[Draft 1] Firming up Governance

Title: [Draft 1] Firming up Governance
Authors: frogmonkee#6855
Squad: frogmonkee#6855
Date Created: October 27th, 2021
Date Posted: October 28th, 2021

:warning: There’s a lot to unpack here. Before I do, I want to recognize that this proposal is coming to light based on the issues around the Olympus Pro proposal. To be clear this is not a personal attack on any individual. The proposal simply kicked the hornet’s nest and surfaced flaws in our governance processes that need to be addressed. This could have easily come from the similar Proposal: BanklessDAO <> Tokemak post, had Tokemak gone to the forums first.

:warning: Please note, This proposal and the Tokemak proposal will not be subject to the terms. Only once ratified on-chain will future proposals be subject to these requirements.

SUMMARY

This proposal introduces some voting parameters and guidelines in response to feedback around the recent Proposal: Olympus Pro post.

Included are:

  • Specificity on what goes to snapshot and what does not

  • Quorum and voting requirements

  • Community education guidelines

  • Proposal wording and presentation

BACKGROUND

  • Olympus Pro was first formally mentioned on October 1st during the inaugural tokenomics discussion.
  • On October 14th, Proposal: Olympus Pro was posted to the forums.
  • On October 22nd, the proposal was uploaded to Snapshot and went live for voting on Monday, October 25th (two days ago).

Since then, voting is 77% in favor, with 5.7M BANK voting no. Relative to previous snapshots, this discrepancy shows a notable divide in the community’s sentiment. Previously, the largest deny vote we saw was just under 600K BANK at 2.66% voting Deny.

Having spent much time listening to people thoughts and concerns, I’ve identified the following pain points:

  • Many individuals were surprised to know this vote would go to snapshot and not to the Grants Committee, as they were accustomed to seasonal specs being ratified on snapshot and the GC distributed the seasonal allocated budget.

  • The proposal went to snapshot before some members could even participate in the forums. Specifically those with less time to participate in day-to-day activities

  • Individuals that were not educated on the topic felt like they had to sit out

  • Individuals felt like their opinions were ignored. Specifically around questions for the 3.3% fee that were left unanswered.

  • The snapshot vote left out crucial information, like a link to the forum post and the voting options were worded were not impartial (Deny option)

MISSION & VALUES ALIGNMENT

Back during Season 0, when we began outlining our governance processes, we emphasized the importance of gathering consensus within the community and using Snapshot as a way to ratify decisions, hence a consistent 95%+ approval rating on prior snapshots. This was because, historically:

  1. Many snapshot voters are not engaged in day-to-day operations in the DAO and will miss a lot of context. Simple things like framing language are enough to significantly sway votes.

  2. Voter fatigue is real. Too many votes is too much noise. This is reflected in Index Coop, which has very low participation on many of their snapshots and is reflected in our own snapshots, with a variance of almost 50% of voters at times.

This is consistent with what Boardroom, a governance platform, is noticing as well.

For these reasons, we have a robust proposal process (unlike Sushiswap that has proposal like this) and a seasonal spec that embeds much of our decision into one ratified vote.

To align with these values, I’d like to introduce a number of different rules and mechanisms that will help us gather community consensus before moving something to snapshot.

SCOPE OF WORK

Proposes a series of changes to governance that, upon soft consensus will be ratified with an on-chain snapshot vote and subsequently included in each Seasonal Spec thereafter, as parameters are likely to change.

SPECIFICATION

What Goes to Snapshot?

Part of the confusion here is understanding what goes to snapshot and what doesn’t. Historically, we’ve sent the Seasonal Spec to snapshot, along with validating project and guild funding. This is the first time we’ve had a purely tokenomic post gain traction and it wasn’t clear to the community that it would go to snapshot. As such, here are few reasons something should go to snapshot. Please comment if you have further suggestions:

  • Seasonal specification [1] [2]

  • Project and Guild funding [1]

  • Governance changes [1] [2] [3]

  • Tokenomic changes [1]

  • Grant committee decision with sufficient conflict of interest (eg. cannot achieve majority vote) [1] [2]

  • Extending budget

  • Emergency vote (“Break glass” scenario)

What does not go to Snapshot?

  • Individual projects funding

  • Additional guild funding

  • Agree
  • Disagree

0 voters

Quorum & Voting Requirements

:warning: Quorum requirements are formalities to achieve sufficient consensus. Culturally, we should thinking beyond quorum. If a proposal reaches quorum and voting requirements, it is your responsibility to capture feedback and dissent in order to achieve better alignment. If someone raises a good point or you gauge sufficient disagreement, go back to the drawing board and incorporate that feedback. @Kouros has a great example with his Gas Reimbursement post. Despite having a nearly 90% in-favor voting, he has opted to redraft his post to incorporate feedback. We are a DAO, we move together. Ape strong together.

We don’t have clear guidelines on what qualifies as quorum. As such, I’m proposing the following. I suspect some of these will be controversial, so I’ve added some context.

  • Snapshot quorum is the average amount of BANK voted with since S2 prep.

  • 80% approval is quite high, but I think we need to be strongly aligned. As mentioned, things that go to snapshot should already have strong consensus. Furthermore, there is a LOT going on in the DAO. A high threshold makes sure that only widely supported ideas get the financial and on-chain support they need.

  • Tokenomics is not explicitly included as proposals would fall within the budgetary ask

  • Timeline refers to how long it must stay up on the forums

  • Emergency vote bypasses forum requirements to go straight to snapshot

  • :rotating_light: Each season, quorum requirements can be updated as part of the Seasonal Spec

Quorum Requirements

  • Agree
  • Disagree (leave comments)

0 voters

Voting Requirements

  • Agree
  • Disagree (leave comments)

0 voters

Timeline Requirements

  • Agree
  • Disagree (leave comments)

0 voters

Education Requirements

Proposals with big asks and governance changes are often complex. As such, they need to be properly communicated to the DAO with time for them to digest and process new information.

In the Additional Requirements section, there are three education tools to use:

  • A short 5 minute presentation on the community call

  • A longer Q&A and presentation, selected at an optimal time via Lettucemeet (needs to be included in the forum post and scheduled after surfaced on the community call.)

  • Presentation must be recorded with at least 1 week to let people listen to the on demand video. This could extend the 3 week timeline if the recorded video is uploaded with less than a week in the timeline.

  • Tokenomic and governance decisions would get priority editorial placement in the Weekly Rollup as an educational explainer piece while they are in the forums.

  • Agree
  • Disagree (leave comments)

0 voters

Proposal wording and presentation

This part is simple and is directly mostly at anyone with the ability to upload to Snapshot (currently all Treasury multi-sig signers)

cc @frogmonkee @0x_Lucas @AboveAverageJoe @Kouros @Grendel @RedVan @Icedcool

  • Snapshot posts must always include a link back to the the proposal’s forum posts

  • Snapshot voting options must be impartial. Something as simple as “Approve” and “Deny” is sufficient in most cases.

  • Agree
  • Disagree (leave comments)

0 voters

FINANCIAL IMPLICATIONS

Not applicable

BRAND USAGE

Not applicable

SUCCESS METRICS OR KPIS

Not applicable

NEXT STEPS

  • Incorporate feedback into a new draft

  • Move to snapshot

SQUAD BACKGROUND

@frogmonkee - Long time contributor to BanklessDAO. Active in Writers Guild, Ops Guild, and strategy for the DAO. Care deeply about governance.

7 Likes

Thanks for putting so much work into this, Frog. Without governance like this in place we could more easily fall prey to aping in on a yes vote. As you say, voting fatigue is real. The processes outlined above will give the time-poor and uninformed (including myself in many instances) more chance to get up to speed before jumping in on something we know nothing about.

5 Likes

I know the grants committee has loose quorum requirements right now for things to go to forums first but unclear if they’re flat or not. Only thing I’ve heard is 20 votes and majority before moving from GC to Forums. I’d like know how people feel that has been working, especially the GC.

I understand the confusion around if something will go to GC or not. Would be clear for that to have been more clear for the Tokemak or Olympus Pro proposals. I feel like there’s room for stuff like these proposals to go to Snapshot but should have a more established process with more guardrails in place.

On quorum. I’m not into these numbers? GC is an elected body from within the DAO and is meant to be the ultimate sanity check on our proposals. I can see different numbers being needed for forum quorum depending on if a proposal is next going to GC or Snapshot.

Clarification on voting requirements, is it for two choice voting refer to the %, if there are more than two choices simple majority? I feel like we maybe just shouldn’t be using more than two choice polls on forums. If you feel a proposal needs further revision that vote should be a simple no. If you’re unclear on a point then ask for clarification and vote after you get it or vote no if it’s not addressed. That’s a bigger ask but setting up all your proposals with 3 options is a good way to secure a positive response more often.

Agree that it should be mandatory for snapshot to link back to the forum proposal. That’s necessary for GC, snapshot shouldn’t be different.

nitpick for the spec, I feel it would be clearer if second bullet under “What Goes to Snapshot?” was changed to “Seasonal Project and Guild Funding” or “Season Grants Committee and Guild Funding”

metrics on how many people have been using the forums and voting on proposals would be helpful in both determining quorum and if we have an issue that not enough people are participating

Appreciate the time you put into this Frog. Really solid work thoroughly describing the underlying requirements. I think it will bolster the flow of information and serve as a guide for the overall snapshot process.

That said , I agreed with all, except the final point:

“Snapshot voting options must be impartial. Something as simple as “Approve” and “Deny” is sufficient in most cases.”

I feel voter psychology (specifically those less informed, or lazy) tends to lean toward the positive word of 2 provided options. In this case “agree” or “yes” or “approve”, always siding with the writer or proposer. It’s NLP (neuro linguistic programming). I’d suggest we avoid opposite positive/negative wording, and frame the 2+ options in a more descriptive (but concise) way. Let the voter think.

1 Like

I’d be interested in seeing the Governance and >1M BANK forum quorum increased to 80 votes.

These are actions that will have significant effect on our community. With time these ideas will gain the necessary traction they need to pass the quorum. It would benefit us to have a higher level of consensus here.

Also, can we clarify who will determine what is classified as an Emergency. Will this always require an amount of funds from the treasury or a significant adjustment to governance? While it would be great to get some sample scenarios these situations will likely be coming up on the fly. Knowing how we will be going about deciding what is and what is not an Emergency should be described to some degree.

Otherwise, incredible work as always!

1 Like

To say that 77% approval is a notable divide in the community is in my opinion an overstatement. Not sure if people have problems accepting what the majority wants when they don’t agree with it, but I see this a risk in keeping the community healthy. In the same way I don’t expect all proposals to pass with over 95% of votes.

Well, the Grants Committee has the function of distributing funds to projects mid season. Whereas Snapshot is used when funds from the main treasury are required or they request fundamental changes in areas like governance. I would probably suggest people read governance documents, Season specifications and Daoisms where all these procedures and functions are explained.

Too extensive and confusing list. I would keep it as it is:

  1. When funds are required from the main treasury
  2. Fundamental changes in our processes, in governance, in tokenomics, etc

I will probably add a third point, but this would be in an emergency and this case would be an exception to all rules for proposals to go to Snapshot. This should be decided on a one on one basis and probably in an emergency DAO meeting. I do not have examples, but one could probably be an attack to the DAO and our systems. Could you imagine not being able to action anything because you have to wait at least two weeks to go through the whole process? There should be tools to invoke an emergency council.

Regarding this and to be able to accommodate people that don’t engage that much in the day to day processes. I would advise two rounds of votes for proposal that go to Snapshot.

The first round should have at least 30 votes and 65% approval rate. Then there is at least one week of discussions and meetings if needed to explain and discuss the proposal. After this, the proposal goes to the forum again and this time it would require 50 votes and a 75% approval rate.

As I mentioned before I don’t think a 75% is a divide in the sentiment as it is clearly a healthy majority.


You haven’t mentioned about the Snapshot consensus… and this is ve ry important … what do you guys think a 51% approval wins? In my opinion it should probably be 75%. This is 3/4 of the votes so it is a quite high approval rate.

4 Likes

Thanks for the post.

I agree on (almost) everything. These are my notes:

  • The quorum is high. I agree to use it in this Season, even for educational purposes, but to review it in the specs of the next Season
  • I know that not everyone is of my opinion, but we should check that the projects do not create overlapping. While in a free market I agree that projects compete, in BanklessDAO it would seem to me a waste of energy and $BANK, as well as possible origins of disagreements if not of real quarrels between members
4 Likes

regarding Snapshot consensus, although there is a 77% indicated as divide in the community, I would argue that 67% (2/3) should be enough to say that something is accepted by community

to reach 95% on all proposals is a bit high, and could slow down DAO developments, while having lower threshold is good for developing projects, there will be miss-outs, but some will be real gems, and maybe those would not come-through with 95% threshold

4 Likes

A pragmatic and sensible approach, very much agree with the tiered framework with escalating requirements as the level of investment or severity increases. Great work!

My only disagree was on voting requirements, as I think the required level of consensus is a bit excessive and may lead to gridlock and lack of action on anything with contention. My suggestion would be to pare back to 2/3 in favor for normal votes and 3/4 required for emergency actions.

1 Like

Thanks for writing this up.

A couple of questions:

  1. Having a fixed number for voter requirement seems rather rigid because the community will keep increasing.
  2. Would the words “For” and “Against” be more neutral for voting purposes?
  3. I always have this nagging suspicion that individuals could actually be incentivised to do certain actions: ie, maybe I have a heavy bag of catdogfur token, and I happen to have a heavy bag of $BANKs, so obviously I would do whatever it takes to make sure catdogfur X Bank collab proposal is pushed through. I guess that’s a feature of the web3 space, not a bug. So having some hard guidelines would be good to prevent people like me from abusing my soft power in the community.
1 Like

I voted NO for Olympus proposal because 1) I didn’t find enough discussion and not all concerns were being answered. 2) their contracts seem to be still under audit. Both are unacceptable to me and IMO those are something we need to avoid for future treasury moves.

80% voting requirement for non-emergency proposal seems a little bit high. I would suggest 67% for the normal cases. As the community is growing and the numbers of voters are growing, there will be more debate. It is not possible to make everyone happy, as long as we have a clear conscience, I think we are OK to go with 67%.

Ultimately agree strongly with the direction here, especially with the Education Requirements.

Regarding Snapshot quorum etc.

  1. I would push for 85% or even 90% requirements. I don’t see any reason why there could be a Majority snapshot option - and who determines whether we use 80% or 51%? (Voting No on " Voting Requirements" for stricter rules and unclear terms)
  2. I think anything under 500k is fine for a 1 week timeline, so long as forum quorum is met
  3. Fundamentally missing is Forum percentage? 50 members vote, but if we are establishing firm governance rules then we need to say that its 50 in favor or otherwise.
  4. Long term, quorum requirements should be percentage active members and percentage circulating supply. More difficult and cumbersome, but better reflective and less arbitrary.

Thanks for drawing this up, definitely a leap in the right direction!

2 Likes

These comments are NOT directed at any proposal that has come before the DAO and do not under any stretch of the imagination insinuate that anyone has acted in bad faith. Seriously. They’re just thoughts I’ve had rolling around in my mind as I watch the crypto/dao ecosystem grow

I think the timeline might be a little short, like the shortest it should be is to span two community calls. If it was launched on a friday and announced at the community call, the following friday would be a final reminder during the call and then it could close at the end of the day or something. But if it was launched on a wednesday, it would still span two community calls, which would put it at say, 10 days. Just to have two public announcements on any snapshot vote.

In regards to what constitutes a quorum, I’d really love to see Quadratic Voting put in place. I know the biggest bank bag holders currently have the DAOs best interests at heart. But it probably wouldn’t take too large of a player to come in and steamroll the community into passing something, like what happened with the Uniswap and Harvard Law delegated votes.

In addition to the steamrolling aspect, large payouts to external entities should probably be done over time, like when a large construction project get’s going, the contractor comes back to the lender and shows that the work has been completed as expected and then is able to take a draw on the next round of funding that was already approved. Obviously this would not be relevant for collaborations that require an all-at-once payment, like with tokemak or olympus.

Basically, between having Quadratic Voting and laddered payouts to external entities (when applicable), BanklessDAO would likely have substantial added protection against malicious entities stepping in to drain the DAOs coffers.

One final point is in regards to @angyts comment 3. I know this would not be a verifiable solution to financial incentives, but a proposal should include disclosures about connections to any involved project, whether paid or not, as well as any financial benefits to the proposing person, team, organization (are you a bag holder of whatever token may be involved, employed by or collaborating with external entities, etc). There would not be any need to disclose being a bag holder of BANK, because by the very action of proposing here, the DAO’s best interests are aligned with the proposal at heart. This wouldn’t be aimed to be restrictive, but knowledge is power, and our community is strong. Like when VC’s attempted to backdoor buy a boatload of Sushi tokens and the community rallied around the fact that it wasn’t in the best interest of the governing body.

Again, these are very much not meant to imply that any proposal has not intended to be maximally beneficial for banklessDAO. They’re just thoughts to help protect us looking forward into the coming months/years ahead as we grow and start having incredible products that people want.

2 Likes

I agree that it is definitely important to get the quorum component right. Too high and it could lead to stagnation, too low and proposals could be passed that might not align with the core values of the DAO.
Personall, I’d prefer to error on the side of having a really high percentage to start with. It’s easier to relax measures than tighten them up I’d think. If we go low, we can end up highly divided and not needing to make compromises. Especially since newer members may have incredible ideas on how to make advancements in the rapidly evolving ecosystem yet may have very small bags to vote with. It might make it more challenging to get proposals through, but there’s no reason that we can rally around something and make it work for enough people.

Auditing is a tough one. I agree that it is something to factor into decisions. It can be really challenging to get audited in the current environment due to high costs and long lead times. I’m not sure if our contracts are audited?

Cheers!

1 Like

Thanks for the replay, thats make sense to me.

Well, having a high quorum rate above 80% is like operating a reversed democracy. When you have majority but still not getting 80% the minority has the winning hand?

2 Likes

This is a tough topic.

A simple majority is easy = 50% plus 1.

Consensus on the other hand is an entirely different beast. The proposal by @frogmonkee looks like a graduated roadmap to achieving consensus, I think this is a great idea. However, getting the right amount of time built into the roadmap may need tweaking.

For myself, it seems adequate as is. For others who are not active participants, they may want a longer timeframe built into the roadmap.

Whether or not members choose to participate is entirely up to each individual. Due diligence requires active participation, therefore one needs to have some initiative.

This is the strongest counterpoint I can see. Thank you for this framing.

Next week, I will redraft this post.

That’s a really good point. I don’t know now.

It’s in number of voting addresses right? Do we have anti Sybil protection built in? I suppose it’d be easy enough to swing the quorum if someone just had a handful of accounts, each with a little bank in each…

Late to the party here, hope it’s not too late to comment. I wanted to throw in this example of a well-worded “deny” option. As a new L2, I didn’t realize that voting “no” simply meant “we’re going to rework this and make it better.” I thought it meant “this proposal is done for good.” I liked the wording here: “Nay: Needs More Revision.”