SubDAO Treasury System for the Hub

Hyperlink of Google Doc “SubDAO Treasury System for the Hub” Introduction With the passing of Prop 88, the Cosmos Hub increased the community pool tax, from 2% to 10%. With the Hub treasury now making meaningful revenues, it seems prudent to start funding projects and infrastructure, building on the Hub and in the Interchain. With this new revenue, the Hub has found itself in an interesting situation. Currently, any project, development team or infrastructure project has had to request funding from the treasury directly, meaning they have had to spend 14 days, deposit 250 ATOM and make their best attempt to convince the delegators that it is the right move to fund their project. No matter the scope of the project at hand, under the current treasury model, this is the only way to get funding, directly or indirectly from the Hub. This begs the question, is there a more efficient model, to allocate funding throughout the Cosmos? What should the Hub treasury fund? • R&D • Open source developer tooling and general infrastructure for the Cosmos Hub and Interchain • Projects building on ICS, and potentially other projects building to give more utility to ATOM • Services…

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I will definitely think on this and come back with some actually helpful thoughts and insights, but just wanted to say I love where your head is at and cannot agree more that this model is ABSOLUTELY at least worth exploring in a serious capacity.

Thanks for the write up!

Hello, it need to be developped.

If i understand right. Voting will change right.

Like prop 101(aid earthquake) and 104 (fund notional) #prop 155 will no pass since there is less than 50% of yes if we count only yes vote.

I think that this proposal needs a full rewrite and that it contains certain trigger words and phrases that endanger the hub.

I’m very happy to jump in on the rewrite.

What trigger words and phrases…?

For sure, I would be happy to assist in a rewrite that would be better phrased, and a system more viable for the Hub to adopt! I know some of my phrasing isn’t ideal for the system at hand, and the concept itself needs ironed out. So I would love the opportunity to iron out some details!

other than software upgrades, this is false: Jcook_14: Where the model breaks down in treasury Governance: • Delegators lack the general ability to do duty diligence, and may vote in opposition to a reasonable and beneficial funding opportunity. • Many delegators may lack technical sophistication, to the point that an R&D proposal may fall by the wayside if deemed too much of an ask by the Hub delegators. • Projects that may need funding, may ultimately skip going to the Hub treasury for Funding, in favor of going to get funding through other platforms. This could leave a large opportunity cost, to fund a project helping to build out the network effect for the Hub, but also, this is a general business opportunity as well. If a project seeks funding, the Hub needs entities that can negotiate and potentially draw up a legal framework to best benefit the Hub, which is nearly impossible in the current position of treasury funding. your assertions are contradicted by the obvious lack of due diligence or possibly corruption of validators apparent when voting history is scrutinized. Validators voted to pass prop101, awarding 20k ATOM to an initiative entirely…

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Thanks for the feedback! common_spelling: centralizing the treasury further around a few validator installed gate keepers being paid to administer funds to themselves is not a tenable solution if decentralization is a goal of the Hub. Validators have certainly contributed to treasury mismanagement, due to lack of due diligence. However, assuming this system inherently centralizes around validators is incorrect. Would you propose that we blacklist validator wallets from some of the subDAO’s created? That should be considered. Anything is considered. The entire point of what I wrote is that I would like to transition to a more efficient model, that has different levels of decentralization where necessary. However, it would not be wise to blacklist validators from every subDAO. I do not blame all of our Governance inefficiencies on Validators. The Props you mentioned, were all pretty niche, and while they spent money, that money has already been minted back into existance. Validators play a crucial role, and are more technical than most delegators, which means on technical funding initiatives, they should have the option to have an opinion and a vote. But like I…

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Funding can be made transparent, predictable, accessible, decentralized and eliminate the need to pay treasury managers using existing governance mechanisms to direct the chain by market forces. Starting with an annual governance vote to assign a budget as a % of the community pool or $ amount of development funds to be distributed across general categories of funding like infrastructure 40%, innovation 20%, marketing 10%, ecosystem 30% as an example, projects that want community pool funding then campaign for their project to the community to support their project in a semi-annual ranked choice voting where the top 3 or 10% or other is granted a vested award allowing funds to be revoked through a confirmation vote before the next round of funding is voted for. *could also distribute additional vested awards if you move up significantly in rank from one award to distribution vote or other incentive structure. This makes the funds validators will inevitably pay themselves through governance predictable in their regular governance distribution, transparent and goes to someone with a strong reputation in the community. this system incentivizes community growth through outreach…

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I agree that having more tooling to allocate resources would be highly beneficial.

With that in mind, it’s worth considering:

• How does replicated security affect what the Hub treasury funds?
• What tooling and infrastructure will consumer chains bring to the table that can solve some of these issues?

I am personally of the mind that now that the ATOM accelerator DAO exists to address from the Cosmos Hub’s particular point of view

Jcook_14:

• R&D
• Open source developer tooling and general infrastructure for the Cosmos Hub and Interchain
• Services helping to build out the Cosmos Hub and the Interchain

The Hub should hyper-focus all of its common resources and policies on strengthening the ATOM economic zone via attracting consumer chains that will add value to the Hub, and building strong relationships with those chains via economic alignment and support.

I would agree, a large portion of funding from the Hub should be directed at replicated security. However, I believe that even in the scenario that we only spend for items regarding RS, we have multiple different subDAO options. I know Informal largely works on the Hub and and RS, but a more centrally controlled subDAO dedicated to funding bug bounties and audits for consumer chains, before they launch. One subDAO dedicated to the on-boarding of consumer chains.

On a side not, one idea I’ve been thinking about, is around, if the community wants to keep the Hub minimal and not put CosmWasm in the Hub. If this is the case, then there is potentially an opportunity to put together a permissionless CosmWasm enabled ATOM sidechain, that is a Consumer chain from the Hub. This chain would use ATOM as its main utility token and be governed by the Hub. This would leave a new area for a subDAO to come in and fund projects to develop on the chain.

I feel like we will find many different ways to be able to utilize different mandated subDAO’s, going forward.

I discussed this exact model in the ATOMZone discussions last week on a Twitter Space and believe the SubDAO model is 100% the way to go. Not every proposal needs to be voted on by the entire community and the Hub needs to figure out a way to remain decentralized while being transparent and more effective. I would love to see DAODAO have its own consumer chain where subDAOs dedicated to certain areas of expertise are led by core contributors voted on by the entire community. First we would need to identify the subDAO categories. This isn’t an exhaustive list, but just off top of my head: • R&D (IBC development, tokenomics, new Interchain services) • Third-Party Auditing • Developer Relations/Outreach • Business Development (developing GTM strategy for ideas coming out of R&D and liaison with institutions inquiring about leveraging Cosmos stack) • Marketing • Budget Planning/Finance The Hub needs a business and budget planning process: • Strategy/Allocation (we have $X to spend, how do we want to spend that across each subDAO) • SubDAO Business planning (what do they want to get done, whats a high-level estimate of cost to get it done, milestone planning, etc)…

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This is a very interesting point of view, I think subDAO model of treasury funding can be helpful for the Hub and capital allocation, I also like the idea to keep it as decentralized as possible

Thank you for this idea, we definitely need to discuss this proposal more

ala.tusz.am:

The Hub should hyper-focus all of its common resources and policies on strengthening the ATOM economic zone via attracting consumer chains that will add value to the Hub, and building strong relationships with those chains via economic alignment and support.

hey

even if i mostly agree with your points, i feel the hub should hyper-focus on strengthening the upcoming consumer chains (Neutron, Duality, etc) before even thinking of attracting new ones.

1. i don’t think the hub needs to attract dozens of chains into its economic zone
2. i believe 6 or 8 strong consumer chains with strong purposes and alignment is way better than 30 chains whose 20% of them are useless one year later
3. i believe the hub shouldn’t underestimate the efforts that have to be made to minimize the costs w adding new chains for low ranked validators - and should work actively to keep their confidence

cheers

about what @effortcapital said, as often, it’s a massive +1 on my side

i see a lot of opinions about how a subDAO treasury system should be used to centralize public funds to direct the future of the chain according to a few opinions, but no reasons to believe a centralized subDAO treasury system would be effective, more efficient, or positive for the hub verse a decentralized funding methodology.

A subDAO treasury system should at very minimum be able to clearly justify the overhead involved in centralizing public funds under a handful of administrators rather than keep funding decentralized and directed according to the desires of hub users

just as importantly, a detailed description of the subDAO Treasury system’s direction for the hub and its benefit is absent from the conversation.

is it not the case that the hub should change slowly and deliberately based on cyclical market conditions where the hub funds experimental and innovative initiatives and once they successfully demonstrate their value the hub appropriates them into their hub and spoke model, given the open source nature of the hub and the public good centric mandate of the ICF in combination with ranked choice voting i roughly summarized previously to fund projects the community would most like to see without relying on the opinions and administration of a few funding gatekeepers on the communities dime?

are u really aware of the capabilities of the DAODAO like subdaos in terms of vesting/funding allocations/transparency/accountability/etc ?

i’ve deleted my previous comment because i re-read your first explanation on how things should be made and i’ve just thought it was quite good and also quite feasible with a subdao model in a more effective way and also that your way of thinking would be so much more interesting and constructive without this “anti-centralizing-things” everywhere that often distorts realities.

My argument against DAODAO/subDAO model pertains to its use as a systemic implementation. but yes, I understand and see the promise these tools and do not mean to discount their value as an innovative solution where there currently is none. I assume that within ranked-choice type funding model, many DAODAOs and subDAO’s would emerge as popular grant recipients and encourage this.

My rhetoric can sometimes lean hyperbolic when i feel valid criticisms are being entirely ignored within the discussion. I have a number of ideas and questions relating to DAODAO that i have withheld in general conversation because of concerns they may be persuasive and make advocating for a decentralized funding methodology more difficult.

I’m not against ranked-choice voting, but I see that in the budget planning process at the community-level where we collectively decide what we want to spend our yearly budget on (which is then streamed to subDAOs with their own business plans and milestones that they need to report back to the entire community on on a period basis).

I don’t want to centralize Mgmt of the treasury, I want to compartmentalize strategy execution without developers having to come to the entire community for every spend proposal

I appreciate from the both side of you all. Since we all know what’s on ground. I think we should work it out immediately. I support Stablecoin right from beginning and It’s be better for us to understand this project. Something good will come out from there. I believe we aren’t going to regret it’s.

i think i see what you are saying, or at least what you said made me realize an issue with vesting between funding periods making funds idle and unable to be spent by a DAO following its award. maybe 2/3 vesting or a category that is specific to DAOs. ill return to this,

but i disagree with your second point, i think that developers should have to come to the entire community with the pitch they would give a grants administrator of a DAO or subDAO in order to recieve funds from the community pool. of the many advantages daos do have, I dont see DAOs or subDAOs being necessary or resistant to corruption especially when tasked to distribute funds broadly. a semiannual distribution to the most popular and promising projects and DAO initiatives according to the community at large should not have an issue gaining support.

a certain amount of sacrifice to speed seems necessary for the hub to remain leaderless, decentralized and as close to unstoppable as PoS can get.

perhaps a lending facility where a risk adjusted portion of vested funds can be borrowed against by grantees.

common_spelling:

a certain amount of sacrifice to speed seems necessary for the hub to remain leaderless, decentralized and as close to unstoppable as PoS can get

a certain amount can easily become an amount that leads to irrelevance. competition is growing, often without leaderlessness spirit/decisions making. we’re not in 2019 anymore. i don’t think we can still afford the luxury of sacrifying this certain amount.

btw to end on a sarcastic note, there is no better way to be as close as unstoppable than being motionless.

I agree, and would settle for motionless and immovable. while leaders certainly can get results, like vitalik, do kwon or SBF…leaders are a central point of failure. ATOM is the most developed chain with no leader and the only one, in my opinion, that has a reasonable chance to achieve sufficient decentralization as a PoS chain and function without any leader that can be jailed or die mysteriously on a vacation in the Bahamas.

I argue that centralization through Treasury DAO gate keepers is a far faster path to irrelevance than the protracted and likely tedious discussions and refinement of governance structures and funding methodologies that will keep the hub resistant to centralized points of failure that are so common in this space.

I think you’re misunderstanding the idea of a subDAO model (or at least my interpretation of it). Funding of subDAOs would still be done by the community on a yearly basis after subDAOs provide their yearly roadmaps/spending proposals to the entire community and lobby why they deserve their funding. SubDAO leads are voted in by the individual subDAO members (which anyone in the community can be part of…it’s like delegating your ATOM to a validator, except you also delegate your ATOM to a subDAO). SubDAO leads are paid for the work they do, and the other subDAO members are community volunteers (like many of us today) but eventually can become leads themselves as we set term limits for subDAO leads. The subDAOs have weekly/monthly meetings on progress updates, have collaborative discussions, etc. SubDAO leads would need to present their updates on a monthly/quarterly basis to the entire community in a forum and if at any point the community is not satisfied with the work, the community has the right to pause streamed payments (or reduce payment until things get back on track). The community still controls the purse strings. What we are doing is creating a decentralized…

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I understand, and am against it. effortcapital: Funding of subDAOs would still be done by the community on a yearly basis after subDAOs provide their yearly roadmaps/spending proposals to the entire community and lobby why they deserve their funding. this would result in the chain direction being chosen by a few corruptible gate keepers of funds according to their individual opinions rather than the desires of users and is difficult to get enough people on board with an omnibus guess at the unpredictable circumstances that can evolve over 3-6 months, let alone an entire year, making waste highly probable as unforeseen innovation removes the need for part or much of the roadmap. effortcapital: SubDAO leads are paid for the work they do, and the other subDAO members are community volunteers (like many of us today) but eventually can become leads themselves as we set term limits for subDAO leads. what work do SubDAO leads do that ranked-choice voting allows the community to do at substantially less cost? they are paid to incentivize them not to embezzle the funds they have control of. or are we going to also pay watch dogs to account for the…

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common_spelling: Starting with an annual governance vote to assign a budget as a % of the community pool or $ amount of development funds to be distributed across general categories of funding like infrastructure 40%, innovation 20%, marketing 10%, ecosystem 30% as an example, projects that want community pool funding then campaign for their project to the community to support their project in a semi-annual ranked choice voting where the top 3 or 10% or other is granted a vested award allowing funds to be revoked through a confirmation vote before the next round of funding is voted for. *could also distribute additional vested awards if you move up significantly in rank from one award to distribution vote or other incentive structure. While I see what you’re saying, this would make the process unreasonably slow and tedious in my opinion. I get that you worry about funds being embezzled or wasted by centralized parties. However, it is my opinion that the process as it stands is too slow, and could be sped up by allocating certain funds and mandates to subDAO’s with qualified members largely controlling the funds, with oversight from the community. Governance in each…

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a subDAO system is trust based and can only work in the best of all possible worlds. planning for ideal circumstances have failed time and time again within the space. for instance, if a lead gets hacked, dies, their father is diagnosed with a rare disease whats treatment is incredibly expensive it can kill or maim the entire system. it is not about filling slots with people who wouldnt normally act maliciously or has a lot to lose. these are risks that can be entirely avoided at the expense of speed which has not been shown to be necessary. subDAOs can still be implemented through ranked-choice voting if they appeal to the community. its not eliminating a subDAO treasury system, it is reducing the risk and scope of the system. Jcook_14: This sounds like a much more centralized and unaccountable model than a subDAO system in my opinion. Hub treasury governance is not nearly quick enough to keep up with the number of funding initiatives we could see in the interchain, over the next few years. If we believe the interchain is going to explode with use cases, then people will happily skip the politics of asking the Hub treasury for funding and go straight to the ICF…

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accountable is here available to approve it’ If all our community support and agreed. With the future of decentralized. Financial Services everything is possible.

so… you really think ICF structure == what subDAOs model offers ?

really ?

you said earlier you were mad people were ignoring your words. i begin to understand why they did so.

cosmodon, is that you with a 267th alt ?

in the sense that both ICF and a subDAO treasury create possible points of failure and dependence on funding gate keepers that rely on the kindness of those gate keepers to disclose information. I thought we already went over the fact that subDAOs have many benefits and innovative solutions to unsolved problems. but decentralization is not one of them, unless you compare it to the ICF which is centralized to a much greater extent, but still more similar than different compared to ranked-choice voting.

I generally agree with most of what is being said in here regarding the need to for different DAO systems and structures. Re: tom: even if i mostly agree with your points, i feel the hub should hyper-focus on strengthening the upcoming consumer chains (Neutron, Duality, etc) before even thinking of attracting new ones. • i don’t think the hub needs to attract dozens of chains into its economic zone • i believe 6 or 8 strong consumer chains with strong purposes and alignment is way better than 30 chains whose 20% of them are useless one year later • i believe the hub shouldn’t underestimate the efforts that have to be made to minimize the costs w adding new chains for low ranked validators - and should work actively to keep their confidence I agree with that frame. @tom – in your mind what needs to be done to minimize the cost of new chains? Re @Jcook_14 's proposal: The place where I get turned around is the order of events. What steps are required to bring something like this to life (cc: @effortcapital )? The last thing I would add is that DAOs are not necessarily equal to corporations and there is a key structural difference. Corporations do…

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ala.tusz.am: I agree with that frame. @tom – in your mind what needs to be done to minimize the cost of new chains? Technically speaking, I couldn’t tell you. I don’t have the skills for it, even if i’d love to ! Nevertheless, I think that somehow, a competent working group should be created on these issues, supported and financed, to work on them. Because inevitably, the problem will grow with each addition of a chain to the economic zone, create tensions, favor the conspiratorial tendencies of some, etc. I understood that Informal and Stride had started thinking about optimizations. Strengthening these research efforts by adding some brainpower would be a good thing in my view. And then there is a magic solution that would make all of this almost secondary if not nonexistent: drastically improving the distribution of stake among all validators. I am not aware of the current research being done on this topic. I have the feeling that it’s been the Holy Grail forever, but once again, I think that investing heavily in this subject/researches can only pay off in the long run for everyone. In my opinion, this should not remain a wishful thinking edit : thanks chatgpt for…

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ala.tusz.am: The last thing I would add is that DAOs are not necessarily equal to corporations and there is a key structural difference. Corporations do sense-making via hierarchy. How can we do it? Below is one attempt to eliminate a traditional hierarchy. If the subDAO has a council or some structure of executive decision makers, then applications to the members should, in turn, be submitted to the community as well. Real time auditability is important, and community action or community veto may be necessary to keep this system accountable. The ultimate goal of a subDAO should be the ability for the community to say no if deemed necessary. Jcook_14: I envision mechanics, where applications to the subDAO’s can be auditable in real time. When the subDAO members see something, it gets published in a community forum for the community to audit if they wish. We would want to open source the subDAO members process and all documents that come across the members eyes, rather than create gatekeepers behind closed doors. ala.tusz.am: • What is needed to optimize sense-making across our dispersed community? • What primitives do we need to execute…

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We should set up a call to discuss this idea further and flesh it out.

The Hub has an opportunity to become the model for how decentralized governance should be done.

I also welcome @common_spelling - even though we don’t agree on what this should look like - we need to have balanced takes and good discourse to solve this problem.

In simple terms, I’d like to see decentralized ownership of the purse strings but more focused teams executing on a future vision for the Hub and its economic zone in a way that’s more organized and effective than what is done today.

We (the ATOM/Hub community) need the entire crypto dev community to know that the Hub is open for business, we aren’t a bureaucratic nightmare, and we have a vision for what we want the Hub to be.

None of the above is true today imo, unfortunately. Time is of the essence, and I’d love to formalize a meeting to work on this together.

I totally agree and would be happy to sit on a call and hash out some ideas to see how we can start to structure this system. @ala.tusz.am @common_spelling I am happy to discuss whatever keeps the Hub treasury decentralized and accountable, but like @effortcapital, we need some organized teams coordinating actions to benefit the Hub.

I don’t believe there is a DM option here, so feel free to contact me on Twitter or Reddit, if you guys want to set up a call.

Twitter: @eggzNstaken
Reddit: u/Jcook_14

One of the key priorities for us (ATOM Accelerator) is to bootstrap an additional sub-DAO during our 9 months mandate as we believe this is the way to go. Once initially funded by us (for 3-6 months), the newly formed sub-DAO can request funding from the community pool to secure long term operations.

@effortcapital I’d love to be part of that call.

Would be happy to hop in a call for this, and would encourage others interested in the topic to do so as well.

I would love to join this call as well.

Not sure if any of you are still interested in the idea or in having a call about it. I am definitely interested in pursuing this idea still, and would love to bounce some ideas around and see what we may be able to work out.

@effortcapital I believe I sent you a DM on Twitter, not sure if you received it, but I reached out to try to make contact for a call.

Anyone who’s interested, I’m happy to reach out to get a call coordinated, I just need to know where would be the best medium to coordinate a call or multiple individual calls. Is Twitter DM the best way?

@Youssef @uditvira @ala.tusz.am