GEN locking scheme - How it could help the DAO governance

GEN locking Scheme framework

Extensive conversations about the GEN locking scheme has taken place in the forum, chats and community calls. A task force was formed with myself, Jantine, Jordan and Ruben and Eylon, Kate and Ezra contributed to this document.

Opinions are still divergent in the community and inside the task force. Most of the concerns come from the possible vulnerability to plutocracy and lack of autonomy while most of the favorable opinions rely on this being a worthy experiment with not such high risks because the DAO would still have means to stop it.

Please continue to share your feedback and find below the reasoning why this could be an interesting experiment.

When does it start

The GEN token locking scheme that will be used in Genesis is an adaptation of the scheme built for NecDAO. It will be added to the DAO via proposal and the community will vote on the parameters more specifically on the Rep dilution. If approved, the locking will most likely start on January 15th.

When does this end

Despite the experimental character of the scheme, the objective is that it doesn’t come to an end. New locking cycles can always be initiated since the rep dilution ratio will remain the same. The proposed ratio is of 45% for lockers and 55% for current rep holders.

Biggest misconception

The purpose of the GEN locking scheme is not to increase the value of GEN, but to increase the quality of decisions taken by the DAO - of which a byproduct could be an increase in the value of the GEN token.

While plutocracy is the first thing that comes to mind, there are other aspects to consider such as the balance between the long term (Lockers) and short term (Contributors) goals, efforts, and interests.

  • DAO contributors are rewarded for their contribution in the form of financial resources and voting power from the DAO. In this way, they are more susceptible to “confirmation bias” as they believe what they are working on, or the group they are a part of should get resources distributed to them.

DAO contributors keep the DAO dynamic as they are incentivized to bring immediate solutions to the current state of the DAO. Attention and engagement are highly valuable short term assets but they can’t predict long term interest.

  • The GEN lockers, or DAO stakeholders don’t have any immediate reward. The action of locking GEN is economically irrational (Why make a liquid asset illiquid?) but led from a belief in the long term viability of DAOstack. These GEN Lockers are invested in the long term future and thus can make less biased decisions.

GEN lockers keep the DAO resilient to its long term mission, principles and objectives that are the social codes that ensure sustainability to Genesis. “Money and private property are extremely powerful social technologies” when used in a balanced way (no maximalism in any direction) But they don’t ensure creative contributions that might only come when profit isn’t taken into consideration.

The beauty of the DAO is anyone can be a Contributor or a Locker, those contributors who want to be aligned to the long term DAOstack ecosystem can also become lockers.
What we get from this combination is an attempt to balance long and short interests to create a more resilient DAO ecosystem.

How the locking scheme could help on governance

So far, Genesis has granted reputation in two ways.

1- Rep request - We recently approved a norm that requires contribution in order to earn rep. This means that reputation requests without doing something that adds value to Genesis will be down voted - we want to move towards a contribution based community.

The reason why rep requests without contribution were considered valuable in the first year of Genesis is because they would lower the entry barrier and increase adoption. I would risk to say that around 90% of our 257 rep holders joined via rep request proposals. Only a small percentage of them are active, we have around 20 unique voters per month.

2- Contribution reward- Community members request reputation for the work they are delivering to the DAO and ecosystem. They have fully passed the high entry barrier once they deliver their first financial proposal.

While neither of these methods have caused the DAO major problems, both have flaws that GEN locking can help mitigate. Having people ask for Reputation directly (#1) is unreliable: someone can talk big when asking for Reputation and have little reason to follow through once granted it. Rewarding work contributions with Reputation (#2) only works for people who have the time and skills to contribute get Reputation, and these qualities may not be correlated with good decision-making about DAOstack’s future. With GEN-locking, anyone willing to commit their GEN tokens over a long period can get Reputation, and while this doesn’t guarantee they will make good decisions, it does give them a vested interest in doing so. Overall, GEN locking should be a positive influence on the quality of Genesis DAO’s decisions.

For example,imagine proposal A and proposal B are “competing” for the same funds. Both proposers have influence with a large group of people in the DAO, and both start to gather votes for their projects. Now imagine two voters: voter Y, who has not locked tokens, and voter X, who has. Voter Y is more inclined to make decisions driven by personal gain than voter X, who has skin in the game of the entire ecosystem. Voter X’s locked tokens give them an extra reason to care about the future of the DAO as a whole, and that should help them make better decisions for Genesis.

How will the scheme work

See this DAOtalk thread for the mathematical explanation

GEN-locking mechanics primer [Important for Genesis members!] Genesis

How GEN locking will work, as far as I know (Math warning, skip to the second section for takeaways!) GEN locking will be enabled in Genesis with a new scheme, added via proposal in the Scheme Registrar. Once GEN locking is active, the new scheme will start tracking GEN-locking periods of [1 month]. At any time, anyone can lock any amount of GEN for up to [12] periods. For example, I can lock 10,000 GEN for 10 periods. I will be able to get my 10,000 back after 10 periods have passed. …

Who can participate

Anyone with GEN tokens. Either old or new holders.

What are the expected outcomes

Genesis is preparing to control the entire treasury of the un-minted GEN tokens (40M). This requires a high level alignment of reputation holders and the predictors network with the mission, principles and objectives of Genesis. The Gen locking Scheme is the first experiment towards this alignment and will start by minting 3 Million Gen over a year to be governed by Genesis.


Alert: my explainer post is apparently out of date now! I think a lot of the main points are still true, but the math has changed I believe.

1 Like

@ezra_w Do you know where can we find an up to-date breakdown of the math involved?