gm gm and welcome to the State of the DAOs!

There’s no denying it; the bear market is upon us. But if we perch on a high ledge and look out over a longer horizon to see where crypto is going, things are looking just plain rosy. Projects are launching every day, and protocols that have been around for a few years are showing us that they are built for the long haul. And then there’s DAOs.

Unlike the bear market of 2017-18, when DAOs were still a novel concept, DAOs today are expanding their contributor lists and use cases. That’s right - DAOs are buidling. But with that building comes certain growing pains, even during a bear market. One of the issues that have beset DAOs, just fiat-space organizations, is less-than-ideal governance participation reflected in low voter engagement - Snapshot is less snappy and a bit through-shot.

As we continue to work on DAO governance, a tried and true solution has emerged: delegated voting. Delegated voting is the idea that you can assign your voting rights to another who will engage in governance on your behalf. While many protocols employ this method, there are questions about whether it’s a good way forward. Fortunately, long-time contributor and DAO thought leader Samantha Marin is here to help.

In this week’s article, she breaks down all the ways DAOs can get delegated voting right. How do DAOs prevent career politicians? What can we do to limit governance attacks by large token holders? Can we prevent delegate bribing and voter apathy? Samantha walks us through some solutions and reminds us that we’re on the frontier and experiments are welcome!

After catching up on delegated voting check out the TL;DR on the latest DAO ecosystem takes and thought pieces, making it easy for you to cut through the noise and stay up to date on the world of DAOs.

Although it’s a bit rough out there, the current state of the DAOs are just fine.

This is the current state of the DAOs.

Contributors: BanklessDAO Writers Guild (Samantha Marin, anointingthompson1, CuratedX, d0wnlore, Elemental, leah_par, WinVerse, Chameleon, hirokennelly.eth, siddhearta, Jake and Stake)

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Strategies for Delegated Voting in DAOs

Author: Samantha Marin

At an old wooden desk in 1880s England, the writer of Alice in Wonderland and The Jabberwocky was hunched over a manuscript. No, he wasn’t writing about Alice and the Cheshire Cat—that had long been published. He was penning a pamphlet on Parliamentary representation that would form the baseline of thought on liquid democracy.

Liquid democracy, the idea that people can assign their voting power to different representative delegates at any time, is a type of delegated voting. In a broad sense, delegated voting just means that constituents entrust their vote to a representative who can vote or otherwise act on their behalf. Most democratic political systems use some form of delegated voting.

It’s been well-documented that DAOs have a voter participation problem. To moderate an inherent tension of direct democracy, that not everyone reasonably can be expected to vote on everything, there's been a lot of talk about Lewis Caroll’s delegated voting model.

jim @0xJim

DAO voting is broken. Voter apathy, not meeting quorum, whales dictating the vote We need more novel mechanisms like vesting (veCRV), bribes (@VotiumProtocol), delegates (UNI, ENS), NFT voting, etc What are some other interesting governance experiments?

December 21st 2021

32 Retweets266 Likes

The idea is simple — assign your voting rights to a trusted community member who can vote with your tokens on your behalf. You enjoy the proxy voter participation and the delegate earns social and political capital for participating in governance. All good, right?

But, I’m wary of using delegated voting without proper strategies and safeguards.

Why am I wary of this seemingly best-case-scenario solution to voter apathy? Because we use a form of delegated voting in the U.S., and while there are many advantages, voters are historically terrible at re-allocating their votes when a delegate isn’t serving them well.

For example, the American Congress approval rate is typically around 30%, meaning less than one-third of Americans approve of how Congress members are doing their jobs.

But with that low approval rating, reelection rates are startlingly high.

Reelection rates in the U.S. House of Representatives (two-year terms, representation based on state population) are generally over 90%.

The purple bars in the chart below show the percentage of incumbents re-elected each year. Reelection rates haven’t dipped below 80% in the last 56 years.

And the Senate (six-year terms, two senators per state) is startlingly high, too. It’s typically above or around 80%, with a few years around 60%. But never 50% or below.

And for those who manage to unseat the incumbents? They need to put in a lot of effort and money to do so. Just look at how much more money challengers had to spend in the 2019-2020 Senate election cycle to unseat an incumbent: $73 million dollars. But for an incumbent to win, they only need to spend $19 million.

The takeaway: once someone is a delegate, it’s extremely difficult to get them out of that position, even if they have low approval ratings.

Even though the trends of the United States are not representative of how the entire DAO space will operate, we should be looking at how existing representative democracies function if we are going to build blockchain-based representative democracies in DAOs.

Given the inability of U.S. voters to unseat delegates, even when they don’t like what those delegates are doing for them, I foresee DAOs having the same issue.

But I believe we can make delegated voting better. There are a few areas we can explore to prevent some unwanted results:

• Preventing career delegates: term limits

• Preventing a single delegate from getting too many tokens: percentage maximums and delegate minimums

• Preventing delegate bribing or vote-skipping: slashing and “socialware”

• Preventing parties and factions: forking and quitting

Delegate Term Limits

Term limits place a cap on the amount of time, or number of terms, a delegate can serve. This prevents career politicians—people who turn politics into a full-time job and never venture to work in the “real” world—from taking over every office in the capital.

U.S. voters largely believe term limits should be implemented in Congress. One survey found that 82% of voters would be in favor of term limits.

Here, you get in an odd situation. The people who have the power to propose term limits are precisely the ones who would not want them. How, then, can you possibly remove ineffective incumbents?

In DAOs with delegated voting, term limits should be put in place before delegates are chosen.

You may be wondering: But why require term limits when voters can simply re-delegate their tokens whenever they see fit?

That requires active DAO members who are keeping up with how their delegates are voting.

tycoon.eth ⟠ 🦇🔊🐼🚬 @0xTycoon

Exercised my #ENS delegate voting rights today - voted "yay" for: ✅ [EP13] [Executable] Fund the Protocol Guild pilot with 200,000 $ENS ✅ [EP12][Social] Working Group Rules

June 1st 2022

2 Likes

If DAO members aren’t voting widely now, how will they be keeping up with people voting for them?

Imagine this situation.

A charismatic-leader type of delegate emerges. The delegate often votes against the grain, and they become popular because of this. People delegate their tokens to them because the person resonates with them in some way. All is well: it’s important to have delegates who represent the will of the people. But then that delegate’s term limit ends. The charismatic-leader-delegate has to step down. But, since so many people supported them, there must be another delegate who had those same views coming down the pipeline, right? Surely someone will take up the mantle.

But this is when the effects of the charismatic leader begin to wear off. No one quite fills the old delegate’s shoes. People aren’t interested in what the new delegate is doing. So, they slowly re-delegate their tokens.

If there wasn’t a term limit, the charismatic leader would continue exercising power even if their “power” was simply their charisma, not the ideas that current voters want. And if the delegate was allowed to stay, they may begin to dissociate with the idea and simply focus on maintaining the following they’ve built. Think of any charismatic leader, and how “pure” their ideas remain over time.

Term limits on delegated voting protect against the charismatic leader issue.

Ideally, delegates would operate entirely in the open. Meetings and conversations would be made public. Voting choices would be shared—maybe delegates would write a couple sentences explaining their choice for each vote. This would help transfer knowledge to new delegates who must step up in their place.

Delegates may not want term limits. And people may worry over loss of knowledge. But for delegated voting to work, I believe term limits are necessary.

Preventing Delegate Whales

With purely liquid democracy, it’s possible that delegates could get so much power that they control a massive percentage of tokens in the network.

What if a single delegate controls 20, 30, 50, 70% of the vote? What could they use their power to do, especially if the token holders are checked out?

The U.S. breaks delegates up geographically, so they would never be able to gain too much of the vote. But in liquid democracy and DAOs, there’s no stopping someone from getting an outsize portion of total votes under their control. And when that delegate controls a huge piece of the voting system, well, we’re screwed.

Some solutions for this would be to cap the percentage of tokens that can be delegated to a representative. Otherwise, delegates may obtain a proportion that becomes so high they can 51% attack the protocol or organization.

Alternatively, a DAO could set up a delegate “minimum.” Maybe there must be at least 50 actively voting delegates. There would still be a scenario of some delegates having much more voting power than others, but because there must be 50 delegates voting to reach quorum (the minimum number of votes or participants required to enact a vote or conduct business), there would be some degree of safeguard.

Percentage maximums and delegate minimums may feel counter to the ethos of decentralization and self sovereignty, because it is placing constraints on the pure, unchecked “will” of the people. But if a delegate received so many token delegations that they could use their super-mega-whale status to abuse their power, then safeguards are needed.

Preventing Delegate Bribing or Vote-Skipping

Another unfortunate scenario coming out of delegated voting is bribing.

Delegates could potentially “win” voters by bribing them, such as with financial promises. You could imagine a situation where a delegate says, “Delegate your votes to me, and I’ll make sure a proposal goes through that gives you a good role in the DAO next season.” Or, “I’ll pay you X amount if you delegate your tokens to me.”

With enough money, the system could be abused.

The value of bribery could be mitigated by delegate percentage caps, as mentioned above. But even then, multiple delegates could collude and attack the DAO with their voting power.

How do we prevent this?

Firstly, there could be token slashing —which is when tokens are confiscated because of an unwanted action —for delegates who use bribes to gain power. The slashing would prevent people from choosing to delegate to someone who is bribing them, because they could lose their own tokens. But delegates would also shy away from bribing, knowing their voting power could evaporate in an instant.

How would slashing be implemented, technically? I predict it will be difficult. Because there’s no trustless way to determine if someone is bribing (as far as I know), then there would need to be human intervention. Someone would need to manually block the delegated wallet from voting, which is against the ethos of a trustless system.

How, then, could vote bribing be prevented?

Social pressures could be used. In systems trying to operate in a trustless manner on the outside, trust-based social pressures on the inside tend to be the way to deal with squishier human issues that can’t be codified. (Coined “socialware” in this Orca piece.)

In other words, there may need to be some “socialware” involved in order for delegate token slashing to work.

For example, if a delegate was performing suspicious behavior, members of an operations guild or governance committee could ask people to remove their delegated votes from that particular delegate. This would be a form of social pressure—no delegate would fully be removed this way, because they’d still have their own tokens to vote with and maybe those of the people who did not want to apply pressure. But, given that social pressure does run many DAOs today, it could make an impact when needed.

Delegates also may miss votes. For example, many of the top delegates for ENS DAO have voted in half or fewer of the proposals since the DAO started. In a blockchain, if validators get behind, they may be slashed. But, would a DAO really want to slash all of those tokens? Is it as critical as a validator in a blockchain?

Again, we’d likely need some kind of socialware here. How many votes is too many to miss? Does that number change as the DAO matures? Again, slashing could be used, but it would likely need to be in the realm of humans, not code.

I’d like to point out that there’s no concrete way for U.S. Senators or Representatives to get punished if they’re using sketchy vote-gaining tactics. Sure, there was a series of expulsions of Senators around the Civil War, but other than that, Senators and Representatives don’t get “slashed” or “banned” because they gave out a few favors to supporters along the way. They would get punished or removed from office if they violated the law or accepted a bribe (depending on what state you’re in). But politics in America is all about making promises and logrolling all sorts of stuff into bills that the public might never even see.

I’m excited about the better forms of governance we’re building in DAOs. But, we’re treading into uncertain territory here.

So, would preventative measures against bribing be groundbreaking? Maybe. Would it be possible to implement the necessary socialware to make it possible? Maybe. Are there more questions than answers right now? Definitely.

Preventing Parties and Factions

Once a DAO gets large enough, it’s easy to imagine factions forming. Just like a modern state, when large groups of people work together, factions naturally form.

The oft-quoted Federalist Paper #10 by James Madison warns against the formation of factions, but says that “the latent causes of faction are thus sown in the nature of man.” In other words, we are naturally going to form tribes and groups based on our opinions, ideologies, and identities.

Groups of like-minded individuals will naturally form — there’s no way around it. But what about when those groups start forming parties that lobby, fight, conceal, and hurt? That’s not the world we’re trying to build in DAOs.

One option for factions is forking, a term typically used to describe blockchains, but that can be used in the DAO space as well. Unlike modern states, a group of like-minded individuals can relatively easily split into their own DAO if they’re not happy with the way their own DAO is run.

Sometimes, forking can even be considered a growth strategy. As it gets more and more difficult to coordinate large groups of people within a DAO, the best strategy might simply be to start a new DAO out of the old one. Maybe if a small group of delegates were, naturally, going to start a faction, they would just fork the DAO and start their own.

But forking does not come with the social capital, contributors, resources, treasury, token, and voting processes. Forking means you basically lose it all for the sake of building a DAO in the way you want it.

I see forking as a philosophical alternative, but not necessarily a concrete, actionable one that will be used often. Blockchains can fork, but can DAOs, which are just made up of humans trying to coordinate, really fork?

Another alternative to forking is rage quitting. This is when a contributor forfeits their stake in the DAO, essentially giving up their membership tokens in exchange for that token’s value. Rage quitting could look like selling your tokens on an exchange, or it could look like forfeiting your tokens or NFTs back to the DAO in exchange for your monetary stake in the DAO via a Rage Quit function, like DAOhaus.

The problem with rage quitting is that it doesn’t take into account the human aspects of DAO work. What if you have a role and people are depending on you? What if that’s your main source of income? What if you don’t have a job lined up next? There are so many factors that go into the simple idea of “rage quitting,” that I don’t know if this is a good solution for preventing factions and parties.

But I do think forking and rage quitting should both still be options, even if they might not be employed very often. Like DAOhaus said, rage quitting is a right. My reservation is this: I wonder if people will truly give up everything they have in their DAO to exercise that right.

DAOs as Grand Experiment

DAOs are the grandest voting experiment we’ve had in centuries and we can use them to test hypotheses that we can’t in fiat-space politics. There’s a big problem with states: you can’t experiment. The stakes are far too high. So, even though there are frequent pleas for eliminating the electoral college, or using ranked-choice voting to prevent extremism in parties, or using a multi-party system in the United States, the reality is that most of those ideas will never be tested because the cost of experimentation is too high.

In DAOs, we can actually experiment. We can actually try new governance systems with a small group of people without having to overhaul a state’s entire system.

And we have that opportunity with delegated voting. And, we have the time to do so. The sky won’t fall on DAOs if we take another few months to iron out details of delegated voting that will pay off years and centuries in the future. Bear markets are for building, and it looks like we may have time on our hands that we can put to a great purpose.

We don’t need to use a basic system without putting thought and planning into it ahead of time. We can create a delegated voting system that truly works for everyone: whether it’s Lewis Carroll’s concept of liquid democracy, or something that hasn’t been thought of yet. As the tech advances and voting experiments are put to the test, we might come up with something just as otherworldly as Carroll’s Alice in Wonderland and as advanced as his voting schemes.

Author Bio: Samantha is on the Communications team at Aragon, and is working on transitioning the entire Aragon Network into a DAO. She writes about DAOs in the Quorum Newsletter.

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📖 Read Building Better Compensation Frameworks in DAOs | Samanthaj

⛏️ Dig into Harnessing the Hive Mind | Jake and Stake

🎧 Listen Collective Organization with Pia Mancini | The Green Pill

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DAOs at a Glance

Hand-picked articles to understand the current state of the DAO ecosystem

david phelps (🐮,🐮)(🃏,🃏) @divine_economy

there've been two types of DAOs so far. communal: the community is the core team (ie bitcoin, moloch daos). corporate: core team makes decisions and shareholders approve or reject. what hasn't existed? modular: communities make decisions and core teams execute them.

June 14th 2022

8 Retweets89 Likes

DAO Entity Matrix | Paradigm

Author: Paradigm

Paradigm charts out a DAO matrix where differentiating several types of DAOs based on their formation, across the breadth of function, governance, taxation, fundraising, and a lot more. Paradigm team has made a simple and structured resource for DAOs across different legal structures and jurisdictions in the US and several other regions. This is a great foundation for DAO summoners and anyone curious about starting or categorizing DAOs.

They draw parallels between forming corporations in the Web2 world andWeb3 DAOs. With different variables to consider, including legal structure, profit/non-profit model, capital structure, and organizational modularity. All these structures are compared using different parameters like usage, relationship of token holders to entities, formation & administrative requirements, personal liability of holders, governance, taxation etc.

Paradigm provides a well-drafted matrix that makes it easy to understand and evaluate structures across DAOs and helps founders choose potential legal structuring solutions for DAOs.

Level Up: Presenting the Future of Education as a Game, and How It May Take the Form of a Web3-powered Metaverse

Author: Bianca Mikaila

The current education system cannot cater to the interests of young people today. Schools are more focused on rote learning and good test scores than creating environments where young people feel enabled and can explore their interests. Instead, students are filling this hole by spending time in online communities centered around gaming and arts and doing activities they find meaningful.

The internet as we know it has served as a learning venue for most, from Youtube and Reddit to educational platforms like Coursera. They’ve all proved a lot more useful to personal learning but there’s still a lot of leveling up to do. This is where web3 and the metaverse can help. It has the advantage of value creation, community, and culture all of which are crucial for helping young people take ownership of their education. To design a progressive game, there are certain educational technology principles it must follow.

It must be standardized in a way that gives users ownership, allows them to collaborate with each other, and is accessible to all. It must be able to execute difficult tasks so that non-technical users can find time and have room to play around with their creativity.

DAO Leadership: Building on the shoulders of giants

Author: Mr. Nobody and Lisa Wocken

The concept of leaders in DAOs is mostly frowned upon as DAOs are supposed to be decentralized, community-governed, and without hierarchy. Mr. Nobody and Lisa Wocken from TalentDAO have dug deeper into the leadership rabbit hole and published a superb guide that shows how DAOs can embrace the concept of leadership in their day-to-day operations.

The current perception of leadership revolves around the top to bottom and individual dynamics. DAOs are introducing an interactive leadership dynamic where people lead one another and have cultivated a culture of shared and flexible leadership. Leadership in DAOs relies more on taking action than on titles or concepts. When a person is chosen to lead by the community, it’s usually as a result of the amount of work they’ve put in.

It takes at least three factors for shared leadership to emerge in DAOs: shared purpose, social support, and voice. There are also certain leadership behaviors that can influence individual outcomes in shared leadership: self leadership, people leadership, and task & change leadership.

Leadership lies more in action and what you do than in who you are, the idea that people are born leaders is completely false and motivation is a prerequisite in leadership, those who enjoy leading, have a strong sense of responsibility and are able to look at the positives are more likely to emerge as DAO leaders. It often involves paying attention to people and their concerns as opposed to tasks. Leading tasks means putting in the work and doing all it takes to get it done.

How We Can Encode Human Rights In The Blockchain

Author: Nathan Schneider

Nathan Schneider describes how the same tools that are used to bypass international orders today, can be used to implement better international systems. Smart contracts have the potential to create new layers of global social systems. Contracts where individuals are the protagonists. Blockchains could have human rights written into their basic protocols like Isaac Asimov famously outlined design “laws” that would prevent his sci-fi robots from turning on their makers.

These new technologies should essentially come with safeguards to avoid causing harm to the human environment at large. Knowing that Lines of accountability can be hidden behind cryptographic secrecy, humans should be able to understand that no technology or innovation is capable of saving humanity from itself. No technology is beyond the human politics, therefore, neutrality when regarding human rights should be considered a stance against human rights.

Blockchains could enforce labor rights, incentivize decarbonization, and impose targeted sanctions. They could establish a fairer, context-aware due process in order to enforce human rights rather than depending on some military power.

Ecosystem Takes

🔥 and 🧊 insights from across the DAO ecosystem

Larry Sukernik @lsukernik

DAOs need to figure out if they’re dealing with the wisdom of the crowds or too many cooks in the kitchen.

June 15th 2022

16 Retweets107 Likes

Scaling Trust in DAOs: Trustware vs Socialware

Author: frogmonkee, Julia Rosenberg and Chase Chapman

🔑 Insights:

Many of us are in crypto, web3, and DAOs because of our declining trust in various institutions that govern our countries, finances, and media. Through DAOs we seek to establish a new framework of trust, first through bootstrapping with known socialware systems, then by codifying some of those systems into trustware. Scaling DAOs in this way, by minimizing reliance on humans as intermediaries, will allow us to scale in-sync with the rapid innovations in this space.

• Socialware are mechanisms that create assurances through human relationships, while trustware creates assurances through technology. Technology helps us offload the higher social coordination cost we currently place on humans. Compare the relationship between lemonade stand and a vending machine in terms of the social contract people must abide by to use them.

• DAOs can use blockchains to codify the assurances that we currently rely on humans for. Trust mechanisms are ambiguous when defined by humans, but they can now be finely expressed through technology. This is simply another form of trust that can be expressed between parties.

• Harnessing socialware and trustware falls on a spectrum with many factors to take into consideration. While socialware has significant coordination and support costs (think documentation), trustware exposes technological risks such contract bugs and governance attacks (like sybil attacks). But blockchains unlock a new paradigm of trustware technology that will enable DAOs to reduce the friction and overhead found in traditional organizations, even if much of this technology is still undiscovered.

• “Code at the center, humans at the periphery” is the idealistic model for many DAOs, though most are still operating with a heavy reliance on humans at the center instead. But through time, technological advancements, and trial & error, this can become a real model seen in DAOs.

How Web 3 Changes Philanthropy

Author: Rhys Lindmark

🔑 Insights:

Billionaires from web1 and web2 like Bill Gates and Mark Zuckerberg started philanthropic initiatives. Now web3 Has created top Billionaires like Changpeng Zhao "CZ" (Binance CEO) and Sam Bankman Fried "SBF" leading to a new wave of philanthropic potential energy.

To get a clearer view on what will happen in the next decade, we'll keep at few things in mind.

• If the price of Bitcoin were to reach $200,000 in 2025 alongside other crypto currencies, we'd have over 800 Crypto billionaires making up 20% of the world’s billionaires.

• While web2 birthed a lot of foundations including the Bill and Melinda Gates Foundation,Schmidt Futures, Chan-Zuckerberg Initiative. Web3 is going a bit weirder with Brian Armstrong funding $100M for longevity research.

Governance for better futures @SuperBenefitDAO

Author: Alex Hannant and SuperBenefit

SuperBenefit DAO has arranged a series of conversations with DAO members and founders to examine how the nature of governance changes with time and how governance can improve the future. The first conversation moderated by @ml_baldwin and @HeenalR was on 'meta-governance'.

• Specific to Web3, meta-governance is a nature of governance created by an index mechanism where tokens obtained from various DAOs and protocols produce governance interests and right to the people. But in a broader sense, meta-governance can allow us to figure out how to deal with issues that concern everyone, without being be controlled by any singular person or entity.

• Beyond governance, there's a need to experiment more with localized decision making, while simultaneously giving people room to cooperatively engage in issues that are relevant to them. In order to do a better job in communicating that 'governance has teeth' and it is worth everybody's interest, we need to understand the reason for lack of interest and show that every voice can have an impact.

• The infrastructure provided by Web3 technologies offers governance as the stewardship of holistic interest, rather than specific ones, like in the case of traditional governance.

DAO governance: move fast and experiment on things

Author: Samantha Marin

🔑 Insights:

To move fast and maintain progress in a DAO, some checks need to be made in the form of safe experiments. These experiments serve as a testing ground for governance, and when applied across the entire DAO system, will move the DAO to greater heights. Move fast and experiment on things.

• Build upon the body of research that already exists is one such test. By looking at previous research, the small group can better understand how their experiments could be adopted.

• Test with low-stakes. This way, negative externalities can be properly managed as the “blast radius” is limited to a small area.

• Bring in experts before mass use. These experts serve as checks that help mitigate any errors that might arise from the experiment.

• Pause and re-evaluate if something goes wrong to properly analyze the result of the experiment and whether to continue, make adjustments, or switch paths entirely.

Building a DAO to Learn in Web3

Author: rahul iyer

🔑 Insights:

Rahul creates a DAO called spicy duck, creating a minimum viable community to stay engaged in the crypto ecosystem. Creating a DAO to learn and invest in crypto was a natural way to get more friends engaged in web3, make money, and learn a ton along the way. Everyone who wanted to participate had to provide x ETH such that 1 ≤ x ≤ 10.

• DAOs should have little friction (mobile friendly with few apps to open) and have a high signal/noise ratio.

• The DAO invested in several notable NFT projects including @moonbirds, @oddities_xyz, @artblocks_io (chromie squiggles), @floornfts, and @tokenproof. Leading to a total asset increase from 42.2 ETH to 66.63 ETH.

• There are still problems to solve: rage-quitting, increasing the DAO treasury, increasing/incentivizing participation, equal access, handling dilution in the future, and expense management.

DAO Spotlight: CultDAO

CultDAO is a decentralized investment platform with a focus on funding projects that are building toward a decentralized future. While much of the DAO’s origin is masked in mystery, its founder, Mr. O’Modulus, has published a powerful Manifesto that clearly lays out its inspiration, goals, and tokenomic structure.

The CULT governance token smart contract has a built-in tax mechanism that automatically sends 0.04% of CULT involved in on-chain transactions to the CultDAO treasury. The collected funds are invested in projects in parcels of 15.5 ETH worth of CULT. Before distribution to projects 2.5 ETH worth of the 15.5 CULT tokens is sent to a burn wallet with the remaining funds set to be disbursed after the project meets the its requirements. As returns on investments come back to the DAO, 50% of funds are burned and 50% is split among those who staked CULT tokens. This aggressive token-burning system makes the token hyper-deflationary, increasing the value of the CULT that remains. Of the ~6.6 trillion CULT supply, over 1.7 trillion CULT has already been burned.

In addition, CultDAO’s proposal and voting structure is designed to eliminate the ability of whales to control vote outcomes. CultDAO members need to stake their CULT tokens to vote. The top 50 stakers of CULT automatically become “Guardians”. Only Guardians can submit investment proposals for the DAO’s consideration, but they are excluded from voting. CULT stakers who aren’t Guardians are called “the Many”, and only the Many may vote on proposals. In short, whales can put forth proposals, but the outcome depends on the will of the people.

The investment criteria are purposefully broad with a project needing to support at least two of three central tenets: it must fight against centralization; further the cause of decentralization; and/or directly benefit a noble cause. To date, the Many have approved investments in a diverse range of proposals, including:

• Projects that aim to decentralize the art sector and the music industry

• DAOs that support organized labor and decentralize gig-work

• Protocols and technology startups working to lower costs and increase access to web3

• Yield farming opportunities that align with the Cult ethos

Read the Manifesto to learn more about CultDAO, visit their website, connect on Discord, or follow them on Twitter.

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