*NOTICE: I’VE WRITTEN AN UPDATED POST ABOUT THIS TOPIC HERE.
With a handful of DAOs launched on Alchemy and many more on the way, I thought I’d compile a list of the different ways a DAO can initialize its Reputation distribution.
This will be a list of practices that we’ve already seen happen plus some other ideas I personally think would be interesting to explore. Without further ado:
1 - The founders directly choose who receives Reputation
This is the most straightforward way to do it, it’s like hard coding the distribution. Don’t get me wrong, the founders always choose how Reputation is distributed initially, the key word here is “directly”. This means that the founders collect the specific ETH addresses of the DAO’s future Reputation holders and assign some Reputation score to each holder.
This is how the Genesis Alpha DAO was initialized back in June 2018, with the initial group of Reputation holders being a mix of DAOstack staff and Pollinators.
2 - Have token, will get Reputation
Hodling a project’s tokens is one of the most practical ways to prove one’s belief in that project. As such, newly founded DAOs can choose to proportionally distribute Reputation to their token holders.
An example of this is happening right now with PolkaDAO, where 80% of the DAO’s Reputation will go to DOT holders. An interesting nuance to this is that only those who manually claim their Reputation will actually receive it, in order to prevent “dead” Reputation from being distributed.
3 - Token locking
I see this a step beyond simply holding tokens. Reputation can be programmed to be distributed to those who lock a specific token in a smart contract. The amount of Reputation they receive can be a function of the value of the tokens they’re locking and for how long. Typically, someone who locks a lot of tokens for longer will receive more Reputation.
For example, in the dxDAO, you may receive Reputation by locking any amount of the DutchX whitelisted tokens (GEN, among others).
4 - Completing bounties or contributing to the DAO
Another way of proving one’s belief in a project is to make non monetary contributions to the DAO by doing real work. Then, not unlike a bounty program, Reputation will be distributed to the contributors.
This method is of course very difficult to implement and needs a centralized body to assess the contributions, but I still think it’s a viable option and especially relevant for non-profit or similar projects.
5 - Sortition
For me, the purest (but not necessarily the most efficient) form of democracy is sortition. Simply put, a sortition-based governance model would distribute reputation completely randomly among a group of people, like a lottery.
While this is not implemented yet, I see it being used in small, niche projects or DAOs that involve local communities where this is most practical.
Fun fact: The ancient Athenians used sortition as a way to select political officials in the 6th century BC and after. They considered sortition to be a democratic process because it was random and elections to be an oligarchic process because a rich man could buy his way into power. Ahead of their time, weren’t they?
6 - Distributing Reputation through a DAICO
DAICO is a fundraising model for ICOs that want to decentralize control over the funds they receive and possibly implement a continuous funding model and a smart contract based refund policy.
While this hasn’t yet happened for DAOs powered by DAOstack, I see it as a very viable option for projects that want to raise funds and give voting power directly back to the contributors.
I’m coining the term DAICRO: Decentralized Autonomous Initial Coin & Reputation Offering.
I’m sure there are a lot more ways to distribute reputation which I missed, so I invite you to write any others below and let’s create a complete list together!