# About: Decentralized governance / DAOs established a vision for the possibility of decentralized, neutral public goods owned by the public. However, after 3+ years of live data emerging around decentralized networks, decentralized coordination is still a work in progress. During this period, without charging members, Collab.Land grew to serve 2.2M unique members across 49k+ tokenized communities and 23+ blockchains. Collab.Land's pure focus on Token-Gating for Discord and Telegram has delivered massive impact to communities across the world, but Collab.Land is evolving. The next phase of Collab.Land is designed to scale this impact even more by providing a sandbox for developers, community admins, and community members to build, explore, and leverage new tools within the Collab.Land ecosystem. Now it is time for the community to join up and collaborate! In ancticipation of the [Collab.Land Marketplac](https://collabland.mirror.xyz/e9mooPGCq1N4O-3Gu6cQs3lUIvWNrttjkAuxrzmwlfI)e, we are inviting members of the community to participate in shaping the future of Collab.Land through the Collab.Land Co-op. The Marketplace is set to revolutionize the distribution of web3 apps, providing startups and builders with a platform to reach a wider token-native audience and grow together. Communities will discover, use, and support the apps they care about. The case for decentralized resource allocation has a long way to go with finding a long-term viable model, with most DAOs experiencing major coordination failures such as the following: * Unclear consensus and clarity on core DAO activities and product strategy, leading to excessive spending and misallocation of community resources to misaligned initiatives. * Lack of oversight, feedback loops, and accountability of community initiatives leading to overhiring and working groups with unreasonably high burn rates and low output efficiency. * Inadequate contributor quality curation and accountability leading to a high amount of incompetent, low context individuals gaining senior leadership positions, leading to a further degradation of the community's operating standard and contributor value extraction at the cost of the entire community. * Lack of data driven of decision making processes that lead to the governance capture of the community to contributors who brute force governance via beuracractic lobbying. * Bloating on the DAO’s decisional surface area to a point where collective governance contributors no longer have the adequate context to govern effectively, leading to over delegation and concentration of social capital to a few select voices who are time rich but not nessearily those creating real impact for the DAO. Rather than trying to address these problems Collab.Land is proposing a surface area reduced model for the governance of Collab.Land DAO's resource allocation known as ‘outcome-based resource allocation' (OBRA). # Outcomes-based resource allocation (‘OBRA’) The OBRA model minimizes the focus on the governance of resource allocation to focus only on the following areas: ## **1. Goals & metrics:** * **What is the Mission, Vision, Values of Collab.Land DAO (MVV)** - Collab.Land is empowering tokenized communities with member verification and collaboration tools to build pro-social systems and create positive-sum change. **Company Wide Goals** - 20% Competitive parity - Multi-wallet Support - Simplified on-board - 80% Token Utility - Dev Portal (staking to get distribution to Miniapps) - User Settings (oriented to the data associated with a user) **What metrics does the DAO rely on to measure progress toward achieving it’s MVV** 1. `#` bot deployments / # of communities using collab.land 2. `#` of wallets staking in the marketplace 3. TVL in the marketplace (where is this value held?) - Is this held in Origami DAO - Is this held in multisig somewhere? 4. `#` wallet connections / number of people - Harder to surface this information 5. `#` product integrations, (Collab.Land Actions / Miniapps) - Harder to surface information (when is an integration considered done?) 6. `#` of installs of Miniapps on the marketplace 7. `#` of Miniapps that make it to the marketplace as a % of total Miniapps (Goodharts Law) - Maintaining Quality of applications being delivered - Maintaining Quality assurance 8. `#` of communities using security Miniapps 9. `#` of Membership NFTs minted 10. treasury diversification across tokens 11. `#` of active voters as a percentage of total member NFTs ## **2. Strategy:** - What are the different approaches to achieving the DAO’s agreed-upon goals? - Eg. ‘Focus on deployments of the collab.land bot, drive application development to the Marketplace, which would lead to more utility and thus greater TVL’ - Eg. ‘Focus on retail adoption of crypto’ **How do we increase each of the Metrics outlined above?** ### We expect there to be three main categories of strategies: 1. Adoption (focused on reaching mass adoption and market share) - `#` bot deployments (less inactive) - `#` wallet connections / number of people - `#` product integrations, (Collab.Land Actions / Miniapps) - `#` of communities using collab.land (active) - `#` of installs of Miniapps on the marketplace 2. Value Accrual (accruing value to Collab DAO) - `#` of wallets staking in the marketplace - TVL in the marketplace (where is this value held?) 3. Risk Management (financial, technological, and social) - `#` of communities using security Miniapps treasury diversification across tokens - `#` of active voters as a percentage of total member NFTs - Example of a strategy proposal template/framework: - Goals and metrics the strategy looks to drive progress in - Outline the execution strategy or thesis - Detail around existing data or evidence to support this thesis - Detail around any risks associated with this strategy - If this strategy succeeds, what is the happy case? - If this strategy fails, what would be some reasons? - What are some example initiatives that would fall under this strategy - Assessment of the strategy’s maturity and if there is additional data that needs to be collected for the validation of this strategy - We expect there to be many valid strategies that the DAO can adopt to achieve its goals. We should both carefully assess the validity of strategies while also focusing on experimenting and validating new strategies. - The maturity of each strategy and progress being made on each front should determine the level of resources being allocated by Safe DAO towards initiatives under that particular strategy **3. Initiatives** - Initiatives are work proposals that are funded by Collab.Land DAO - Initatives are more traditionally thought of as more traditional 'DAO proposals' - Example of an initiative proposal template/framework - Which pre-approved strategy is this initiative driving forward? - Which metrics and KPIs will the initiative be measured against? - Who is the accountable initiative lead? (individual or organization) - What is the initiative about? - What resources are being requested from Collab.Land DAO? - What risks does the initiative entail? - Timeline/roadmap of milestones for the initiative - Are there any upfront funding this initiative needs at the beginning - The requested $COLLAB success reward if the team achieves all work milestones - Operating procedures around initiatives: - All initiatives must be driving forward an existing DAO strategy - All initiatives are funded by streamed payments via a tool such as superfluid or sablier unless the sum of funds is < $10,000 - The proposer may request an initial lump sum to kickstart the initiative, but the lump sum may not exceed more than 20% of the total funding requested for the project unless the project timeline requires less than 3 month to complete ![](https://i.imgur.com/sjPwlT7.png) **4. Review:** - Collab.Land DAO will operate on seasons lasting 4 months each consisting of a work period and a review period: - Initial 14 weeks of operational focus - Followed by a 2 week review period in which the funded initiatives of Collab.Land DAO will be reviewed by token holders and delegates - During the review period, all initiatives with streams of funding are subject to review and be required to share progress updates - they however do not need to re-apply for funding and drive a proposal through governance if their pre-approved funding extends beyond the prior work period - The DAO will also review existing approve strategies and may also decide to remove supported strategies too - Any new strategies and initiatives for the DAO must be proposed before this period to be considered for funding or approval - If token holders and delegates wish to terminate an initiative, the rest of their approved funding are returned to the DAO (all unspent funds and unvested tokens) We expect the first review cycles for Collab.Land DAO to take a bit longer in practical reality but, over time, get to a better place of operational predictability. For the first review cycle that emerges of Collab.Land DAO, we want to take extraordinary care to walk through the process carefully to educate all community members involved about the process and invest time with involving delegates. #### Voting thresholds for governing strategy, initiatives, and review We suggest there be minimum thresholds in governance power for being able to vote on the DAO’s core strategies, initiatives, and review cycles as a means of encouraging coordinated delegation parties to emerge in the governance process while also discouraging low effort and low signal participation. We suggest the following parameters: * Governance on strategy: minimum 1% of circulating supply * Governance on initiatives: minimum 1% of circulating supply * Governance on review: minimum 1% of circulating supply #### Incentives for reviewing initiatives Once the first review cycle emerges, there will be an open question on how to properly incentivize the review of this work, as this becomes an operational burden on token holders and delegates. We can expect professional delegates that take a delegate management fee on tokens to emerge as a result of such incentives. MakerDAO currently has a model for rewarding delegates ([MIP-61](https://mips.makerdao.com/mips/details/MIP61#sentence-summary)), and we can expect a similar design to emerge here eventually. # Why no working groups? Typically working groups within DAOs are funded on an ongoing basis, with very little oversight where many critical decisions around strategy left for contributors to decide. By first defining strategies as a DAO via token holder governance, it enables clarity of operating strategy and direction for contributors to focus on contributing as opposed to overly involving themselves in governance and other areas of their core competency. Initiatives are then funded based on pre-approved strategies and curated based on their ability to efficiently produce metris driven results for the DAO. As such, with Collab.Land DAO, there are no 'default' working groups. While working groups may form and request resources to drive initiatives forward for Collab.Land DAO, there are no ‘official’ working groups to which the DAO will default responsibilities towards. Any arbitrary individual or group will be able to apply to contribute towards the DAO via initiatives. We instead look to foster many groups contributing to Collab.Land DAO, some cross-functional, others specialized in certain functions. By assessing contributors based on metrics/KPIs and fostering a free market of working service provider options, the DAO is able to assess and reward its contributors in a manner that is politically minimized and free of governance capture from any single contributor group. The goal here is to open up a free market for teams to offer bids for work in relation to the DAO as opposed to many of the other DAOs that ‘officiate’ working groups and their working group leaders into permanent positions purely based on being ‘early’ or having social capital in the community. While this model might introduce sub-optimal resource allocation towards initiatives, it is a design that minimizes the political friction of Safe DAO. We can think of the current status quo of working groups as highly inefficient government-subsidized departments and the initiative-based model as a free market-based model that encourages the formation of service providers for the state that operates under the pressure of competition and a free market. While a working group model for earlier stage DAOs might fit better due to the need to be more iterative with feedback loops and strategy, Collab.Land DAO has product market fit and a natural monopoly. At a smaller scale, you can operate with greater uncertainty without the overhead of politics, but as you scale, the political environment is a variable you want to minimize. In every case, we’ve seen an over-reliance on working group-based models suffer similar fates to centrally governed economies and have fallen to democracy and governance hell. In every case, we’ve seen an over-reliance on working group-based models suffer similar fates to centrally governed economies which we've historically seen to fail. In this outcomes-based governance model, we look to place a heavier emphasis on debating strategies first before deploying resources and having metric-driven feedback review cycles on the DAO’s allocation of resources. reviewing the DAO’s work. Slow is smooth, smooth is fast. #### How do we retain crucial functions for the DAO without working groups? There may be areas of critical function for the DAO that may need ongoing functions, such as smart contract security or full-stack security audits to which the DAO should look to create a risk strategy to which various service providers can bid for the ongoing responsibility required to be filled by the DAO. The difference here is that there will continue to be regular review cycles for service providers retained by the DAO and that there might even be several service providers that are engaged to support the same very initiative. We expect risk-based initiatives to be much longer than and steadier supported by the DAO as opposed to other initiatives surrounding adoption or value accrual, as these areas are far more dynamic than risk management. #### Design principles * Limit the scope of the DAO’s scope of governance and push complexity to the edges * Establish a resource allocation process that limits politics and rewards merit/data * Allow for bottoms up open source resource allocation and opportunities to contribute, but only if there is pre-existing clarity and due diligence around strategy * Keep it simple stupid (K.I.S.S) #### The evolution of Safe’s operating model This operating model looks to soften the landing of Safe from a centrally operated organization into an open-source DAO. We expect this operating model to evolve as the core organization currently driving forward Safe gradually decentralizes over time. For the time being, this operating model simply looks to accommodate community-driven resource allocation toward grassroots initiatives. #### Non-resource allocation-related proposals There will be many other proposals that are non-resource allocation related, such as smart contract parameters or token list upgrades, and we expect those to have their own set of processes governed as needed by the rest of the DAO. This operating model mostly has looked to zero in on resource allocation, which has been mostly been the number one point of failure in other DAOs. #### Governance references that inform our point of view: * Working group models often face sustainability challenges and sometimes lead to Principal-Agent problems or entrenched leadership * [Index Coop Open Letter](https://gov.indexcoop.com/t/index-coop-open-letter/4147) * [ICC Communication on Reduction in Contributor Spend](https://gov.indexcoop.com/t/icc-communication-on-reduction-in-contributor-spend/4307) * [The MKR holder Confessional](https://forum.makerdao.com/t/the-mkr-holder-confessional/15164) * [Gitcoin Compensation Sustainability](https://gov.gitcoin.co/t/dao-compensation-sustainability/10604) * [Gitcoin Treasury Runway Analysis](https://gov.gitcoin.co/t/gitcoin-treasury-runway-analysis/11077) * [Resiliency Challenges & Risks Register](https://ses.makerdao.network/resiliency/challenges) * [Sushi Tries to Pick Up the Pieces: A DeFi Governance Case Study](https://www.coindesk.com/tech/2021/12/30/sushi-tries-to-pick-up-the-pieces-a-defi-governance-case-study/) * [Sushiswap Scandal](https://rekt.news/sushiswap-scandal/) * Without established KPIs or accountability, both contributors and funded projects lack clear goals and metrics to work towards * [Governance Proposal 005 - DeFi Education Fund](https://gov.uniswap.org/t/governance-proposal-005-defi-education-fund/12963) * [Concern as Uniswap-backed 'DeFi Education Fund' dumps $10M worth of UNI](https://cointelegraph.com/news/concern-as-uniswap-backed-defi-education-fund-dumps-10m-worth-of-uni) * [Thread highlighting lack of communication and updates from the DeFi Education Fund](https://twitter.com/cobie/status/1487456870696689673) * Too much human governance can result in potential attack vectors * [MIP-13: Merit Circle: A New Era](https://gov.meritcircle.io/t/mip-13-merit-circle-a-new-era/469) * [Twitter thread breakdown of Merit Circle events](https://twitter.com/itstimconnors/status/1536734104422522881) * [SLND1: Mitigate Risk From Whale](https://app.realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxPMnXJUZ1Hn/proposal/HuaL6cDtuNtfnJgvwMnYiZDHVCoLAuDtVFgJD8kYChJ4) * [The Problems of DAO Governance: GLF22 Survey Results](https://glf.digital/fa5a954c2cfd429ba60122cc3ac3189e) * [Compound governance is disorganized](https://www.comp.xyz/t/compound-governance-is-disorganized/2135) Our goal here is not to refute the tremendous contributions these DAOs have made to the space for their experiments are necessary to understand the viable design space of coordination better but instead to acknowledge the risks involved and seek an alternative structure that accounts for these common pitfalls. # Next steps * Feedback from community members on this operating model * Ratify a revised version of this operating model as a DAO via a community vote * If the community ratifies the operating model: * Propose a set of metrics and KPIs for Collab.Land DAO as a community proposal * Propose a governance framework for developing strategies (a way to propose new strategies and a process to validate them) * Propose a governance framework for proposing initiatives (that drive forward approved strategies) ==== This initial draft here aims to open up a conversation and gather feedback. We’ll be iterating on the design and execution of this model per community discussion. ps. Please fork these ideas and apply elsewhere as needed.