Subscription DAOs

This post was inspired by Philip’s suggestion that we need something that works economically even if only a small number of people are using it, Luke’s suggestion to create a bonding curve for Subs, Zefram’s post from two years ago about the failings of Aragon to get token holders to participate in voting.

Could we get greater participation from DAO members if they paid a subscription fee to participate? They should take voting more seriously if they’re paying for that privilege (and not just interested in holding a tradable asset as in ANT).

The DAO will be reestablished every three months, with a new issuance of voting tokens based on donating Subs, supplying liquidity to the Subs / DAI pool, and sponsoring verified users.

Before each DAO rebirth, two-thirds of the voting tokens for the next DAO will be assigned to the current DAO to distribute. Some will be distributed to existing participants based on their participation level; some will be distributed to new and existing participants based on the number of verified users they have sponsored in the last three months. (The square root of this number should be taken to estimate the voting power of the sponsored users a la Penrose.)

One-third of the voting tokens for the next DAO will be awarded automatically by a smart contract that accepts Subs and liquidity reward tokens for the three months leading up to the start of the new DAO. The proportion of voting tokens allocated to Subs donors versus liquidity providers is set by the current DAO based on perceived needs for donations and liquidity. Subs or reward tokens deposited into the contract will result in voting tokens being minted proportionally to the square root of the number deposited.

These new motivated, engaged DAO participants will be more likely to vote on project-based rather than department-based expenses, but there may be a mix of the two. They may engage in conviction voting. They may send funds to Hedge for Humanity. The funds of BrightID are at their disposal.

Instead of recreating the DAO periodically, we can distribute more voting tokens in a reputation-based DAO.

Each period (for example, 3 months), each member can increase their voting tokens by a maximum of 5%.

The components for increasing one’s voting tokens are:

  1. Active participation–as judged by other token holders. (up to 3%)
  2. Providing liquidity–could be represented by locking MetaNode tokens earned for providing liquidity. (up to 3%)
  3. Sponsoring verified users–could be represented by locking MetaNode tokens earned for sponsoring verified users. (up to 3%)

If the % of new tokens earned is above 5%, it will be rounded down to 5%. This means that just by being an active participant, a DAO member could increase their voting tokens by 3% every round; staking MetaNode tokens also could increase this up to a maximum of 5%. A non-participating member could still increase their voting tokens by 5% if they were to lock enough MetaNode tokens.

Voting power increases from locking MetaNode tokens would be compared quadratically.

New members can be added by demonstrating a willingness to

  1. Participate and represent the community
  2. Sponsor verified users
  3. Provide liquidity

The weight of these three activities in determining a new member’s eligibility can vary according to the current needs of the DAO.

New members added after the initial period will receive new tokens equal to 60% of the average amount of current DAO members.

To avoid overloading the term “period” (since Aragon DAOs have voting “periods”) let’s use “epoch” to describe the time intervals when voting tokens are increased.