Governance and Reputation (REP) 🗳
Governing the Engine for Sustainable Open Finance
In order for PrimeDAO to become an adoption engine for open finance, good governance is crucial. DAOs are unique in their ability to leverage Web3 primitives, such as open access, tokenomics and smart contract programmability to provide an effective environment for multi-stakeholder coordination. By design, DAOs benefit from decentralized governance as the diversity of participants and voices increases the resiliency of the organization and contributes to a strong fit between different stakeholder groups and the organization. PrimeDAO practices Holographic Consensus—a governance mechanism native to DAOs powered by DAOstack that streamlines the attention of the collective. Central to Holographic Consensus is Reputation (REP), non-transferable voting rights used for voting on proposals. Reputation can be earned by contributing to the development of PrimeDAO. Similarly, through proposals, PrimeDAO may slash REP from stakeholders in case of misalignment with the whole.
Governance Architecture
With Prime’s introduction to the Ethereum mainnet, a potential schism emerges with the Reputation ledger of Prime on xDAI. Reputation-holding members on the Ethereum mainnet may not have the same quantity as the members on xDAI. Left to itself, without any intervention, this schism would grow and effectively create two separate governance assemblies that do not accurately mirror each other.
But, why not just use the mainnet version of Prime? Why do we need two DAO instances in the first place? The answer is clear: Ethereum’s oppressive gas prices make the cost of governance too high, and in some cases, impossible when the network is extremely congested. This corrupts the governance process, diminishing its legitimacy, and violates Prime’s commitment to diversity. How can we reasonably expect a diverse range of participants to govern, when voting is unaffordable?
The interim solution to this issue, as determined by the DAO through this proposal, is that Prime’s governed protocols and interfaces that exist on the Ethereum mainnet — such as primedao.eth — will be governed by a DAO, but this DAO will be a “vessel” of its xDAI counterpart. Through a social consensus, Reputation-holding members of the mainnet DAO agree to follow a single source of governance truth — Prime on xDAI. Prime’s members have agreed to do governance through a single, designated entity, and then apply passed policies to other parts of Prime’s cryptonetwork. Keep in mind that Prime’s xDAI/Mainnet DAOs may only be the beginning of a network of entities that are deployed across multiple chains. While entities on other chains may not be technically interoperable without heavy R&D, they can be socially interoperable, as long as policies enacted comply with the source of governance truth.
In order to accurately mirror the Reputation values of Prime on mainnet, every builder cycle, a new xDAI DAO will be deployed — a Burner DAO. Burner DAOs will be deployed by trusted stewards as determined by Prime. Deploying a Burner DAO is an incredibly easy process, taking as little as fifteen minutes to complete using DAOstack’s xDAI DAO Creator. Burner DAOs will match the Reputation of PrimeDAO on the Ethereum mainnet, similar to a snapshot mechanism. While this solution is clunky, a handful of elegant solutions are being explored by different teams to unify Prime’s xDAI and mainnet instances. The DAOstack team, for instance, is exploring a DAO scaling solution similar to the solution pioneered by Snapshot and the Aragon framework. Nonetheless, PrimeDAO is open for proposals, and builders who want to create these scaling solutions — if you think you have the answer, submit a proposal!
Governance Cycles
Admittedly, periodic Burner DAOs aren’t an elegant governance solution. But they do bring an unexpected benefit by introducing a cyclical rhythm to the governance of the DAO. Many projects today in blockchain find themselves encumbered by non-stop governance. A mistaken assumption tends to be made that as cryptocurrency markets function 24/7, governance should also function 24/7, regardless of how the human mind or collectives actually work.
With this in mind, PrimeDAO has approved a given builder cycle, loosely analogous to sprints:
For the first week of the cycle, new proposals will be submitted to a recently deployed Burner DAO for ratification. It's this week that the governance assembly participates in proposal curation, passing the most value-aligned proposals, and courteously declining the remainder.
Following this, the xDAI proposals, if passed, are submitted to the Mainnet DAO with rewards attached. Since a social consensus is being enforced, those voters who do not follow the social consensus should expect to have their mainnet Reputation slashed if they act counter to the source of governance truth.
In the last week of the cycle, contributors will share and review their work, presenting results and stating ongoing challenges that require further assistance. In parallel, contributors will present pre-proposals — proposals that have not yet been submitted to the DAO — to the public for open comment and review. Part of PrimeDAO’s Code of Conduct is self-accountability, and contributors are expected to maintain norms of transparency in this regard.
Deploy a new Burner DAO and repeat ...
The main advantage of this rhythmic process is streamlining attention: if the collective is aligned in its virtuous, value-creating cycles, it can achieve optimal levels of efficiency, transparency, and co-accountability. Over time, the DAO should adapt these cycles to best represent its organic processes and rhythms that emerge. Structurally, can even imagine more Burner DAOs beyond the general assembly of Prime’s mainnet Reputation holders — squads, campaigns, and joint ventures that have specific missions and initiatives assigned to them by the DAO. People have limited attention, and knowing what, when, and why they need to focus on certain things is extremely helpful to aligning and elevating a collaborative network like Prime!
Locking PRIME for REP
The initial REP distribution was based on merit and optimizes for good governance, vision alignment and stakeholder cooperation. Initially, 5,500 will be distributed at the launch of the DAO. Further distribution will be governed collectively by the PrimeDAO REP holders and is only possible through governance PRIME may be locked to generate REP and join the DAO’s governance body — having the option to govern helps align token holders. With the transition to the Growth phase, a six-month locking period will be opened that doubles the DAO’s REP. Alternatively, you could look at it as halving the current voting power of the DAO’s voters today. Locked PRIME is non-transferrable, similar to the way vesting works in traditional start-ups.
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