Discussion around a DAO and its level of control

[giaki3003]

Greetings, fellow adventurers.

This post comes from a debate recently held on Discord, where we all acknowledged moving to a forum would be best.

I hope this thread makes it easier for people to stick around and follow the conversation.

Essentially, the Loot community seems now to be split between two different factions of people.

The first group supports the creation of a DAO with an associated token (perhaps AGLD, perhaps something else) which would take “control” of the Loot project and essentially give control of it “back to the people”.

The second group doesn’t support this, and would rather retain the current Loot status, which means no gatekeeping, no voting, no DAOs nor “democracies” of the people and so on.

Points I have seen which favor the creation of a DAO:

• “Verified” Loot projects being endorsed based off public DAO voting, so less risk on airdrops from the outer Loot community (e.g. malevolent derivative(s) and so on).
• A transparent and verifiable structure of control for the Discord channel.

Points I have seen which don’t favor the creation of a DAO:

• Historically, DAOs with an economic principle behind voting power tend to become plutocracies, so the risk of a rich Loot owner choosing everything is pretty high.
• Historically, DAOs without an economic principle behind voting power aren’t without risks.
• As of right now, the “official” discord isn’t really official and the current moderator team who volunteered doesn’t seem to be enacting any gatekeeping of sorts. If this were to happen, we, as a community, would easily be able to move to another discord.
• As of right now, the risk of a DAO seizing control and actively gatekeeping would be much higher, and recovering from something like that would be pretty tough.
• The principle of Loot is freedom to do anything - this is what makes it so revolutionary. Adding a DAO may risk going against this principle.
• Dom himself didn’t have a thought on DAOs and said he “would rather focus on building”, which leads me to agree with him. Building is the best place where we should be focusing our energies.

Please, let me know if I missed anything/feel free to add points pro/contra.

May luck assist you in your travels, adventurers.

[swox]

Welcome @giaki3003

Thanks for taking the time with this discussion. It’s an important topic

I’ll share my thought on this but first i need few hours maybe a day, in the meantime let’s see what other think about it!

[Cryptolemy]

Currently, I think a DAO with a high level of control would go against the principles of the community.

But perhaps if it was built around a clear set of principles, that could be avoided?

There’s a discussion on principles in the forum which might help! Community Principles and Goals

[Mrtyndall]

I need some time to get my head around this. Thanks for the post will respond soon.

[giaki3003]

Thanks for the suggestion.
Right now the main points in favor of a DAO quite-directly contradict point 4-5-6, although I’m open to debate on how a clear set of principles, lightened and re-written, could actually plausibly avoid such issue.

[Hierux]

We do need some way to organize, filter participants based on their skills, and reward those who are significant contributors (retroactively, or otherwise). What this looks like specifically is up for debate. I do think that without some sort of guiding framework we will miss the opportunity to align and build economies of scale.

That said, I’m not in favor of a DAO being a central “king maker” in terms of voting on specific projects that it supports or does not support.

Rather - I’m in favor of a DAO designed to organize efforts (e.g., project forums, JIRA boards, etc) and reward contributors. We should focus on bootstrapping during this phase and provide incentives to builders and organizers that outweigh the benefits they would accrue by churning out low-effort derivatives.

Coordinape was mentioned by Jihoz from Axie. Would be worth looking into some solutions like this.

[giaki3003]

I agree with your point about “a DAO designed to organize efforts” from the organizing point of view. My discussion is actually around the need of a DAO doing this.
But…

With regards to retribution, the people using the projects built around the Loot metaverse themselves will reward significant contributors, the point of assigning a DAO to this occupation specifically isn’t worth it imo.

And, about organisation, we already have a working forum without a DAO which can easily keep our ideas sorted and discuss-able by all, atleast for this stage. A DAO for purely organization-related choices seems (at least to me) quite a stretch.

[Veltoss]

I agree with those that don’t want a DAO that controls too much. A DAO that just organizes and guides projects would be best. A DAO can also help new projects get their feet and even fund them when necessary. We can’t do that if it’s entirely decentralized with no DAO as it is now. Not all developers have ideas that can be funded by selling NFTs, and not everyone is open to buying NFTs for the 500th derivative either.

The most important thing I think is making sure that as many people as possible can have at least some role within the DAO. One of the biggest concerns I see right now is that Loot holders are “rich dictators” who are controlling the DAO (which is one of many ignorant misunderstandings people have right now), and that can easily be fixed by giving people with AGLD a vote as well as maybe giving some voting rights to certain derivatives.

We could start with voting with Loot and AGLD and then have votes to include Derivatives in the voting potentially, with weaker power? This would give legitimacy to certain derivatives and make it more clear to some developers which versions of each idea (which version of characters or abilities) people prefer, and give people who got into the bigger derivatives like Realms early on a chance to participate.

[giaki3003]

I would agree with the vision of giving voting powers to derivatives/tokens (eg AGLD) except its essentially moving the issue farther away. Both still hold a monetary value and both can essentially be controlled by rich entities.

Giving legitimacy to some derivatives and not others also only pushes the issue of Loot not being as “free” as initially was perceived again, so that is also something I wouldn’t personally support.

Imo, the only feasible DAO which would align with the core values of the project would be a synthetic Loot DAO, which would completely avert the monetary issues and truly be a free portal for all.

[scatterbrained]

Loot is, and always will be, fully decentralized and headless. That decentralized ecosystem could still house one or several DAOs each with their own mission, principles, and governance structure. I am thinking about a first LootDAO as akin to the Ethereum Foundation, an org meant to support the project and ecosystem without “owning” it.

My personal take is that using AGLD as a governance token would be a good way to broaden participation to include interested synthetic Loot holders. Since AGLD was initially distributed to Loot bag holders it is in some senses a fractionalized Loot token. It’s already being used to vote on certain narrative proposals and has gained a lot of traction in the broader community.

[giaki3003]

I can agree with this stance as long as LootDAO doesn’t take the power of “certifying” projects, and AGLD is actually properly distributed to all participants. Afaik, right now, Loot distribution isn’t the best for a DAO setup of this type (re: plutocracy concerns)

[scatterbrained]

One other thought-- the challenge of equitable DAO governance and preventing plutocracy is one that the broader DAO movement is also reckoning with. In my opinion it is one of the single most important challenges facing the broader crypto ecosystem. As @giaki3003 points out above, using AGLD widens participation (since it’s divisible and more liquid) but is ultimately just another capital structure gating governance participation. The most equitable approach would be for every synthetic Loot holder to be given voting rights, but then it becomes difficult to prevent fraud from spinning up dummy wallets to influence proposal outcomes. Ultimately this is a challenge that goes well beyond just LootDAO… I always come back to the need for on-chain identity to assign equitable voting power to all individuals without relying on wallet addresses.

[giaki3003]

Exactly my thoughts. All DAOs (much larger, older and more influential ones than the one we’d want to build) have struggled and are struggling with this fundamental issue. I don’t see why we should also choose to struggle with them when Loot was made exactly to avoid this and actually be free.

[icarus]

Reposting some various options here:

Overview:

As the Loot community builds and grows in cultural importance, various challenges will arise. Some of these have already been illustrated in the past week. $AGLD, a token given as an airdrop to all Loot holders, is up 1400% on the week. To this point there has been no proposal on the future utility of the token or if it should be a part of the community roadmap. While this may appeal to some (future projects should only adopt the token if they want to), it illustrates a real challenge for the community as those outside the project are now trading $AGLD and have viewed it as the de facto currency of the Loot Project. Without some level of community feedback, the risk becomes that speculators determine which things get built and with what.
At the same time, the singular virtue of Loot is permissionless building. This must always be cultivated. The goal of this essay is illustrate various potential approaches.

The Evo(Loot)ionary Approach

One path that can be forged is to follow no path. In this instance, builders continue to decide what gets built and the only formal community input is whether the community adopts the project. The community evolves as it adopts projects informally and best projects survive. This would maximize the freedom to build anything as it would be truly permissionless. It also allows for product-market fit to not be overfitted to some communal ideal of what Loot should become. The community finds itself as it builds.

Guilds

Guilds serve as an intermediary step between the evolutionary approach and a more formal DAO structure. Guilds establish themselves as sub-communities within the project and can organize themselves as they best see fit. They can vote on guild matters, build for their sub-community, adopt a currency (or not) and continue to make decisions at the local level that best align with their interests. Regardless of any decision about an overarching DAO, these will continue to thrive. Some potential problems: will the Divine Robe Guild de facto serve as the driver of community decisions simply by virtue of economic power? One fear that the freedom maximalists have is that a DAO turns into a plutocracy. Is there already a risk of one being formed?

DAO Governance

Any discussion of a DAO should be separated from discussion of AGLD initially. AGLD does not need to be adopted as the governance token and thus should not be assumed as the de facto token if a DAO was formed. Further, I will propose a DAO minimalist framework in addition to a DAO maximalist framework.

DAO Minimalism

One approach that the community could take is to form a DAO that has tight guidance around the decisions it makes. The exact things a DAO should decide should be left for debate by others but suffice to say determining rewards for builders, economic alignment of the community, and other such decisions may be best decided by a formal governance structure. Importantly, this structure need not be linked to a token that has already been issued or even a token at all. One option may be to proportion votes to guilds. Another may be to allocate votes to builders, writers, and artists in accordance with community adoption of projects. One potential problem is that in deciding very little, the DAO decides nothing and is too ill-defined to make decisions around tokenomics, rewards, or grants.

DAO Maximalism

The last approach would be for a DAO to be established with the power to determine the overall direction of the community. It would have final say on sanctioned loot projects, tokenomics, etc. The DAO would be equipped to make decision that come with the full sanction of the community. As with all DAOs, there is a risk of a decentralized organization having concentrated power amongst several holders and centralizing decision making.

Some Closing Thoughts:

While I have attempted to layout various options, I am sure this is not exhaustive. Further, I do not mean to suggest that the community must decide soon what lies ahead. Loot is an infant project. Its spontaneity is its greatest asset. However, it would be helpful to gauge community sentiment through a survey of sorts on various topics. First and foremost, we must deal with AGLD and determine how the community views it going forward. I propose that we set up a way by which we can collect data on how the community currently views itself and matters of collective interest.

Whatever path we go, I look forward to forging it with the adventurers. Onwards.

[Russell]

To DAO or not to DAO: This is the Wrong Question

Current debate around governance is straying away from what I think is exciting about the Loot experiment in the first place.

Hear me out. (only a 1 minute read)

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What is Loot?:

A basic building block which developers can build upon, artists can create about, and community can be formed around, in a permissionless and trustless way. The value of Loot comes from what people create on top of it.

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What would a DAO actually control?

Nothing. Nothing, that is, unless the devs, creators, and communities choose to give power to the DAO.

Would the creation of a DAO immediately give loot holders the ability to determine the issuance schedule of $AGLD?

No.

Not unless the 3 of the 11 controllers (edit: perhaps “stewards” is a better word here, controllers makes it sound like I believe like they’re malicious, which isn’t the case!) of the $AGLD contract choose to use the “transferOwnership()” function, to transfer ownership of the $AGLD contract.

Would the formation of a DAO give that DAO any authority over, or ability to enforce what gets created, what’s canon, and the direction the project goes?

No.

Not unless the DAO convinces enough people in the ethereum ecosystem (whether they’re loot holders, or not) that the DAO’s votes and decisions have merit, or “legitimacy”.

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We don’t need to vote, or check for consensus, before creating (or not creating) a DAO.

If you want to be involved in governance, you can create a DAO. You don’t have to ask.

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If you want that DAO’s governance to be able to control $AGLD, you’d need to convince at least 3 of 11 of $AGLD’s current controllers that the DAO you’ve made is the right place to transfer ownership status of the $AGLD contract. Maybe you don’t like $AGLD, and want something different. You’re free to create that too!

If you want to direct which way the project goes, your DAO should focus on convincing devs, artists, and the broader community to follow the standards your DAO has laid out.

There could be multiple DAOs, competing and coexisting. I hope this doesn’t sound cynical, because I’m personally excited about this, and find it super interesting!

[lotm]

@giaki3003

“Verified” Loot projects being endorsed based off public DAO voting, so less risk on airdrops from the outer Loot community (e.g. malevolent derivative(s) and so on).

This is an important point that I think needs to be addressed in the correct way to prevent spam from negatively affecting the Adventurer experience while not being too gatekeepey. I made a post about token lists for derivatives here which I think will be part of the solution. The DAO could maintain a derivative list that token holders can vote on.

[scatterbrained]

Would the creation of a DAO immediately give loot holders the ability to determine the issuance schedule of $AGLD?

No.

Not unless the 3 of the 11 controllers of the $AGLD contract choose to use the “transferOwnership()” function, to transfer ownership of the $AGLD contract.

Good point, transfer of the $AGLD contract to the DAO would need to be a requirement of making AGLD a governance token.

[icarus]

Great points. It seems to me that most of the problem stems from a project that is de facto the currency of Loot trading on exchanges with no monetary policy or roadmap on accruing value to builders. In that sense you’re right that the DAO doesn’t change that (I like a marketplace of DAOs!). In some sense, we’ve already got that through guilds the meta-point is trying to gauge if this is good enough or if there is a desire for more. Additionally, Will has already made known they want community feedback on what’s next and I think AGLD is a perfect opportunity for us to come to some understanding of what the community values going forward.

[ZKTruth.eth]

I agree that the best use for a DAO is to fund new projects to be developed for loot holders. If we want to maintain the strength of loot, then we want people building high quality projects that favor loot holders and those derivatives that are loved by the community of loot holders.

What we don’t want is someone with a lot of accounts controlling the vote and sending our treasury funding to themselves or their friends.

Maybe voting should be tied to an loot holder’s contribution in AGLD to the DAO treasury, and then the treasury gold could be paid to developers to build the games we’ve voted on from among what is proposed. What if after you contributed 100 AGLD to the pot, you had 100 yes votes you could spend on one or more proposals? And when a proposal passed, it was funded with an amount of AGLD equal to the total number of yes votes it got? So you would slowly exhaust your votes as we spent the money. And if it were a blind vote, throwing all your AGLD into one single vote couldn’t guarantee you to win that vote, or to win a vote that receives a big payout, because you won’t yet know who else voted or how many votes they cast.

It would force people to put some skin in the game when they vote. That’s just a rough idea to put out there in case anyone wants to shine it up and build on it. I haven’t thought through all the possible game-theoretical outcomes of that kind of voting system.

[Katana-and-robes]

The AGLD airdrop is analogous to a vampire attack

If loot wants a DAO, though it seems to me that we don’t need one yet, then one Loot = one vote would be more aligned with Loot holders.

The interests of the $AGLD DAO will diverge from the interests of Loot holders as the two token distributions diverge post-airdrop.

$AGLD governance only has as much power as we give it legitimacy. I don’t see why to give it any.