Updates to EnDAOment Criteria

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Ferns in New Mexico, shot by the author

A lot has changed since we first published the Regen Network Whitepaper in October of 2017! DAOs have taken off as a mechanism of blockchain governance, and numerous tools and conventions have been developed.

We’re ready to launch our first two Community Staking DAOs on Regen Ledger—with Commons Stack and OpenTEAM.

Following the “built-in-public” ethic, we’d like to revisit the original enDAOment criteria and have an opportunity to reflect on what has shifted in the past few years.

Here’s what we had written in the whitepaper:

5.5 Community Staking Pools

30 million $REGEN will be placed in the Community Staking Pool at genesis block, split between no less than three constituency groups.

Criteria for a constituency DAO formation (taking over keys):

  • Signed by no less than 10 addresses that are verified by Regen Foundation and the Validator Set
  • KYC/AML: Organization in good standing in approved legal jurisdiction of incorporation (list pending)
  • Ratify a statement of fiduciary responsibility for ecosystem health clause in corporate bylaws of organization of signer.
  • Exclusive use of network through DAO Agreement: The organization must sign a legal document stating that they do not and will not personally hold or manage any $REGEN for any reason (e.g. that they will restrict their interactions with the network through the DAO that they belong to and manage). Note: if this is discovered to not be true, this organization will be removed from the constituency governance DAO by vote of the DAO.
  • Drafting and adoption of DAO operating agreements
  • Legal reflection of DAO operating structure: DAO must be incorporated in appropriate legal jurisdiction and have contracts with Regen Foundation outlining the appropriate responsibilities and rights.

Like any staked entity on the network, a DAO can both be slashed and will earn block rewards and fees and can vote on what to do with those fees ensures that this community is deeply aligned with the shared value generation of the network.

Before these DAOs have come online, the Foundation will steward these token pools by delegations to approved validators. The approval process of these validators will follow a strict selection process which will prioritize:

  • Security and competency of operation (no delegations will be allowed to operators running purely cloud-based set ups)
  • Rating of support of bootstrapping the network (performance in test nets and longevity of testnet participation)
  • Distribution of stake to ensure diversification security

All of this stake will be validated as close to genesis as possible. Redeligation will occur for security and any actions deemed abusive to the community (such as fee gouging). Until which point the DAOs are formed, Regen Foundation will abstain from voting tokens reserved for future constituency DAOs (promise of no overrides). 

What does the process look like now?

Each new DAO signs a “Grant Responsibility Expenditure Agreement.” This agreement was originally drafted before we planned on using it for the enDAOment process. Token grants used in the formation of DAOs are rather unusual, in that they’re permanent endowments. This document was originally written like a normal grant agreement—assuming funds would be received, spent down, and the grant would be concluded. The agreement has been updated to take into account the permanent nature of these grants. Given this direction, we’ve renamed the part of the document that articulates the purpose of the grant as the “charter.” This term better articulates the weight of DAO formation.

To look at an example, Common Stack’s charter outlines the Foundation’s grant for the following purpose:

for Stewarding the Community Staking DAO, Ambassadorship (e. g. curation, research collaboration, events and speaking opportunities, AMAs, content creation), Strategic Advisory Support (e. g. case studies from the Token Engineering Commons launch, community staking DAOs incubation with the Trusted Seed and/or Donor Advised Funds, explore synergies in crypto-philanthropy and using Giveth), and support the launch of multiple DAOs/Commons deployments within Regen Network via advisory support and community cross-collaboration, communications, events, and promotion.

The grant document has also been updated with various disclosures. As these token grants are permanently locked, Regen Foundation does not have the ability to rescind grants. That said, if a DAO shifted to malicious activity, etc. Regen Foundation or another community member could bring about an on-chain referendum for token holders to consider whether or not that DAOs funds should be confiscated (just as any blockchain can do, such as during the infamous hack of “the DAO” on Ethereum in 2016). Additionally, as outlined in the grant agreement, recipients commit to publicly publishing financials and updates, so that the larger community is aware of their contributions and status.

One of the legal requirements we’ve realized in the DAO formation process is that, as these are technically grants, we need a non-profit fiscal sponsor on the receiving end (although this non-profit can be a pass-through entity). In the cases of our first two DAOs, there is an affiliated non-profit. With future DAOs, we will likely encounter scenarios where we need to recruit non-profit community members to serve as fiscal sponsors to receive a DAO grant, and foresee this as a place we need to grow additional network capacity.

We’ve also learned that incremental token grants complexify DAO administration, as, in the current codebase, locked wallets can only receive an initial transfer of locked tokens. Each additional grant requires a fresh wallet with no transaction history. There may be work arounds—such as future upgrades to the codebase, or a DAO simply having multiple REGEN wallets.

On the pattern level, we’ve realized that there are at least two meta types of DAOs: bioregional (organized around a geographic location, such as the Amazon) and guild (focused on an arena, such as remote sensing). We’re still exploring the implications of these distinctions. As our Board Director, Kei Kreutler, pointed out on her recent interview with Epicenter, the one thing that she’s confident DAOs will be in the future is multi-chain, and we anticipate both bioregional and guild DAOs integrating other aims and communities (Commons Stack is a good example of this, in that their DAO already lives on xDai/Gnosis Chain, so this REGEN grant will bring them into the Cosmos SDK space).

We had imagined a set of selection criteria in October 2021, and set their “expiry date” for February 2022. So now is the time for review and design of the next generation of metrics.

Are you interested in participating in co-evolving these criteria, and the way in which DAOs enter and move through the enDAOment pipeline? Please join our bi-weekly governance calls at noon Eastern on Wednesdays. Reach out to us on Discord or Twitter to be added to the calendar invite.