a DEX or liquidity aggregator — its product horizon is near-endless. To this end, Prime is actively looking for individuals, builder squads, and DAOs who want to collaborate to move open finance forward in a safe and inclusive fashion.
👷🏻♀️ Technical and ecosystem builders who want to create proposals to Prime should join Discord and introduce themselves in #contribute. Perspective builders are invited to check out the product and squad channels as well.
🌳 Community supporters can support Prime by amplifying its online presence and sharing their respective skillsets in the #contribute channel — there’s lots to get done, and everyone can help!
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