Decentralization. Accountability. Optimization.
Written by DAO operations team: Devin Marty, Sam Harrison, Michael Benson, Chak Raam, Rachel Brissenden, and Gabby Vorbeck. To be reviewed by Daniel, Giv, and Li. Internal feedback given by Peter and Stephen
Harmony takes the community’s sentiment seriously – it lives at the center of every action the DAO operations team makes and is the impetus for this document. The following was, first and foremost, informed by community feedback during weekly open DAO calls. ** This Framework is subject to change and will be enacted in Q3 following additional community and team feedback. **
DAOs are a core pillar of Harmony. Over the past year Harmony has supported new and existing DAOs, drastically scaled their DAO operations team, and has committed ~$4 million in DAO grants so far. But with an organization model that is still so new and untested, we still have a lot of learning if we are to become the home to 10,000 DAOs.
The fundamental tenet of operational decentralization, according to some of the initial framework architects F. A. Hayek, M. C. Jensen, and W. H. Meckling, states that decision-making authority should always be matched with the relevant specific organizational knowledge – centralized when those in key areas hold the relevant knowledge and decentralized when decisions require information that is known only to those in specific or singular areas. [see citations]
If the DAO operations team is going to continue scaling the Harmony DAO ecosystem in meaningful ways, they need to improve the tooling and educational infrastructure, base new decisions on up-to-date reports and data, and prepare to pivot as a result of that data, communicating those pivots quickly to the entire ecosystem. Such a scaling endeavor cannot be accomplished without setting up a clear channel of communication that moves information from specific or singular areas across the “DAO’sphere” to a central, highly visible area. But this endeavor goes beyond simply the DAO operations team. Each DAO has a responsibility to report actively, collaborate with, and teach newcomers, as well as their fellow DAOists. Every DAOist should consider the following of the current DAO Ecosystem:
- Are the DAOs currently promoting accountability?
- Are we creating an environment where Harmony DAOs are responsibly growing, serving, and uplifting their communities?
- What does the journey of a successful DAO look like, and do we have any examples in the current ecosystem?
- What does the journey of a DAO community member look like, and can a DAO be a suitable replacement for their career?
- What are the most important operations of a DAO, and do our current approval requirements appropriately emphasize and support those primary operations?
Despite 1,000s of DAOs across multiple blockchains, a DAOist may find these questions difficult to succinctly answer. Why? There is no infrastructure to report on metrics and scale accordingly. Thankfully, the existing Harmony DAO ecosystem has vocalized these concerns and we have taken their advice – advice that will give Harmony the opportunity to become synonymous with DAO.
Thus, it pleases the Harmony DAO operations team to announce the 1DAO Alliance – a meeting place where Harmony DAOs can discuss issues, develop relationships, learn best practices, attract new members, report on metrics, and contribute to the direction of the greater DAO ecosystem.
Reasoning for 1DAO Alliance
Over the past 90 days, the DAO operations team has listened closely to the community sentiment surrounding the growing DAO ecosystem and has determined that the channels of reporting and discussion must change.
While the Harmony Foundation alone may not fund up to 10,000 DAOs, Harmony aims to be the home of 10,000 DAOs by 2026 through ensuring that DAOs on Harmony – and the tooling solutions that support them – become more decentralized and optimized for sustainability, all while promoting accountability across the ecosystem.
Lack of Data
With no strong examples of successful DAOs, combined with a lack of enthusiasm for DAO reporting, the DAO operations team cannot confidently prove that DAOs are viable organizational structures – nor prove that they warrant continuous support and financial allocations. Providing quality guidance or optimizing best practices is impossible without quality data. Approved DAOs aren’t incentivized to do anything past what’s required for funding, which has led to a general lack of accountability, low participation in reporting, and an absence of clarity in the DAO ecosystem.
Measuring the productivity of the DAO ecosystem by the number of DAOs onboarded, paired with a lack of DAO education has created an abundance of potential “Zombie DAOs.” The absence of verifiable education levels amongst DAOists is the leading cause of most of the prevalent problems in the DAO ecosystem. Chief among these are lack of accountability within communities, lack of successful financial distribution to the community, lack of infrastructure stemming from unfamiliarity with tools, low engagement rates, and near-zero business development plans for self-sustainability.
While the Harmony Foundation alone can not fund up to 10,000 DAOs, Harmony does aim to be the home of 10,000 DAOs by 2026 by ensuring that DAOs on Harmony – and the tooling solutions that support them – become more decentralized and optimized for sustainability, all while promoting accountability across the ecosystem.
We propose a new strategy for Harmony's 10,000 DAO ecosystem:
- A research-based framework that lays out the infrastructure for a scalable DAO ecosystem.
- Comprehensive guidelines for DAO grant approval, KPIs and Ranking, and DAO reporting standards.
- A scalable approach that starts with the 1DAO Alliance – a unified point for data collection and communication.
The DAO operations team, and several members of the community, believe the 1DAO Alliance will guide Harmony to become “The Home of 10,000 DAOs.”
What the 1DAO Alliance is...
- 1DAO Alliance is Harmony’s Iteration on a Town Hall. Since members from all Harmony DAOs make up 1DAO Alliance, DAOs will now have an open forum to voice concerns, contribute to the education of new DAOists, and craft best practices for DAOs moving forward.
- 1DAO Alliance is a data-collection point. A much-needed catalyst to bring uniformity and consistency to DAO reporting, 1DAO will allow the DAO operations team to optimize the grant process while giving all DAOs the opportunity for more informed decision making. In addition, consistent reporting will make it easier for new DAOists to vet and join DAOs.
- 1DAO Alliance is a hub for the new verticals of DAO to explore the development of a complimentary DAO ecosystem, helping one another grow while reducing DAO overlap.
- 1DAO Alliance is an ecosystem-wide voting mechanism. All DAOs will help approve any new DAO grants and ecosystem guidelines.
- 1DAO Alliance is the base layer of education for new DAOists on Harmony.
- 1DAO is a house for DAO tools. a complimentary selection of DAO tools that provide the much need infrastructure for the 1DAO Alliance and the overarching DAO ecosystem.
What the 1DAO Alliance is not...
- The 1DAO Alliance is not a DAO. It is a meeting point for all of the DAOs on Harmony to grow asynchronously and should not be considered a DAO that other DAOs report to.
- 1DAO Alliance is not centralized. It is an alliance, built from the sum of its parts. It’s designed to responsibly govern, scale, and report to itself and promote ecosystem-wide accountability.
How Does the 1DAO Alliance Work?
First, each DAO in the alliance must meet the requirements of a “Minimum Viable DAO,” which is essential to be considered a grantable DAO on Harmony. The “mighty six” criteria are clearly outlined below and were designed carefully to ensure the safety of the DAO ecosystem and its supporting ecosystem grant fund. Failure to meet all six of these MVD criteria will disqualify a DAO from grant funding from Harmony and peer-review bonuses and stake matching from the 1DAO Alliance.
Minimum Viable DAO (MVD)
- Nine Member Multisig Vault: Every DAO must have at least nine signatories who have shared ownership over the DAO treasury. A 5/9 constituted majority is also required. It is recommended that signatories carry out regular elections. Note: Being voted off as a signatory does not mean that the former signatory is being voted out of the DAO. The signatory position is simply the responsibility of treasury security.
- 100+ Vote On-Chain: At least one on-chain vote must include 100 or more voting parties with active wallets. Any generally-recognized on-chain voting tool can be used. Votes can be cast by anyone, regardless of their status or involvement in the DAO.
- Membership Token: Each DAO member must be identifiable as a member via a membership token (NFT or other). Token minting tools are available on Harmony, though the DAO operations team is focused on improving the experience by the time the 1DAO Alliance is enacted in Q3.
- Mandate, Deliverables, and Metrics: Before reporting, each DAO must write out a scope for the quarter and submit these to the talk.harmony.one forum. The DAO operations team and DAO community will offer feedback and promote a high standard. Reporting will be partly based on these three areas, and the results may have an effect on peer bonuses and grant qualifications.
- 1DAO Alliance Representative: Each DAO must have one representative. The responsibilities of this DAO member include 1) presentation of a quarterly report, 2) weekly attendance at 1DAO Alliance meetings, and 3) participation in peer bonus voting each quarter. It is recommended that DAOs carry out regular elections for 1DAO Alliance representatives.
- ONEReputation Circle: Each DAO is required to submit an initial ONERep circle, as well as updated circles in quarterly reports thereafter. This tool will be available to use when the 1DAO Alliance is enacted in Q3. More information will be available soon.
1DAO Alliance meetings will occur one hour each week, once per week. Out of respect for the members, timekeeping will be prioritized so that every agenda item is discussed. The weekly agenda will be as follows:
1. Roll Call
Attendance for all 1DAO Alliance representatives is taken, a factor that will be taken into consideration for peer-review bonuses and future grants.
2. Vertical Reporting
Each week, 1DAO Alliance representatives from each DAO will convene for a mutually agreed-upon amount of time. During this meeting all DAOs from a specific “Core DAO Vertical” will present a summarized report to the alliance, covering 1) deliverables and metrics, 2) accounting and 3) membership and ONEReputation circles. The presenting vertical will rotate quarterly, leaving two additional weeks each quarter for a 1DAO Alliance report and a DAO operations team report. Each DAO is expected to report when its corresponding DAO vertical is scheduled to present. Which vertical is your DAO in? That is up to each DAO to decide.
(Example: Basic DAO determines it’s a part of Tool DAOs and therefore reports to the 1DAO Alliance on the ninth week of each quarter.)
The 10 Core DAO Verticals
- Community DAOs: DAOs that engage IRL and online with members of the Harmony ecosystem dedicated to promoting activities and organize socially.
- Education DAOs: DAOs that facilitate responsible onboarding and teach new members about the Harmony ecosystem or other Web3 technologies.
- Marketing DAOs: DAOs that focus on consistent branding, messaging, and discoverability across the Harmony ecosystem.
- Research DAOs: DAOs that initiate exploration or audit with the intent to enhance the wider ecosystem technically and otherwise.
- Developer DAOs: DAOs that focus on network development, security, maintenance, and integration.
- DeFi DAOs: DAOs that focus on growth, education, and accountability in Harmony’s Decentralized Finance ecosystem.
- NFT DAOs: DAOs that focus on growth, education, and accountability in Harmony’s NFT ecosystem.
- Gaming DAOs: DAOs that focus on growth, education, and accountability in Harmony’s Gaming/GameFi ecosystem.
- Tool DAOs: DAOs that operate in collaboration with other DAOs to promote best practices, reporting, and accounting.
- Future DAOs: Presently Undefined.
3. DAO Grants Voting
Each week the 1DAO Alliance will have the final say in any grant funding from Harmony to new DAOs. It is expected that 1DAO Alliance representatives have read the grant overview document submitted by the DAO operations team prior to the meeting. Keep in mind that the DAO looking to receive funding should be present at the meeting since the requirements of the MVD state that a grantable DAO must have a 1DAO Alliance representative. Should the DAO receive grant funding, funds will be moved into the 1DAO multisig vault for distribution.
4. Discussion Forum
Using Reddit and Commonwealth, any remaining time will go toward discussing any posts directed at the 1DAO Alliance in descending order of upvoted popularity. Should there be any discrepancies in what to discuss, a 1DAO Alliance vote will be taken on the spot to determine the desired order of discussion.
5. Treasury Discussion (weekly) and Peer Bonuses (once per quarter)
Each week the 1DAO Alliance will determine if any financial decisions need to be made, such as stake matching (see below) or investing. Additionally, using the ONEReputation tool, DAO representatives will award peer bonuses during this time, once per quarter.
Value to Harmony Protocol
With considerable community discussion as to whether Harmony’s DAO grants are causing sell pressure on $ONE (which is mathematically unfounded) paired with the necessity for self-sustainable practices within DAOs, the DAO operations team is asking that each DAO in the 1DAO Alliance stakes 25% of the treasury as well as 25% of any Harmony grants. The amount that each DAO stakes will be matched by the 1DAO (funded by Harmony). Any tokens generated from staking will be added to the 1DAO Alliance treasury for OneReputation peer-based DAO bonuses and other 1DAO Alliance initiatives/investments. While we can by no means tell DAOs what to do with their treasury, this model promotes both long-term self-sustainable practices and bolsters the entire DAO ecosystem over time.
(Example: Basic DAO has $50K in its treasury and receives an additional $10K grant. $15K is expected to be staked to a Harmony Validator. Upon reporting this to the 1DAO Alliance, the 1DAO Alliance will stake $15K as well, and all token rewards will be used for peer bonuses and 1DAO Alliance initiatives/investments.)
The primary value of the 1DAO Alliance is echoed throughout this document, arriving in the form of a more decentralized, accountable, and optimized DAO ecosystem.
Enhancing the Grants Approval Process
Utilizing the 1DAO Alliance, the DAO grants process will become a shared responsibility of the DAO operations team and the DAO ecosystem. As stated above, the final say on DAO grants will pass through the 1DAO Alliance each week. All approved grant funds will be sent to the 1DAO treasury for distribution (accountability and autonomy). All funds are granted in USD at the time of the invoice. Should the price of $ONE change during the distribution window, the 1DAO Alliance will either debit (positive price action relative to the USD) or credit (negative price action relative to the USD) the difference and will reflect this in the treasury/financial section of the quarterly report. Should the 1DAO Alliance treasury near bankruptcy, it will lean on Harmony to make up the difference of the promised grant, just as the system exists now.
What does the 1DAO Need to Start?
** Numbers below are not approved by Harmony, nor is this section a statement by the DAO operations team, merely numbers to consider and to begin a conversation **
The 1DAO Alliance has one primary financial consideration: Funds for peer bonuses. The DAO operations team is asking Harmony to fund the 1DAO Alliance treasury with 28,889,000 ONE to stake with five Validators, as recommended by a vote of the Validator DAO. The staking rewards generated from this amount will yield ~650,000 ONE per quarter – 65,000 ONE per quarter for each DAO vertical divided among the qualifying DAOs in their respective verticals (One vertical per DAO).
- Graph integration for key DAO tooling infrastructure
- Gnosis update to support staking and investment dAPPs
- Improved token minting for DAO membership tokens
- NFT Explorer to support membership tokens
How is the 1DAO Alliance’s Success Measured?
As stated in the Operating Procedures section, one week each quarter will be reserved for 1DAO Alliance reporting. The report will be jointly produced by the 1DAO Alliance representatives and the DAO operations team and will include metrics on 1) treasury financials, 2) voting activity, 3) community sentiment, 4) milestones, 5) attendance, 6) number of new DAOists, 7) general health of the ecosystem, and 8) the state of any assets or investments.
The rightful conclusion to this document is to firstly say “thank you” to the DAO community. It is because of their vocal bravery and concern for this ecosystem that we are here. It’s surprisingly easy to point fingers at others and assert blame, which would likely spur continued separation and negative community sentiment. What takes courage is to be proactive in humility, to seek feedback from all who’ll give it, and correct past mistakes by refocusing efforts on what matters.
The 1DAO Alliance is an elegant solution for scaling and elevating the greatest organizational technology in human history. The Harmony DAO Operations team looks forward to the community’s continued feedback and looks forward to the inaugural 1DAO Alliance meeting at the beginning of Q3 – the ONE-year anniversary of the Harmony DAO program.
Specific organizational knowledge is part of the broader category of specific or ephemeral knowledge that underlies Hayek’s explanation for why the market form of economic organization yields results that are superior to those of centrally planned economies. See Hayek, F. A., 1945, "The Use of Knowledge in Society," American Economic Review, Volume XXXV, #4 (September)
Jensen, Michael C., Foundations of Organizational Strategy, Harvard University Press, 1998