How the DAO Makes Decisions - A companion to the proposal
Decision-Making Modalities
The DAO currently has one decision making modality: delegates must vote for everything big and small. This does not scale and is suboptimal for outcomes. Once the noise surpasses the signal, this becomes a popularity contest. Can I get enough voters’ attention?
Delegates know this, and see the need for different groups to take responsibility for parts of an allocation approval process.
Plurality Labs has been one of those groups. Our ability to experiment in making decisions enables two huge benefits to the DAO:
When there is an urgent need, we are able to fund it right away.
- STIP likely wouldn’t have happened without us having this ability
- The treasury & sustainability research wouldn’t have happened
- The procurement committee wouldn’t have been paid for their work
We are able to harness evolutionary mechanics by trying out different mechanisms
- This happens at multiple decision making levels
- This requires Plurality Labs freedom to make decisions
- The experiments in governance are what will bring capture-resistance
We have been able to fund impactful work with our grant spending because we are able to sense the needs of the DAO and address the biggest issues fast. We do this in parallel to the experimentation and design work needed to deliver over three milestones and exit.
We Support the DAO
We are a framework architect for the pluralist grants programs for the DAO. What does this mean?
What does this mean?
Funders in the Pluralist Grant Framework
You can see the roles as indicated in the picture below representing how the DAO is allocating funds. Each shade of blue represents a different role in the pluralist framework. A black-line border indicates a governance layer.
Plurality Labs is a “Program Provider”
A program provider is responsible for selecting Grant Programs to fund. They help avoid redundancies by connecting the dots between programs and communicating with other service providers. Their success is based on selecting quality programs which in turn select impactful grants to fund. The program provider is indirectly responsible for grant success in so much as they must focus funding to top programs and coach program managers in design and ensuring grantee participation in accountability systems.
Royal Blue = Grant Program
Grant programs fund the decentralized community to build in alignment with the DAO. They consist of Voters, Pools, & Recipients. Grant programs may consist of multiple funding rounds.
Grant Program managers are responsible for the design and execution of grant programs. They are responsible for the end-to-end program including comms, operations, and project management. They should be able to match allocation strategies to the funding needed in a way that provides the best results. Grant program managers are grantees themselves as they may require some level of compensation which can range depending on the program design.
Dark Blue indicates the number of funding rounds in the program
Rounds are discreet funding events. They have pre-processing, execution, and post-processing work. The initial conditions, especially for fully onchain systems, can be iterated each round.
This doesn’t even look at the grantees!
Within grant programs, there are a few very different categories of grant types. Each has its own set of benefits and risks:
| Type of Grant | Benefit to Ecosystem | Benefit to Builder | Risks |
|---|---|---|---|
| User/Liquidity Incentives | - Acquire new users - Large investors bridge |
- Acquire new users - Offer better returns |
- Users leave when incentives stop - Attracts engagement farmers |
| Product-market fit bets | - More businesses to bring users | - They receive funds - They belong to the community |
- Very low odds - Requires infrastrucutre to support it - Can’t compete with professional orgs |
| Open source infrastructure development | - Tooling needed to make builders lives easier is funded | - They receive funds - They belong to the community |
- Builders don’t have to build things that aren’t part of their core product |
| Community education & events | - A more informed population - Acquisition & retention |
- They receive funds - They belong to the community |
- Very hard to be fair and unbiased - Lots of grifters |
| DAO operations | - People can easily find their way - Onchain systems ensure credible neutrality - Ensures legitimacy - Maintains context - Can sense & respond - Executes ideas that suggesting parties don’t have time to do |
- They receive funds - They belong to the community - They have access to leadership - Opens up career opportunities |
- Can lead to bureaucracy - Can lead to capture - Naturally tend to bloat - Naturally tend to work in silos |
Most of the Arbitrum grant programs have done open source infrastructure. The foundation has so far taken the lead in product-market fit bets and community education and events. Questbook programs have done a bit in these areas as well. Open source infrastructure development can be attributed to all of the grants programs.
Plurality Labs is the only organization funding DAO operations, although it hasn’t been our direct focus.
How Much Should Plurality Labs Fund?
We are committed to building capture-resistance, scalability, AND efficiency. This is the point of hiring our team. Our flexibility will also allow us to wisely experiment with new methods which may optimize funding in the other categories.
The portion we allocate is represented by size in the graphic below on the left. On the right you can see the relative grant size if our proposal was passed.
The light blue area on the left is the only funding which is allocated to:
- Supporting DAO operations
- Innovating to optimize how funds are allocated
- Designing capture-resistance
- Ensuring the DAO can safely scale the amount it allocates
- Building accountability systems
The Purpose of Plurality Labs Experimentation
The Arbitrum DAO governance is the decision-making modality for everything outside of the programs it has funded. When it does approve a grant program directly, it only does so if it knows what the governance mode of the program will be. You see proof of this when the most engaging delegate discussions are about councils and elections. Questbook is a program provider which allocated funds to 4 programs based on conversations with delegates and contributors. All of its four programs use one decision making modality - delegated domain authority.
In Plurality Labs’ first Milestone, we were the only program provider with decision-making to make adjustments and iteratively improve their program’s governance.
The methodology funded 12 programs which managed 27 rounds of fund distribution in less than 6 months. We had over 30 experiments in grant governance design including 6 at the program manager level and 24 at the round level.
For Plurality Labs to be successful in delivering across three milestones, we need to run enough experiments to find optimal solutions. Then we need to build them onchain and run them again to see that they work correctly. We also need to be able to attract top talent by having a runway long enough for them to view Arbitrum as a quality career opportunity.
The allocation fund made available to Plurality Labs goes to the PL-ARB Grants Safety Multisig which is a 4/6 with only two Plurality Labs team members. This is low risk… The DAO can claw this back with a Tally vote at any time. They can even claw back a portion of the PL fee. Because of this, we don’t think most people will object to the amount set to allocate.
How We Decentralize
We learned that we need other program providers to keep us on our toes to maintain context in a given area over time. During our second milestone, we will empower workstreams to allocate 60% of the allocation fund and we will select programs to deliver the other 40%.
This graphic shows the ideal future state for how the Plurality Labs team facilitates the decentralization of Arbitrum DAO. It includes our team roles as framework architect and program provider.
We will take the month of February to publish an in depth report on the state of the grants overall. We will use the time to conduct our PL Community Council elections and begin planning our strategic objectives for 2024.We will begin deploying funds at scale in March 2024
To move fast, we will move some big bets forward by working with the DAO and delegates to craft well-liked programs. At the beginning of 2024, we will spend more time setting up workstreams and facilitating alignment and planning some big bets. By the end of 2024, there will be multiple other program providers known as workstreams with full-time Arbitrum dedicated people and keeping context for us all.
We will establish a container to design and implement capture-resistant governance that we can walk away from and expect it to operate in a Decentralized, Autonomous, and ORGANIZED way.