TLDR: Proposal to establish an Ecosystem Treasury DAO. Proposal includes member selection, funding this treasury with up to 200M $NEAR from NEAR Foundation and potential types of allocations. The next step is for the NEAR community to give feedback on this proposal and, if no major concerns are surfaced within the next 2 weeks, to launch the vote for initial members of this DAO.
The NEAR Ecosystem is growing at an exponential rate and there is not single organization that can efficiently manage this. This is why decentralization is important not only on the technology and community side but on the strategy and funding side as well. To achieve this, a DAO of DAOs approach is taken: lots of small DAOs each with specific purpose around supporting a Guild, a project or a type of fund allocation.
At the root of DAO of DAOs is Treasury DAO - the one that allocates to the first level of sub DAOs and decides on the high level which directions to invest in the ecosystem. Transitioning this role from solely NEAR Foundation to a decentralized organization is Foundation’s long term goal and has the benefit of increasing transparency, involving more people in the process and being more flexible around some decisions.
Establish a DAO as the NEAR Ecosystem Treasury to grow the Ecosystem. DAO members will be identified via delegation of staked $NEAR to pseudonymous and known actors (see Tech Details).
To scale the fund allocation, the Treasury DAO is not expected to allocate funds directly into projects / initiatives. Instead, the Treasury DAO will allocate funds into other DAOs. Members of the Treasury DAO will focus on defining the strategy for allocating the funds and due diligence/reviewing of DAOs to fund into.
Members will need to select the “Chair” who will be responsible for driving members to come up with the high level strategy, collecting information about proposals, and enforcing the timeliness of the DAO’s decisions.
The work of the Chair will be compensated from Treasury DAO, as this is expected to become a full time job and may require a team and funding other DAOs / projects to do research. The rest of the members initially are not expected to be compensated, as they are already holders of $NEAR, but Treasury DAO could potentially establish a compensation plan as well. The Chair is also responsible for providing transparency into allocations back to the community by participating in Town Halls and presenting progress of allocation and subsequent results.
NEAR Foundation will allocate funds via public grant to the initial members of the Treasury, who have known identities in the ecosystem. The initial size of the grant is proposed as 30M $NEAR.
The Treasury DAO grant can be renewed to cover the rest of the Ecosystem’s funding from token distribution (up to 200M $NEAR total) if the Treasury DAO has not had any issues and has earned the support of the community.
Due to technical limitations of staking and lockup contracts, there is a problem with enabling continuous delegation. The process also is more predictable if there is a specific voting period requirement rather than rolling or continuous voting.
There will be a delegation smart contract DELEGATION. On every first day of the quarter, the checkpoint of current delegations will be taken and committed to the DELEGATION contract. Anyone can register as a candidate for delegation, provided they have 10k $NEAR staked and include some information about their role in the ecosystem and identity: role in the ecosystem (validator, developer, investor, etc), twitter handle, description of how they see their position in Treasury DAO and anything else they want to share.
Each account that has staked or delegation then can call delegate(account_id, amount_pct) function on DELEGATION contract to allocate a percentage of their stake to one of the candidates. Every quarter when the stake is updated, the votes for a given account get rescaled to the amount they have staked in the snapshot (e.g. if a user had staked 100k $NEAR on June 1 but only has 50k $NEAR on July 1, their delegation weight will reduce by half).
At the end of the quarter, the votes go into effect, reweighting and potentially changing current DAO members. To facilitate communication and information sharing, members should use the NEAR ecosystem forum at https://gov.near.org (though we expect that there will also be a dedicated Telegram or other messaging group and bi-weekly meetings to be managed by the Chair).
To prevent the “tragedy of the commons” pitfall of too large a group where participants become inactive, the DAO membership is limited to the top 21 delegates.
The DAO will make decisions via voting of the members with a quorum achieved by 11 of delegates.
The Chair is appointed by the DAO members via vote and will be active until explicitly changed by the current members. The Chair does not need to be a standing member of the Treasury DAO.
The community has already proposed several DAOs which could potentially get funding from Treasury DAO in its first voting period. These include:
- Liquidity DAO: a DAO focused on funding liquidity incentives and other DeFi needs in the ecosystem.
- Marketing DAO: a DAO to fund operations of Guilds focused on awareness and marketing for ecosystem projects. NEAR already has a number of guilds like this and they are important to grow awareness and spread information across the ecosystem in a more emergent, decentralized way. It’s already clear that the NEAR Foundation is not an efficient way to do this for the whole ecosystem.
- Grants DAO: DAO that allocates grants to builders in the ecosystem. This is to augment the existing NEAR Foundation Grants Program and provide a more scalable and transparent approach going forward.
- Guilds DAO: a DAO that would allocate funds to all the Guilds in the ecosystem.
Collecting the list of potential funding recipients and ensuring timely decisions by the delegates will be the job of the Chair initially. The Chair will be facilitating KPI collection from the funded DAOs and report back to the ecosystem on the result at the end of each quarter.
A comparable example is a VC that invests into independent companies and collects information about their investment for their LPs, which in this case are all NEAR holders. Using this information to learn and improve how to best do these decisions will also be big factor.
This Treasury DAO proposal is active for discussion until June 30, 2021. Incorporating feedback from the community will be a major part of this process. After that is done, and if the proposed plan is mostly intact after the discussion, the technical implementation will kick in.
NEAR Foundation will allocate the grant if the amount of voted tokens is above 66% from the total staked (excluding Foundation’s delegations) indicating that a critical part of the network is participating in the selection process. If 66% are not achieved within 30 days from the start, NEAR Foundation will be responsible to collect information about why a large percentage of stake didn’t participate, provide a report with community feedback, and suggest another iteration of this process.
The goal for the selection process would be to guarantee a set of initial members who represent different stakeholders in the ecosystem: validators, projects, DAO operators, strategic investors and thinkers. NEAR Foundation should help to promote candidates from various stakeholder types, balancing out the initial membership in the DAO.
PS. For more on how I believe DAOs are changing the way people are working together read and how Sputnik can provide tooling for that: Sputnik DAO: Empowering Communities | by Illia Polosukhin | SputnikDAO | Jun, 2021 | Medium