Founding Documents for the Centrifuge DAO? Part 1 & 2

Hey @devin thanks for your comment! Parts Three and Four will be on the Forum at the end of the week so you’ll be able to see the full recommendation.

It’s not so much a draft (ie I will not turn this into an RFC) as a recommendation of what I think make key pillars of any DAO, however, others may have additions, or even other ideas for what needs to be part of Founding Documents - maybe we’ll see some posted here :grinning:.

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Hey ImdioR,

Thanks as always for your lively comments and questions.

Q1. The 12 year experience is in decentralized communities and governance research rather than DAOs (which as you probably know only really kicked off in 2016) but I think the older vision that decentralized networks could provide a third way to organize - beyond the state and beyond the overreach of corporate capitalism - was kicked into another gear with the advent of DAOs.

I think there can be different pases of DAOs from an organizational design perspective - note these are not linear, and can exist at any time:

Phase 1. Code is law = super scalable: belief that trust between humans is not needed
Phase 2. Governance maximisation: DAOists realised they had overestimated that automation does not negate the need for human-to-human collaborate to execute proposals: the reaction was to over-govern
Phase 3: (CURRENT) DAOs striving to be distributed: Understanding that direct democracy doesn’t work, encouraging different levels of participation, fractalization etc
Phase 4: Stigmergy and emergence become less scary states, self awareness of those involved reduces both the need for so much organizing

Q2. I think it’s attainable. It will take a lot of hard and collective work. But not trying is to let the whole vision of web3 and DAOs die a slow death via one thousand cuts :herb:

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I’ll present on the Code of Conduct and Levels of Engagement in the Centrifuge Gov Call tonight at 18:00 - there are quite some open ended thinking on Levels of Engagement so I’d be keen to hear any ideas to sharpen it up! :person_fencing:

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Hi Kate! Thanks for sharing your background and the in depth-research you conducted. Is there any chance you could summarize both cited publications in a TL;DR-version in the forum which would be very interesting for the community?

For the ones who don’t have the capacity to browse through 200 pages of scientific research on governance :grinning:

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Thanks so much for sharing this @Kate_Bee!

This type of approach to governance feels so incredibly relevant right now. CeFi failures of late have shown an obvious need for transparent and community-oriented ownership, but the past performance of DAOs in our market isn’t exactly comforting. Speaking from a place of vulnerability, I see the DAO as the most exciting feature within the protocol, but also the most anxiety-inducing.

Just echoing a few statements you made

I love this approach. What we’re doing here feels like it is at the peak of complexity - DeFi, structured credit, decentralization, disruption. Although it’s difficult to truly understand it all, I believe the founding team has done an incredible job in developing a mission and vision that is incredibly motivating. Capturing this and passing it on to the community to “own and steward” will provide an incredible foundation for our work.

To me, this is the most important document to develop. Way too many DAOs either neglect a Code of Conduct or have a weak one because they fail to use it. The only way you can truly do this is to make sure we handle it at the social layer, and this is where I hope our community will be able to shine. It’s all about the vibes, and so we must protect the vibes at all cost.

I have a ton of other thoughts about definitions, incentives, purpose, etc. but I’ll leave it here for now. I’m looking forward to engaging with our Governance Group on all of these!

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I’d like to add to “Proposed Operating principles”:

Any identified problem, should have a proposed solution.

This should guide us all to seek solution to problems, be proactive in owning and constructively finding a way forward, rather than remaining stuck in a problem.

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Dear All

@Kate_Bee, love your PPT, couldn’t resist to write some thoughts.

The share understanding of the DAO is complicated for English speaking ppl, imagen for everyone else.

I have always seen two big issue in DAO especially where you have OG’s and new ppl onboarding all the time when it comes to voting. 1 coin 1 vote will never give you any good decentralize DAO because it just rewards ppl with more money and give them all the power. Since tokens are publicly purchasable all proposal are always won by ppl holding the most coins. At the other hand ppl (OG’s) that developed the DAO and put their souls in the project and a lot of time to developed it, they can at the end become voteless compered to some rich coin holder.

The DAO governments and voting should have some kind of mechanism that would allow token holders to have more fer voting power.

Regarding the punishments’ of bad actors on discord it can be solved easily. Carrot and stick principal always works.

You could create groups where if you wanted to participate you would have to put a few CFG in the discord wallet and if moderator would lets say warn you twice, the third time it would deduct 1 cfg from your wallet. You have incentive to play nice. And lets say that moderator could reward you with token if you lets say engage in conversations a lot. Or you could make different groups on discord and more you talk the higher group you go to. You could also reward groups. The higher group you are in, more tokens you get per week. Lets say 0.25 CFG per week. This is how you get ppl that would engage more. Also you could lose your group rank if you stop engaging in chat.

just my 2 satoshies on the subject.

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:top:

Thank you for your comment and feedback.
Just now the voting power is mainly based on the amount of tokens that you have in your wallet and the conviction (0.1-x6) that you can use and increase your voting power in exchange for the locking of tokens.
image

Anyway, I think the delegation of tokens (gov 2) could be very useful in the future.

Unfortunately, this is true. The community without any incentive doesn`t want to participate in discussion, governance and etc. I partially agree that in some-how the community should be able to earn or receive incentives.
But reward groups for messages i-m not sure if this could give some good results.
It is hard to find a balance between the quality of the message/content and the quantity (Especially if you encourage the amount of payouts of something.)

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Part 3 & 4: Code of Conduct & Levels of Engagement

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Nice one @ctcunning

I agree this would be a good principle to add which reflects our need to be a ‘do-cracy’ to make this work.

I.e it can be as simple as: if you see a problem, take action - even if that action is just clearly articulating the problem and trying to get others involved to help solve it. It also goes as far as seeing a problem and starting action immediately to solve it.

This needs to be met by an open attitude and support.

@DamjanKM great to hear your voice here. The topic you’re addressing is plutocracy right: how to avoid rule by large token holders rather than by regular token holders? It’s an important one!

I’m curious as to where it fits in the post that I wrote because I do not think that I address voter participation in my post? Are you suggesting that me not including it is an omission and that trying limit plutocracy should be included in a Founding Document somewhere (i.e. as a principle?), if so please let me know :slight_smile:

If your point is not related to my recommendations (i.e the post I made) per se, but is a new point that you believe needs to be discussed could you start a new thread on this? You can do this either by proposing a discussion or RFC on mechanism design relating to voter participation and preventing plutocracy.

This would really help us in our governance discussion: it’s good practice to discuss what is being addressed and if there is a new unrelated point, to link it to the original thread or to start a new discussion

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Thanks for starting this discussion @Kate_Bee! I think this is an extremely important topic for Centrifuge to mature as a DAO and I want to share some of my personal reasons for this below. This post is already getting long enough as it is, so I will leave it as my thoughts on why this important and reply about some of the ideas on the contents in a second post.

To build Centrifuge to become a successful DAO and functional protocol it will require many of us working together towards a common goal. In some ways this is no different than a startup, it starts with an idea and from there people join, start contributing to the project and refining the idea, this work is continuously tested by talking to users, launching products and seeing what works adjusting our course to whichever way is deemed to be the most direct way to reaching product market fit (building something that people want and can use).

But Centrifuge is a decentralized protocol. What does this mean? A few things change, but ultimately the protocol needs to serve a purpose and provide value to its users. As such Centrifuge needs to reach protocol-market-fit. As with startups, we don’t know which route will take us there, and likely there are thousands of paths we can take to get there, to ultimately reaching what we agree on is the purpose and vision for Centrifuge. However what will certainly kill both startups and protocols is a lack of focus, or more visually presented the scenario I’ve sketched on the left: too many contributors jetting off left and right and instead of unifying their forces to push forward in one direction all of them fighting their own battles. So for decentralized protocols and startups alike the more focused the energy/capital/humanpower is spent and the faster results from different areas can be shared to inform and direct the collective path forward the more likely we are to reach our goal.

As an organization working together we need ways to align our efforts and ensure we push forward. We need to build guardrails that nudge all of us unto the right path that we determine together. In a startup these guard rails typically come from working culture, from a CEO sharing their vision, from the board providing feedback, from business development/sales people providing market feedback, from product managers researching problems and solutions etc. But at the core of it are: leadership and a strong vision, functional communication, alignment on a common goal, a shared definition of what success is and good collaboration. In the above sketch those are the guard rails that help us all work towards a shared direction with fewer distractions and misdirections.

As a DAO we need to decide together what these items are. The better we can organize and work towards a common goal, the fewer resources we will waste on pushing in different directions. When I got into crypto and started diving into Ethereum I got excited about the very basic idea that truly open and decentralized blockchains allow us to create systems of coordination unlike any that exist today; without a central authority that exerts unnecessary control, with no unnecessary intermediaries. From there over the years I’ve refined my goal of what I would like to build: a way for borrowers to access liquidity that doesn’t depend on the terribly inefficient financial system we have today. A more direct way to borrow and lend providing a better service to borrowers and lenders around the world based on this idea of a truly open and decentralized system of coordination: Centrifuge.

As the DAO matures and with launching the network and decentralizing the control over it a process that has concluded with the launch of Centrifuge Chain and CFG token holders taking full control last year we are now at a place where we need to define for the DAO what direction we want to go in but also how we want to work together.

I’m looking forward to making these decisions together with everyone of you - if you think you’re part of the DAO then join this discussion and process.

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Having said why I think @Kate_Bee is doing super important work, I want to comment on some of the things you’re proposing.

Shared Mission

I believe the hardest will be to define a shared mission. Why? Because to creating an inspiring and concise mission is a creative exercise that will be hard to do “by committee” (i.e. everyone wanting to see their own version of it expressed perfectly). How should we go about this? Is this a process that would be facilitated by the Governance Coordination Group or do we create a public document where everyone can edit as they please? (Probably not the latter - maybe the former?) I would love to contribute, should we set up a group of motivated people who meet on coming up with a process to design this document and bring back a proposal to the forum?

DAO Principles

I like @ctcunning’s proposal of focusing on solutions instead of problems. Creating a culture where pointing out problems becomes the main sport will bring us to a halt.

Guiding Principles

I would suggest to add something about sustainability & long term horizon thinking. This should be ovbious but in crypto unfortunately it’s not. I think our industry is full of short term opportunists and I think that is not how we will build long term sustainable success. As an example, as “RWA TVL” shot through the roof when a lot of other projects launching pools lending to relatively risky crypto businesses like 3AC, Gensis, FTX we consciously stayed out of it. In the end this was good, instead of getting distracted we kept building our expertise in what really is the real world.

Operating Principles

In addition I personally care about the following principles and think they could be considered to be added:

  • Direct and honest communication: Not addressing issues or talking around sensitive topics is rarely helpful. Being honest (without being disrespectful) is the best way to get to alignment, a resolution of an issue and result that will let us move forward.
  • Cooperate and assume the most positive intentions: Choosing to interpret someone’s actions as hostile will only lead to conflict that maybe wasn’t there in the first place.
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Yes, the GCG will facilitate this process and spend the next month taking the feedback from here and here, along with the input in the Governance calls, into consideration, and talk to people from all corners of the DAO (issuers, ambassadors, token holders, VCs, team etc.) to get their take on all four documents.

We are still trying to figure out how to propose the Shared Mission in the most participatory way but in the end the GCG will propose some suggestions to a Shared Vision that the community can vote yes or no on.

Great, we will reach out to you, and everyone else we would like to hear some input from, latest next week once we have everything ready to start the process. Initially, we would like to approach everyone 1 to 1 - but we could follow this up with a meeting/call where everyone can attend.

I totally agree but for one to start focusing on the solution he/she/they needs to understand and focus on the problem/issue first. Ignoring the problems will never give you a good solution. I’m with you on the second half that after problem is well understood focus should go to solution.

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Love this 2 points. Honesty is always the way to go. We need to let ppl speak freely.

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Thanks @lucasvo - I appreciate your approach of adding to the discussion by making some of your own recommendations about what you’d like to see

Agree this is really hard. Shared Mission (SM) by committee sounds very uninspiring. Luckily I think there’s already a strong basis for the SM and it just needs to be shortened so that everyone can remember it. It sounds like the Gov & Coordination Group have a plan to try get to this shortened (yet still inspiring) version and I’m happy to support them in anyway I can.

I like this, it seems it reflects well the actions of Centrifuge until this time - thinking systemically and for the long term, rather than short-sighted quick wins. Would you recommend removing one of the guiding principles above (i.e. Open access, Transparency, Ownership) and instead implementing Long Term Thinking

Would it be possible to combine these two principles in some way with the principle below? I feel like they’re very similar.

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I.
I think that Centrifuge is already practising some of the principles listed here and to me, that shows integrity, openness and transparency. They are not just some aspirational words on a page that mean nothing.

I noticed that usually people follow the flow. And most people in a working collective use to rule: Taking initiative always screws the initiator.
And if you are part of a collective you, intentionally or unintentionally, follow the same rules (or you change collective → work)

The thing that I noticed in Centrifuge, that this rule is not working here (…huh!).
And this is part of the principle proposed by @ctcunning :

Any identified problem, should have a proposed solution.
This should guide us all to seek solution to problems, and be proactive in owning and constructively finding a way forward.

At Centrifuge, i see that instead of passive working (work only if the task will be assigned to you and do not never initiate anything otherwise you will get more tasks or complicate your life) you can start the initiative, take leadership on the problem, and solve it. That’s cool. The initiative is almost always welcome. The Team & DAO is looking not only for good feedback (most obviously known by all) but trying to find “undeveloped”/ weak parts/ aspects.

@Kate_Bee I don’t think we can combine the new proposed principles of @lucasvo with the one you mention. I have experienced them as different.

II.a) Direct and honest communication:

Talking about my path from Ambassador… I interacted with a lot of Centrifuge members and i saw this behavior from a few of the members. After a personal conversation( in real life) with almost all Team members, i noticed that generally most of the Team is using this principle. This is cool.

II.b) Cooperate and assume the most positive intentions:
This is another important principle that I think should be included in founding documents.
I’m talking about my exp in Centrifuge Community, DAO.
I received support for my family and relatives from a couple of Cent members (with real intention to give help). By the way, people who never know me personally before nor my relatives. Unbelievable and this is cool. (Thank you again if you are reading this )

I think this principle is being spread - I helped a community member (from centrifuge) to extract the private key from the parity wallet ( We are talking about a very big amount of assets) and now we still talking in DM and keeping the conversation live with him).
I helped him without any intention to be repaid or any favor in exchange. Just because I think that if somebody could help anyone - just do it. Help is very important. (this is one of my principles - help each other if you can ).
After 3-4 months he became aware of some of my problems and offered me help for me free (just would like to highlight that he never met me before). I never asked him for any kind of help. Thank you for this (if you are reading )
And I would say that this is cool.
Be happy, be Centrifuge :wink:

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Thank you for all your input everyone - this is very valuable to us!

The Governance and Coordination Group will gather all the feedback from this thread, our Governance calls and conducting individual interviews with community members and make a proposal for the founding documents in January.

We are thinking to create two separate RFCs (one for Doc 1 & 2 and another for Doc 3 & 4).

If they pass our Governance process, they will lay the foundation for our vision, principles, rules for how we behave in the DAO (Code of Conduct) and the Levels of Engagement.

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I like the idea of Levels of Engagement (“this means not all owners are expected to participate in every governance process, but rather a more generative way where people with different levels of engagement participate where they have expertise or are affected.”)

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