Genesis DAO

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Dissensus Governance in the Genesis DAO

Jaya Klara Brekke, Kate Beecroft and Francesca Pick:

"The Genesis DAO was one of the first decentralized autonomous organizations created after the DAO incident. It was formed by a startup called DAOstack who raised $30 million equivalent in an ICO in May 2018. Its objective was to run experiments using their decentralized apps (Alchemy), protocol (Genesis Protocol), and crypto token (GEN) with a real community and real funds, and to finance the development of this technology ecosystem. DAOstack’s governance mechanism, described in detail in their whitepaper (DAOstack, 2018), is called “Holographic Consensus” and combines voting, staking, and reputation. The ideal DAO is defined as “an entity that not only lives on the Internet and exists autonomously but also heavily relies on hiring individuals to perform certain tasks that the automaton itself cannot do” (Buterin, 2014). Humans are on the outside, with coordination taking place automatically from the inside by an algorithm. The essential concept is to program the required rules and decision-making of an organization into code on a blockchain, with the idea that it will minimize the need for governing roles (Mehar et al., 2019).

The Genesis DAO is a good example of a unique trait common to many DAOs, namely, that they comprise highly motivated groups that have formed around a set of ideas about governance, rather than governance being a means in order to achieve some shared mission. In other words, it was tool-centric and focused on one main action: allocating funds to proposals. It is unusual for people who are strangers to start making financial decisions together immediately without having time to develop coherence and trust. And this was in fact the very promise of projects like the Genesis DAO: that the technology would bypass the need to develop trusted relationships, meaning thousands of people would be able to coalesce around objectives, take actions, and even spend money together as a group.

As the centerpiece of the community, the design of the Alchemy app had a strong impact on how the group culture developed. Alchemy is an app for decentralized resource allocation through voting. In the case of the Genesis DAO, this tool-centeredness however created a self-referential dynamic: many people who joined were already convinced that DAOs were a solution to governance problems, and wanted to have a live experience of one. Having a simple concrete task—voting on fund allocation—was on the one hand catalyzing, because it encouraged clear lines of engagement; at the same time, the group seemed constrained by a focus on the functionalities, limiting the capacity for off-chain discussion and healthy dissensus. This manifested in an inability to “think outside the tool,” resulting in the group having to relearn and establish norms for many things that might seem obvious in other contexts. For instance, the first version of Alchemy did not have a comment feature for proposals. This meant that participants simply went straight to putting up proposals (an irreversible action that you pay for in Ethereum gas cost) as well as voting, without any conversation or deliberation beforehand. This was often frustrating for proposers if their proposal did not pass, because they had no way of knowing why it was not accepted, had already paid, and had to repeat the process if they wanted to improve on it. One might expect that in such a situation people would start talking to each other about their proposals off-chain; this however did not happen naturally. Instead, it had to be proposed as an explicit, recommended norm that participants should have conversations about their proposals outside of Alchemy before submitting them. This development was at odds with a recurring debate raised by “DAO maximalists” in the group, who repeatedly advocated for interactions outside Alchemy to be minimized for the majority of interactions to take place on-chain. In other group contexts, the idea that one would vote on something without having ever talked about it as a group is quite unusual. Indeed, voting tends to be a last resort if agreement cannot be reached otherwise.

Norms and new product features were developed to support higher group coherence, but the Genesis DAO continued to be unconducive for surfacing nuances and disagreements. Although the experiment generated valuable insights about DAO implementation, it also lacked a clear purpose and objectives that might otherwise have motivated participants to work through disagreements, beyond “Supporting a healthy GEN-Economy.”1 Since many voters remained anonymous, proposers often did not know who voted against their proposal, creating an additional barrier to engaging in a discussion. The fact that decisions are executed automatically, no matter whether conversation takes place or not, generally had the effect of discouraging it. Instead, it was all too easy to disengage or disappear when dissensus arose. Low proportional voter participation led to much speculation about what a “no vote” meant. Were those not voting abstaining because they had no opinion or no time? Had they registered, left, and never come back? Were they silently disagreeing, or already left because of a diverging opinion? Apart from engaging with the group on other communication channels, there was no way of knowing whether silence meant silent agreement or silent dissent. This dynamic led to a stagnant feeling in the group, hindering it from collectively learning and working through issues as they arose.

One example of this lack of collective learning was a proposal created to slash the reputation of DAO members who had not participated in voting for more than six months, to avoid reputation being locked up by inactive members. In its first attempt,2 this proposal, which had not been discussed on community channels prior to being posted, was rejected “without much conversation.”3 Subsequently, the proposer asked for feedback on the online forum and created an improved second proposal, which was unanimously passed.4 However, when we take a closer look, we can see that all the members who voted against the first proposal did not vote on the second one. This leaves open questions: Do they now agree with this modified proposal? Or have they disengaged because they disagree? If the proposal in question pertained to financial allocations, changes to users’ reputation, or protocol changes, the answer to these questions would not matter, since the decision would be automatically enforceable. However, this was not the case, because in order to implement the reputation slashing proposal, it would require submitting and passing additional proposals to slash the reputation of each inactive member. Therefore, the passed proposal is no more than a “temperature check” to gauge people’s level of support, a practice often used in the Genesis DAO for agreeing norms or strategic objectives. As this particular case illustrates, the GenesisDAO ledger does not give us a realistic understanding of what happened. It shows that the second proposal was passed, but that as of yet, the proposers have not gone through with executing its content. It does not show why—whether the proposers do not see enough support for it to feel legitimate or whether they have disengaged themselves or just changed their mind.

In conclusion, the Genesis DAO is significant in that it attempted to realise many of the ideas of what might become possible with DAOs. But the experiment led to disengagement and important information about disagreements being lost rather than feeding into discussions that might lead to organisational development and growth."