Budget management Scheme - Process Proposal

Continuing the discussion from Genesis 1.0 - Budget Management Scheme, this post describes the process for implementation of the budget management scheme proposal

Phase 1 introduced the concept of defining a budget framework according to which the DAO members can come up with ideas and proposal request for budget. This budget framework is set based on a longer term thinking of what are the main buckets that need to be funded to serve the DAO strategy and mission.

It was clear that beyond agreeing to the soft consensus of how the DAO wants to allocate it’s budget, there is also a need to have a process to facilitate how a distributed organization can gain a holistic picture of the funding opportunities, and make an educated and calculated decision when voting for or against a proposal , based on the understanding of the trade-offs and longer term priorities and not just based on evaluating if a single proposal meets the DAO goals.

The ultimate goal is to have a system built in Alchemy that allows this capabilities, but as we saw in the recent DAO debt discussions, there is an urgent need to improve the current reality and so the purpose of this proposal is to suggest a budgeting process that will help voters gain this holistics view of budget needs and funding availability, before actually voting on-chain.

This process should be included in the DAO header using the coming signaling scheme.

The expectation is that if this proposal will pass, everyone will adopt and act accordingly, but clearly this is not perfect and members can still technically bypass this process, raise proposal and vote for proposals that do not play by this process. Even if they don’t, at least this tool allows to have a holistic view and what is the Debt / funds left based on the proposals quo, so will be an improvement to the current status quo.

The Proposal - a Cycle based budgeting and voting framework

Each month, a full month cycle of collecting ideas, discussing, proposing and voting is taking place.

The idea is that unlike today, these cycles help put an order and provide the DAO members a rhythm, a pace for when is the time to raise new ideas, when discussions take place, and when voting occurs.

This transparency will provide more time for discussion, allow people to plan ahead availability to participate in those discussions, and be ready to vote when the time comes

Phase 1 - Reset - Funding is hitting Genesis. New Tab is created with the overall available budget input. If Budget framework has changed, a new % split of funds is updated in that sheet

Phase 2 - Proposal submission phase - Proposal are added to a google sheets list, there all pending proposals are being aggregated in the submission phase. this phase allows the DAO to have a holistic view of the overall funding opportunities it has, and make an educated decision not only on the quality of a proposal, but also on it’s importance against other proposals , and against the treasury status and fund availability. This phase allow time for discussion, deliberation and editing of proposals

Phase 3 - Proposal submission in Alchemy

Phase 4 - Voting phase - Voters have the ability to see the full picture of what are the proposals standing, and vote not only based on if a single proposal is valid or not, but what we don’t fund if we upvote it

Phase 5 - Summary - When voting is completed and proposal are approved at the end of each month, The spreadsheet is updated with passed proposals only so we have also history of what was eventually voted

To support the above process, I have created this Gsheet, that should be used by the DAO to operationalize this process:

Next steps

This is an invitation for comments, suggestions and discussion on this proposal. The plan is to raise this proposal during January 2020, so if there is an agreement to use this method, we can implement it for the month of Feb’2020.

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I think this is a very good approach and I’m very curious to see how would the negotiations phase go (phase 2).

I’d add a rep column. Not directly related to the budget but it would give a big picture view and could help standardize the requested rep amounts.

I would like to see near the name, also the person’s reputation and/or successful past proposals.

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I think that the use of subDAOs could be a helpful way to understand how DAO’s can responsibly budget their initiatives, all while providing flexibility and transparency toward the work being performed on behalf of those budgets…allowing members to have both context and scope of what is being funded and why.

A subDAO will be a necessary feature for any well developed DAO, as they will provide a distinct method for distinguishing the division of labor required by any organization who wishes to effectively coordinate complexity at scale.

These administrative divisions also provide a healthy Framework for broad budgetary decisions to be made.

As my main buckets, I propose we mimic Government Budgetary Processes** by establishing three Budgetary subDAO’s:

1.) Mandatory Spending - Budgetary Allocation in this subDAO is dedicated to building upon already established products/initiatives. The requirements for any beneficiary to receive funds from this subDAO is that their project has already been approved for funding or is a continuation of already funded work.

This subDAO will provide a transparent method for members to understand the obligations already agreed upon by the community, as well as to know what developments to expect on the horizon.

2.) Debt, Interest, and Emergency - Budgetary Allocation in this subDAO is dedicated to funding any instances of risk. Allocating a small portion of funds (~1%) toward this subDAO for each budget allocation cycle can grant members an understanding of risk, and how well equipped they are in responding to that risk. The funds in this subDAO can be “ear-marked” for instances of debt, maintaining interest, and providing for Emergency situations that may be required of the members of that community.

3.) Discretionary Spending - Budgetary Allocation in this subDAO is dedicated to the ideation of new work to be done. Proposals are developed and voted upon for funding. Discretionary Spending budgets will grant a way for community members to understand the context of what they are funding based upon the developments of their obligations toward current initiatives.

Better financial decision-making can be initiated by granting members the ability to weigh the trade-offs of funding a new project against the already established financial obligations of the organization, along with their new ability to assess and define the boundaries of acceptable risks.

The Mandatory Spending subDAO in particular will also inform members of the direction the organization is taking toward our common enterprise. Members who have this knowledge and understanding will be better equipped to make more holistic decisions in regards to their activities within the Discretionary Spending subDAO.

I understand this would require developing and then acting upon some new mechanics, but I do think it should be prioritized, because at the end of the day, processes such as these will be necessary for DAOs to scale responsible decision-making.

**At times it feels as though we are trying to “reinvent the wheel” — when we should be trying to improve on it’s initial design.

Decentralization requires some form of democracy. Whether you have a DAO of 15 members or 150,000 members, some form of democracy will shape your particular organization. Equitable methods of voting and representation are not uniform, and requires innovation as the organization scales.

I believe that we should appreciate how far our modern democratic institutions have come in their understanding of these methods. We’ve had generations and generations of ideation, experimentation, and iteration on the methods of governance.

My point being is that we shouldn’t be afraid to mimic current government structures and processes in our attempts to provide our organizational democracy all the affordances^ that decentralization and trusted communication can provide for such governance.