Q.) Donnie (@donniesparks) from the community Telegram asked:
"How can we be assured that the dao funds are fairly given to projects that aren’t connected to anyone within DAOstack. It’s very important that this process is transparent because it is using funds raised by token holders. Cheers
For example the test pilot funded Enspiral and their book. What was the process and how can we make sure large funds aren’t moving to other projects if this is the use case scenario. For example “dao 1” use case has been awarded 20,000 in eth for such an such reason. This has to be very very carefully processed or its gonna look bad if we find out “daves cousin” won. If you get me"
A.) Answered by @matan [CEO/Architect]:
Hey @donniesparks, good point. The whole idea is that the funding decision-making process will be made over the Alchemy platform with a wide decision-making power distribution, by the crowd. This power distribution will not happen in one day (we also want to make sure the DAO makes good decisions, aligned with the DAOstack long-term needs), but already in the internal pilot there are about 40 decision-makers. In the next phase (about a month from now) there’ll be many more reputation holders, and so on.
In fact, this would be, by design, a very transparent process, where you could see who voted for what and how decisions were made. More transparent and widely decided than any other project out there today.
In parallel, and until the Genesis DAO is fully active, the DAOstack non-profit is stewarding the funding process of projects contributing to the DAOstack eco-system, and an announcement of any funding decision of this sort will be made.
Donnie followed up with: "Sounds good. But nearly all crypto projects at the moment are just fund raising mechanisms. Whenever an ico is done the first thing they work on is other people’s icos and build to help other people do icos. I’m tired of the fund raising. I’m tired of putting people upside down and emptying pockets it’s getting ridiculous. I’m all for crowdfunding but at the moment it is becoming extreme."
I agree with you 100%. We’re only (mostly) interested to build real stuff, products on the blockchain that people actually need and will use (and which will make a big impact too). We’re building real stuff ourselves, but even better, we want many others to build real stuff on the DAO stack for greater scalability of operation, adoption and ecosystem growth.
Every DAO has to have a “seed” of reputation holders, that define the alignmnet, value system and goals of the DAO. Further reputation holders added will be gradually “filtered” by their alignment with the seeding group (i.e. whenever you make decisions aligned with the majority your reputation increases and it decreases otherwise). The DAOstack team, and the group of pollinators and advisers of the project, make the seeding group of the Genesis DAO, and in the next stage we’d like to add many more people to the decision-making circle.
Those who’re misaligned with an existing DAO can at any time fork that DAO and open a new one, where they are the seeding reputation-holders group, and thus define its goals and value system. This system of increasing alignment (by reputation flow towards those aligned with the majority) and diversification (either via growth of the DAO or via forking) will optimaize itself between “too much forking” (better alignment of one self with his goals, approaches and values but worse collaboration thus lesser scalability of operation) and “too much collaboration” (better scalability but too much compromise on one’s goals, approaches and values) via natural selection and economic evolution.
Followed by: "I know it would be transparent but if your handing out eth it needs to be transparent now or people like me will just think your passing eth around your brothers."
As said, any funding of external projects will be transparent, and is already so right now.
On the other hand, we’re not publishing each and any expense of the DAOstack company (we will issue reports of financial expenses down the road), and no other project does so, not even the ultra transparent Ethereum.
There needs to be a balance between maximal level of transparency on one hand, and sense and effectiveness of operations on the other hand. I can guarantee you that DAOstack is and will be pretty much on the radical end of transparency on that spectrum, significantly more transparent with respect to almost any other project in the space.
But you also need to rememeber, at the end of the day, that backing a project means backing its founding team, more than anything else, and if you don’t trust the team and its motivations you should definitely not stand behind the project. Trust can be built based on credibility of the team, and more so its performences. Our performences thus far go way behind anything existing in the space (in terms of level, maturity and ambition of our product), and further performences will be available for further token holders estimation, but these things do take time (and do not happen in few days, nor in few weeks).
Followed by: "Yeah I don’t mean publish how many coffees or train tickets you bought. I get that. You got it bang on by saying “decision making circle” I thought we was all in that circle since its a democratic organisation.."
No, the decision-making circle is gradualy growing. If we made the decision-making circle simply everyone from the first day there would have been no reason to believe that that circle will make the right decision. Not only from the professional point of view (that not everyone have the same knowledge base) but also from the incentive point of view. This is a long discussion, and I plan to publish a blogpost on it one day, but a simple token-based voting leads, inevitably, to a very bad decision-making system. That’s exactly why we’re focusing on reputation-based governance. It doesn’t mean though that this reputation circle needs to be small, and contrarily we want it to big as big as possible — but that will take a little (not too much) time.