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PermaDAO in Practice: From Human Governance to Fully On-chain Governance
Author: Outprog@ Contributor of PermaDAO
Translator：PermaDAO
Reviewer: Romain @ Contributor of PermaDAO
Summary
PermaDAO is exploring the practical transition from traditional “human governance” to fully "On-Chain Governance." With Bitcoin and Ethereum communities serving as examples, Decentralized Autonomous Organizations (DAOs) are flourishing with the support of blockchain technology. While DAO's have excelled in creating simple rules, navigating collaborations entailing intricate regulations remains a complex challenge. The ultimate goal for DAOs is fully on-chain governance, a realization that requires a prolonged evolutionary process. PermaDAO, recognizing this, will release the HALO governance token, progressively advancing towards a fully on-chain governance model through "meta-governance concept.”
A Decentralized Autonomous Organization (DAO) is a form of organizational structure embodied through open-source code, controlled by shareholders, and impervious to the influence of central authorities. Due to the immutable and traceable blockchain smart contracts features, DAOs have received robust technical support and have made significant strides in cryptography.
The Bitcoin and Ethereum communities represent DAOs, where consensus is formed through code, fostering community collaboration to enhance the system for common goals. DAOs have made significant strides in decentralized community governance, primarily due to the relatively simple Bitcoin and Ethereum rules. The fundamental Bitcoin rules revolve around payments, essentially involving miners providing BTC payment services. Similarly, the basic Ethereum rules entails miners to provide smart contract computing services.
Additionally, Uniswap, with its simple formula of k = x * y, offers decentralized asset swaps, representing a fundamental rule for DAOs. Built upon this formula, Uniswap serves a vast user base, liquidity providers, and arbitrageurs, creating a token exchange ecosystem that is open to all, allowing participants to join or exit at any time.
It is evident that DAOs have had a profound impact on collaborative efforts based on simple fundamental rules, yet there have yet to be notably successful cases in collaborations involving complex rules.
Dual Aspects of Governance
Rule of man
The traditional governance model, often referred to as the "rule of man," involves individuals creating a set of rules through communication and coordination to manage production and consumption relationships. These rules are codified into laws and regulations, forming standards that can be referenced. The enforcement of laws relies on centralized violent institutions for protection.
The rule of man developed over thousands of years, has become highly mature but also intricate. Whether at the scale of a company or a nation, all the rules and laws within a system are products of human governance.
A mature human governance system can handle highly complex collaborative issues, which is a capability that current DAOs have not yet fully achieved.
Code is law
The emergence of smart contracts has sparked a new wave of governance, making it easier to manage organizations using open-source code. Smart contracts rules are executed by machines, eliminating any margin of error, avoiding informal rules and fraud that may exist in human governance.
Code is law
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However, due to this mechanism's precision, the flexibility is limited. If incorrect rules are established (often referred to as smart contract vulnerability), the losses caused by these vulnerabilities can be challenging to recover. The DAO incident on Ethereum in 2016 is an example where significant asset losses occurred due to a smart contract vulnerability. Ultimately, this led to a division within the Ethereum community. The outcome was a rollback from "code is law" to “rule of man". Guided by Vitalik, the community refused to acknowledge the results created and ultimately decided to roll back the blockchain to its state before the theft occurred.
At the end of the day, the lack of flexibility restricted "the rule of code" to small-scale applications and scenarios with relatively simple foundational rules.
Opposing Forces?
The dual sides of governance, the “rule of man" and “code is law” seem to have conflict and opposition. With the recurring security incidents and governance failures, does this imply that DAOs are destined to struggle with complex collaborations. Are DAOs a utopian fantasy?
Making DAOs applicable to complex collaboration rules, suitable for large-scale collaborations involving strangers, is the direction PermaDAO is looking at.
Indeed, the “rule of man" and “code is law" are not opposing forces. Whether it's rules computed by machines or legal rules documented in books, humans remain to be the core of collaboration. DAO Practitioners don’t need to bring all actions under blockchain governance; instead, they should start with a human-based input and gradually introduce on-chain rules. The rules computed by machines aim to minimize the trust costs between individuals and reduce the consensus cost of value distribution (cutting the need for violent enforcement), rules executed by machines are more efficient and transparent, enabling human governance to achieve faster iterations and stronger execution capabilities.
In the process of PermaDAO's practice, there hasn't been an excessive pursuit of fully on-chain governance. Early on, it was driven by individual enthusiasts, gradually establishing rules, expanding the community membership, and constructing bit by bit. The following two cases might indicate an excessive reliance on on-chain governance:
PandaDAO. Excessive reliance on on-chain governance, token issuance, and NFT distribution, coupled with a lack of efficient decision-making and rational contributors, ultimately led to a downward spiral.
Polkadot. Despite establishing complex on-chain governance mechanisms upon launching, allowing all functionalities to be improved through voting, it ultimately failed to yield truly effective applications. The lesson learned is not to become excessively absorbed in on-chain governance prematurely; instead, growth should occur organically based on the needs of users and developers.
The typical manifestation of excessive on-chain governance is engaging in extensive discussions about governance and advantages even before the community has formed. This is often accomplished by creating FOMO sentiments through methods like token issuance or prematurely using NFTs as a medium for user acquisition, resulting in the unhealthy rapid growth of the community. In the end, all participants are fixed within a carefully designed behavioral pattern, unable to change anything or determine the future direction of the DAO. Embracing fully on-chain governance from the outset is not a favorable governance path. Even in mature and large ecosystems like the Bitcoin and Ethereum communities, full on-chain governance has not truly been initiated. Instead, communication, management, and iterative growth are more often facilitated through human-centric community models. The Bitcoin community grew slowly rather than being designed. It started with just a few enthusiasts running Bitcoin code on personal computers, then progressed to someone buying pizza with Bitcoin, and eventually evolved into the massive computational power we see today. The governance and development process of DAOs is both lengthy and challenging.
Meta-Governance
In stark contrast to the previously mentioned excessive on-chain governance, Meta-Governance has minimal pre-defined rules. First and foremost, there is no genuinely orchestrated set of rules by an official entity to entice more people to join and generate FOMO. Secondly, Meta-Governance places more emphasis on how the governance process is generated. It adopts a human-centric governance model, relying on contributors to create rules.
Meta-Governance
The PermaDAO theme revolves around the Arweave ecosystem, with a core philosophy of exploring large-scale collaboration amongst strangers. All rules only need to expand around these two aspects. We hope any contributor can create rules, introduce new types of work, and generate more tasks. Of course, the premise is that these rules and tasks can operate clearly, and the execution results can be recorded on the blockchain. Permanence is also a crucial foundation feature for PermaDAO. The process of everyone's contributions will ultimately be recorded on the blockchain, creating a permanent record. Your workload will forever belong to you, thanks to Arweave’s permanent storage.
In practice, through Meta-Governance, PermaDAO generates autonomous domains such as Activity Guild, Content Guild, Branding Guild, Development Guild, and more. The rules of these guilds are created spontaneously by contributors in the community. Initially, many guilds faced various issues, but as more contributors joined, there were always individuals raising questions and finding solutions.
Occasionally, contributors would inquire why PermaDAO hasn't issued NFTs to attract newcomers. According to the Meta-Governance logic, the issuance of NFTs is also a rule created by contributors. There won't be corresponding rules until community members propose and promote such proposals within the community.
The governance of DAO relies on the community itself, not on any so-called official entity. Meta-governance is the process of creating rules amidst chaos, evolving from disorder to order in an automated manner.
Fully On-Chain Governance
Excessive on-chain governance is not a good practice, but fully on-chain governance remains the ultimate goal that DAOs explore, it just needs a more lengthy evolutionary process to achieve it eventually. The rules of on-chain governance should not be prematurely defined. Due to the lack of flexibility in smart contract code, early definitions can lead to the model having issues and ultimately creating a death spiral to failure. After all, it hasn’t even been a decade since DAO exploration started, and there are too many issues to explore and solve. We hope to start with Meta-Governance, deriving a model of full on-chain governance from chaos, without expecting to produce a FOMO model meticulously designed by a few individuals but still flawed.
Exploring HALO Token
PermaDAO has been using the approach of Meta-Governance in its exploration of DAO for over a year. There are over 1000 articles created and translated within the DAO, and more than 10,000 tasks of various types have been executed. These tasks include, but are not limited to, Space activities, large-scale offline events, PR campaigns, software development, content creation, content translation, financial settlements, and institutional proposals. PermaDAO's currently has 370 contributors, achieving the collaboration scale of a medium-sized enterprise through 100% online cooperation. Over 50 active contributors receive AR incentives weekly. The achievements are significant!
With the guild rules made now being mature, the DAO is poised to embark on the next phase of exploration—how to achieve fully on-chain governance! In the three stages of DAO development, pioneers delve into rule exploration when talent is scarce. After establishing rules, in the mid-term, more contributors are attracted, and a fair and transparent promotion system is instituted, fostering healthy and sustainable development. Ultimately, this leads to the exploration of fully on-chain governance.
We introduced the HALO Token for governance voting. With HALO allocation based on past workload data. All contributors will receive HALO tokens, with the quantity tied to their past workload to encourage and recognize volunteers' contributions. Initially distributed HALO will be in a locked state, granting voting and governance rights, with weight proportional to workload time. This approach respects early contributors, safeguarding their interests as they played a crucial role in the DAO's early stages when talent was scarce.
The HALO Token obtained through contributions to different guilds carries different voting characteristics. The HALO Token from that particular guild weighed ten times more than the HALO voted to other guilds. This measure is designed to safeguard the governance rights of guild professionals and prevent the rules established by a guild's founders from being easily overturned.
10x Vote
Staked HALO can be unstaked and traded on secondary markets, but unstaking sadly means that you’ll be forfeiting your voting rights. In a permissionless DAO, new members must contribute by working or repurchasing HALO to gain voting rights. HALO purchased on the secondary market after locking won't inherit the tenfold voting weight.
Conclusion
In the governance realm, decisions, both centralized and decentralized acknowledge the pivotal role played by individuals. In the age of information and blockchain, a unique opportunity presents itself — the creation of a platform that manifests fair and transparent visions, granting greater autonomy to individuals in designing systems. The HALO Token will serve as a powerful tool for PermaDAO to explore fully on-chain governance. Despite the risks, HALO will operate as a test token before its official launch. PermaDAO is poised to execute on-chain governance voting using blockchain technology, encompassing facets such as scrutinizing guild rule proposals, electing leaders, and rotating key positions. The efficacy of meta-governance has already manifested during PermaDAO's early stages. We firmly believe that the future will witness the exploration of highly viable solutions for complete on-chain governance, establishing the groundwork for extensive collaboration among blockchain strangers.
We extend a heartfelt welcome to individuals with expertise to join PermaDAO, contribute proposals, and engage in collaborative efforts to refine rules. Within this realm, no rules are immutable; there are only opportunities for improvement. While the current framework may seem somewhat antiquated, the forces of emergence and evolution are certain to infuse a renewed brilliance into the system.
