Kick starting stage 2 of Decentralisation of 1inchDAO

Authors: 0xBaer,
link to the original doc with comments

Tl;dr

This proposal discusses an operational structure, seasonal approach, and use of 1INCH tokens in the DAO.

Introduction

1inch DAO achieved a significant milestone on 16 November 2021, as the 1inch foundation underlined its strategies to kick-start stage 2 of progressive decentralisation. Since then, we have grown significantly. We have a functioning treasury and a new proposal for forming a grants committee which will be submitted to Snapshot for a final vote from the token holders very soon.

This made me think about the path we (as a DAO) must take to successfully complete stage 2, underlined by 1inch foundation.

In this post, I would like to address the following:

  1. A hierarchical structure and operational decentralisation.
  2. Things the DAO could achieve
  3. 1INCH token as the currency for the DAO.

Functional decentralisation of 1inchDAO

The rise of Dex Aggregators like 1inch has made me think if there is any real need for different protocols to spread their liquidity across different DEXes. Or should users look for different DEXs for price discovery? 1inch, the leader in the Dex aggregation space, has often collected more total volume than Uniswap. Therefore, the 1inch DAO is in the best position to govern the liquidity space as we channel the trading volume of these underlying DEXes.

Even though we are a protocol DAO, our participation within the 1inch network is minimal. In a better way, we are a collective of like-minded people experimenting with the decentralised economy revolving around the 1inch Network, a DAO focused more on the social aspects of the 1inch Network, a social DAO.

Talent pools in the DAO

To successfully grow as a DAO, we need to onboard quality participation from the community who will participate in debates, table new proposals, and build new projects under the 1inch banner. Organic growth of the DAO could be facilitated by making specialised pools of talent with skill sets like writers, developers, marketers, designers, etc.

In the DAO ecosystem, these talent pools are called ‘Guilds’ and act as an open marketplace to source talent. Guilds will also streamline the onboarding process of new joiners as they could align themselves with their area of expertise and interst in a robust way and start contributing. Furthermore, they decentralise the DAO by creating resilient economic engines that could run experiments in parallel to help the DAO evolve further.

Operational Hierarchy of the DAO.

The DAO could have a flat hierarchical structure where the talent is divided into different Guilds, working groups, projects and a Grants committee. These guilds and projects, funded by the Grants Committee, are open to any 1inch DAO member and will not be discriminated against in any shape or form. The main aim of the Grants Committee is to disperse seasonal funds to internal and external projects without over-clogging the governance process. It also acts as the primary vetting group within the DAO for sustainable funding of projects and the Guild. Finally, it ensures that the money allocated is used sustainably.

Membership Hierarchy

The concentration of power in a few hands is against the ethos of Web3 and crypto. This made me think about the possibility of decentralising the DAO membership without compromising the system’s security. I think the DAO should be open to everyone; however, the token holders should have more power in the game. After all, this is a DAO of 1INCH token holders. Furthermore, roles that require expertise could be assigned to dedicated and trustworthy people rather than being open to anyone.

Why do we need a membership hierarchy?

‘The mantra: contribute to level up in the DAO’

As I have explained above, the best and most obvious reason for a membership hierarchy is to protect sensitive parts of the DAO from bad actors and Sybils. The other reason is to encourage healthy competition among the contributors.

Members will be encouraged to contribute and level up in the DAO to earn social authority. This authority does not come as hard written rules. Instead, it comes with understanding and familiarity with the DAO, their significant time commitment, and the constant help they give their members.

Implementation of Membership levels

The best permissionless way to structure a membership will be to introduce “membership thresholds”. But making a membership threshold is really hard, as we don’t want it to be too high where only 1INCH whales could join the DAO. Nor do we want to make it too low that it doesn’t make sense to have a threshold. A 500 1INCH requirement for the primary membership level called ‘Enthusiast (Member)’ could be a good starting point. This would serve to prevent ‘paid roles’ from Sybil attacks.

Some roles within the DAO need a higher level of trust and administrative guardianship, like Discord server modes, Notion database managers etc. These roles could be shared among a group of active members and community leaders who have a ‘contributor status’ and are vetted on their commitment, responsibilities and contribution to the DAO. s

A smaller circle of people working full-time with the DAO and have fixed compensations for their roles could have ‘core contributor’ status. They Will hold very sensitive permissions in discord, forums or 1inch Pathfinder algorithm and API etc.

The ‘Core contributors’ role could only be given after going through a thorough vetting process but could be decentralised at a later stage. Read more about ‘Core Contributor’ here.

Membership within the DAO

Being a member of the 1inch DAO is very different from being bullish on the 1inch protocol or being a visitor. The members proactively commit time - a scarce resource - and help us evolve. There should be extra membership perks for being in the DAO. We need to iron out some additional benefits of being a member of the DAO.

Process of getting a membership.

Enthusiast (Member): Anyone who holds 500 or more 1INCH tokens.

Contributor: Any existing ‘Contributor’/‘Core Contributor’ tag holder can nominate an ‘Enthusiast’ for the Contributor role through a poll in the discord server with 80% majority.

No one can self-nominate themselves for the role, and the nomination from an existing Contributor should be based on the commitment and responsibilities of the Enthusiast (Member) to the DAO.

Template for poll

‘Name of the Enthusiast: John Anon

Sponsor: 0xBaer.eth

Second: Vit.eth

Reason for Nomination:

John Anon has shown his commitment to the DAO through his contributions to the Newsletter Pod of the Writers Guild. He has delivered more than 15 weekly newsletters, driving tremendous attention to the DAO and 1inch Network.

Core Contributor: Any contributors who work full-time with the DAO and are a backbone for the evaluation of the DAO could be nominated by other Core Contributors. The nominations should follow the Proposal lifecycle explained in the governance process.

All genesis members who have contributed significantly during the initial phase of the DAO will be given the Core Contributor status.

Offboarding Contributors.

  • Any Contributor’ who cannot commit up to the requirements and isn’t active in the DAO is morally obliged to step down from the role with an official announcement.
  • A Contributor’ can be forced to offboard through a poll with 70% in favour of the proposal and should have a quorum of 80% of members with Core Contributor status.

The overview of the Membership Hierarchy within the DAOs will be:

Membership level 1INCH token held Notes
Guest 0 All members joining the DAO will automatically receive a Guest Tag, regardless of the token held. Can vote on the forum and on Snapshot if they have any tokens.
Enthusiast (Member) 500 Any community member who holds a minimum of 100 tokens. Will have access to members-only channels of the DAO, they can hold ‘Paying roles’ in guilds and projects.
Contributor 500 Any Enthusiast tag holder nominated by other ‘Contributors’ due to their valuable contributions, commitments, and responsibilities to the DAO. The nomination poll needs to have a 51% majority in favour of the nomination
Core Contributor 500 Contributors who have dedicated an enormous time to the DAO and hold some critical positions that tie the DAO to the web2 world. Should be nominated by Genesis members/ existing core Contributor role holders and elected to the status through a snapshot vote.
Genesis members 500+ Members who have made a significant contribution to the DAO in kick-starting Stage 2 of decentralisation, will automatically be granted a ‘Genesis member’ role. They are automatically given the Core Contributor status. They will not have any extra power within the DAO outside their positions.

2. Things DAO can achieve.

A quick tl;dr: This section talks about the Seasonal approach and things we could achieve.

As we have mentioned in the introduction, we are more of a Social DAO than a Protocol DAO that only focuses on protocol governance. We could either embrace this and start focusing on the social aspects or be more proactive in the tech specs. The best approach in our scenario will be to have a bit of both, we could actively focus on the overall marketing, community building, anything and everything in between but also push out new upgrades to the 1ich network.

Let’s divide our focus into some important groups: Media, Defi, and others.

Media

Embracing the social aspect of the DAO, We could place ourselves as a Media hub and extend our outreach to new horizons through educating people about Web3, decentralised finance and the role of 1inch in it. We should not be just publishing blogs with ecosystem updates Still, we should be sending out newsletters, making cool, easy-to-understand videos and hosting AMAs with industry leaders. These strategies will not only help us in increasing the initial reach of the DAO and onboard new contributors but also divers more users to the 1inch network with increased revenue.

Defi

1inchDAO is a protocol DAO. Through instant governance, we have the ability to control some of the important parameters of smart contracts. But we should not just limit ourselves there. Instead, we need to develop the network further by suggesting and introducing network improvement proposals, building new products, etc. Our community has collected some exciting Ideas we could implement but here are some I would like to see.

  1. Gasless transactions.

  2. The 1inch Foundation has been offering Gas refunds through their Gas refund program for a while now. This will motivate a lot of people not to fear the gas cost and use Ethereum Mainnet but will not favour those who don’t have any ETH in their account. There are a lot of SDKs and methods to implement gas-less DEX transactions, so it will be cool to offer this feature even/maybe as a DAO membership perk.

  3. Maybe a new weighted pool for stables, let’s grow the ecosystem to a frontier.

Others

Cool New tools for the DAO ecosystem

  1. The DAO ecosystem is very nascent and needs a lot of tools to develop. We could build tools around contributor compensations, treasury management, DAO to DAO swaps, etc.
  2. Inbuilt Integration with GameFi projects
  3. Exclusive merch for DAO members.

Seasons in 1inch DAO

In my initial proposal for the Grants program, I have talked about the seasonal approach the committee will be having. For ease of coordination, the DAO should also brake down its operational cycle into chunks, Ideally, 3-month periods that run alongside fiscal quarters. These periods are to make short and precise goals for the DAO to evolve and evaluate its growth, improve things that haven’t worked and boost the successful products.

In every season the DAO could propose a budget to the community, analogous to the government submitting a budget to the parliament or the US federal budget to the congress. The budget will underline what the DAO wants to build over the next three months and also its plan for development. These seasonal budgets could be validated by the 1INCH token holders through the snapshot.

3. 1INCH token as the base currency of the DAO.

To facilitate the previously mentioned work and further drive the adoption, we need to build an economy around the 1inch token. The structures discussed above of Guilds, pods, and working groups will help test the idea of 1inch as a token for payment, thus increasing the utility even further. Interestingly enough, our treasury currently has ‘0’ 1INCH tokens to disperse, as all of our assets are in USDC.

Having a treasury in USDC is great to protect from price volatility but we are probably the only DAO which doesn’t have its own native token in the treasury. Therefore, periodically converting a portion of the swap surplus to 1INCH tokens will add some buying pressure to the token and fill our treasury with necessary tokens for allocation.

The main aim of this experiment is to develop a culture of a 1inch token = 1inch token mindset where we will not be calculating our rewards in terms of stables.

Building a functioning economy around the 1inch token within the DAO ecosystem will help us introduce newer token management strategies hence ensuring the token to be ‘bear-proof’ and sustainable.

Strategies.

  1. Bounties: Bounties are a great way for driving contributor engagement within the DAO, Bounties paid in 1INCH token will distribute the voting power to a wider range of people.
  2. Coordinape rounds: The activities and contributions of people who aren’t compensated through a paid role should be compensated adequately. This could be archived through regular Coordinape rounds where the members distribute ‘Give’ tokens to their peers.

Contributors sign up for rounds and allocate ‘Give’ tokens to fellow contributors. At the end of the round, the received give tokens will be converted into percentages which are then used to distribute the allocation pot. So, for example, say a contributor received 1% of all ‘GIVE’ tokens, and we have a pot of 10k USDC, he will receive a 1% of the pool, i.e. 100 USDC. The ultimate aim of the coordinape is to encourage contributors to contribute. More info: Coordinape | FAQ.

Conclusion

As a DAO and crypto, we are currently in a make-or-break phase. The steps we take and the path we follow will determine if we must evolve as a Decentralised Autonomous Organisation and build an inclusive structure. This as a whole will not got through the snapshot, but we will try to implement some of the important aspects in seperate proposals

5 Likes

Defining relevant guilds is a great way to onboard high-quality talent, it’ll help them better navigate how they can contribute to the DAO from the get-go and expand the operation form the bottom-up.

Would we consider adopting certain DAO Ops or HR tools as well to optimize the coordination effort? For example, if we want to invest in talent, a fair and structured compensation model should be considered. We can then select appropriate tooling like Coinshift for payroll management. I believe they just integrated w/ Superfluid so DAO talent can get paid in real-time streams.

2 Likes

I just saw this due to a recent comment, but I thought I’d provide my 2 cents since it’s a discussion.

Operational hierarchy

Interchangeable terms: Guilds, Pods & Working Groups

I agree that splitting the DAO into separate guilds/pods/working groups is the path forward. We have seen many other DAOs employ this tactic, and it’s a great way to increase efficiency within a DAO. We recently introduced this in Element Finance and enabled people to contribute much more quickly.

However, I disagree with the idea of the grants committee having ultimate control of fund disbursement.

“The main aim of the Grants Committee is to disperse seasonal funds to internal and external projects without over-clogging the governance process. It also acts as the primary vetting group within the DAO for sustainable funding of projects and the Guild. Finally, it ensures that the money allocated is used sustainably.”

I can see where you are coming from, but from what I understand, you are relying on the grants committee to fund working groups. This opens the doors to many layers of collusion.

Not only that, but the entire DAO would rely on the central grants committee to have the ability to evaluate a working group/guilds ability to decide whether they should receive future funding. Is a grants committee capable of handling that?

Membership hierarchy

I disagree that someone needs to hold 1inch token to become a contractor or work for the DAO. Imagine having to hold shares of stock before being eligible for a job at Apple/Microsoft etc.

Not only does this create a barrier for those from low-income countries, but this goes against the whole ethos of Web3 and digital work. Permissionless and borderless. This would also serve as a deterrent for potential contributors for 1inch DAO and cause the DAO to lose potential talent.

Membership & Operational

  1. When can someone join a working group?
  2. If they need a membership, what membership level do they need?
  3. Wouldn’t it be easier to have someone present a working group and let that team be onboarded rather than onboarding specific contributors?

There are a lot of vague areas between the operational & membership hierarchy, which make it somewhat confusing to understand your place as a contributor. Onboarding specific contributors with a certain amount of 1INCH tokens significantly reduce the applicant pool.

2 Likes

Hey @Bobbay_stablenode, Thank you for your input. The ideas from @0xBaer here could be considered experiments, and the DAOplomats will be focusing intensely on elements with the high priory.

Thank you, we also believe that the DAO is more efficient when dedicated groups with specific skill sets work together. Just like different work streams in a normal entity. But here, we might be a bit focused on a startup approach. People have to wear many hats, and high-level decisions always run through the entire team (here, the token holders).

The grants committee reference is about @0xBaer’s previous 1RC8 which looks into many of the things you have expressed concern about. The GC proposal is dropped as we thought it might be a little bit early for the DAO for a GC.

This post is not calling to restrict contributions to members with tokens. Anyone with ‘0’ 1INCH can come and join the discord, join the working groups and start contributing. These contributions will be paid ideally in 1INCH (as a method for distribution of ownership to individuals). Onboarding external groups isn’t a great idea. They will be like stocks migrating from place to place, coming in masses and exiting together. We are trying to build a foundation of core contributors working for the DAO.

Yes, I agree with you; people from low income who can’t buy in this amount could also change according to market conditions. The membership status will only give access to membership perks. Like access to closed events or premium publications, we only want contributors who believe in the entire mission of the DAO to hold roles in DAO. These will be elected roles like guild coordinators or project leads. It’s not ideal to have people looking around to fit those roles since anyone can hop into the server and start contributing.

Trust or reputation levels in the DAO. have nothing to do with the overall thrust of this person in a more expansive web3 space. The minimum requirement to be on the reputation ladder is 500, but we can reduce the minimum airdrop amount to 250 or remove it entirely.

1 Like

Sounds good, would love to work on some of these ideas with the @DAOplomats.eth Happy to work together and present an idea to the DAO on how we should move forward.

It’d be great to create a process that enables contributors to easily join and contribute to the DAO.

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