Genesis 1.0 - Budget Management Scheme

Genesis
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Budget Management Schemes

TLDR

  • As the DAO grows (more people , more budget), there are more opportunities and ideas popping around
  • There is an increasing need in prioritization between many good ideas
  • Signaling Scheme – Work in Process – we can start “manually” until it’s ready
  • Proposal – Define a budgetary framework to guide proposers which proposals are valuable by the DAO and will have high chances of passing.

Genesis is maturing slowly but surely, and we see more and more activity taking place – a lot more engagement from community members, more social interaction, more events carried out by community members to spread the word of DAO’s and Genesis in different locations, and overall new and exciting ideas, integrations and research proposals.

We are also heading towards the next phase of Genesis DAO – Genesis1.0, being an ecosystem fund, that aims to improve the adoption, UX, and architecture of collaborative networks as well.

This step, discussed in this blog post is a big milestone and an exciting shift to a DAO in which not only individuals take part in a collaborative network, but also organizations – these organization will invest and stake funds out of the expectation to get the best ROI on this investment – not just in terms of profit on the capital invested, but rather out of expectation that this funds will be best used to develop the eco-system they need to take their project forward.

Prioritization – the hardest part is deciding what NOT to do…

Enters scarcity, and budget and funding are a scarce resource, and will not last forever. ”Treat it as it was your own business” is a good way to judge intuitively if you want to upvote a funding proposal.

The beauty and uniqueness of a DAO is that there’s no central authority making decisions, and it’s up to each member to propose and vote on things they care and think are valuable. But with great power, comes great responsibility– each member who participate in a DAO, as well those who are just “watching”

and therefore, Genesis members, serve like the board of directors of Genesis who control how budget is being spent.

Metrics based decision making, How to decide?

When deciding how to make a budgetary decision, there is a consistent and everlasting tension between short to long term: Companies, governments and other organizations always need to prioritise between short term consumption / spend, to investment in stuff that will only show value in the far future, and which is crucial to the long term growth. In a DAO like Genesis, which is still in its infancy and does not have a proven long term business model to make it sustainable for the long run, There might be great proposals that could benefit the project in the long run, but first the DAO needs to make sure it will exist in the long run , and therefore budget request should first prioritize ideas that help the DAO generate it’s own sustainable existence, out of the assumption that a ‘grant DAO’ is not going to work for eternity.

Based on Genesis 1.0 Mission and Objectives that will be published by Eric and Kate, the below is a practical way to decide if a proposal is aligned to what Genesis want’s to achieve:

Questions to ask:

If this proposal passes,

  1. How – Does it significantly contribute to drive adoption and usage to Alchemy?
  2. When - Does it have an immediate / short term impact
  3. What – Are the specific use cases this proposal will enable
  4. Who - Are the users that will directly see the value driven by the implementation of this proposal and will increase Alchemy’s adoption?

Enters Signaling Scheme —> The Budgeteory Framework

How can we calibrate the DAO towards alignment of budget deployment ? (and - we don’t need to wait for this scheme to be live, we can agree on it “manually” for now…)

Signaling Scheme, a proposal raised by ApeUnit that already been funded, is a method aiming to create soft consensus. Once this feature is ready, every DAO can signal a set of rules, guidelines and values it approves, that can serve as “ground rules” for day to day operations.

Back to budgeting, the DAO can decide to signal a framework, a budgetary envelope within it operates. For example:

  • How does the monthly budget is allocated to various focus areas
  • What are the ground rules (such as – DAOstack employees that are already being funded by the project are not allowed to ask funds for them self

The Proposal - Define the budgetary framework for Genesis

Expected outcome - a framework that helps proposer know what is the expected information needed, and make them already ensure the proposal is aligned to the DAO’s priorities as its being built into general rules (“budget framework” / “objectives”) that the DAO pre- approves

As a first step, every proposal should specify how does it support the 4 decision metrics specified above: How , When, What, Who.

Then, I’m proposing to define 4 key budgetary buckets. Each proposal, will have to define on which budget bucket it is being suggested and #tag it using the new tagging feature in Alchemy.

Product and Tech (70 percent of funding)

Features, modules, interfaces, integrations, research implementation, stack improvements (70 percent of funding)

Proposal that fit in this bucket help support the increase in Alchemy’s usability and increase the number of users that can drive value from using Alchemy

Research (10 percent of funding)

Use Cases, Security, Governance Modules, Staking, Cryptoeconomics and funding modules are all areas for people to contribute and help improve the knowledge as a basis for later implementation

Ecosystem (15 percent of funding)

Activities that increase the brand awareness, Explaining the concept of DAOs, and help onboard developers by creating better documentation, improve developer tools, education, marketing, developer events, etc…

Other (5 percent)

Wild card - ideas and projects that don’t fit any of the above, open for community creativity and imagination

Kate will soon publish a blog post that deep dives into these categories explaining more in depth what kind of proposals are included in each one, and how this is all connected to Genesis 1.0 mission.

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I invite Genesis community to comment and discuss the method, as well as key buckets we would like to split the funding, in order to create a clear and aligned view for all members on which areas Genesis wants to invest it’s budget.

If this proposal passes, the next step will be to develop the mechanism to facilitate this method, This will include:

  • Proposal template
  • Tracking file to allow transparency on the available budget on each category
3 Likes
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I really like that pragmatic approach. We could create a poll in DAOtalk to test the waters on that topic before going forward with a more formal decision-making process (i.e. a budgetary framework signal proposal).

Could be added to a “Proposal Voting Good Practices” thread. Also to a “Proposal Creation Good Practices” thread.

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I would add 5. How much does it cost vs. what we expect to get.

I think it would be a good idea for GenDAO to also fund projects in (at least) two phases - an initial, generic seeder phase in which a proposer is grated a appropriate amount of funding to get up and running and then, if the proposer delivers, the majority of funding is released. In other words, the DAO can make several small bets on reasonable-to-high ROI proposals, but is only on the hook to truly reward the ones that actually pan out (call it the Fyre Insurance Policy if you like).

Lastly, related to my multi-phase funding suggestion, I propose that classes of proposals are defined that have a set “base funding” amount, by class. When a proposer makes a proposal, they say what class the proposal falls into, describe the project, and request the final amount (or GenDAO defines the final amount to begin with).

Example: I want to run a DAO hackathon. GenDAO has stated that a hackathon can be funded for an initial amount of 5 ETH with a final amount up to 50 ETH. I state in my proposal that I am awesome and have done this before, I expect to see 500 people, blah blah. It passes. I get 5 ETH right away. Once I am done, I somehow adequately “prove” I actually got only 150 people and GenDAO runs a magical calculation that means my final payout is 21.5 ETH.

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I’d go a little more hardcore and hope we create a “Minimum Viable Proposal” thread with the goal of creating a template (or a couple of them) to help everyone really up the quality of future proposals - my take is that if you can’t at least take the time to give us this base rate of XYZ info and justification on your project, expect your proposal to fail.

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This is indeed the intention - agreeing on a framework and develop it to increase the level of alignment on what Genesis want’s to invest in.

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could be added in the future. remember the idea here was to keep it as simple as possible just to achieve the goal of better spending the $ based on pre agreed budget framework the DAO has defined. Later on the ROI measures a DAO take can become even more sophisticated like you suggested

This is definitely required as well, but you are rereing to the post- approval stage - how we enforce good & high quality deliver

Yes, this is the suggestion I wrote and proposed an initial split to 4 buckets:

Product and Tech, Research , Ecosystem , Other

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Not exactly. Maybe the following is what you mean, but the quote above is very vague so I want to be sure. What I specifically meant was something like “We fund hackathons @ up to $500 initially and $5000 in total. We fund meetups @ $100 maximum.” etc. since right now people just throw out some amount for the thing they want to do. Giving a “min/max” or basic rate forces the proposer to either conform to the expectations or spend the time to prove why their proposal is special and should be granted more than the “normal” amount.

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Yes, but it is also about process. Nothing I have seen so far gives a proposer the idea that they need to do a 2 stage proposal (or 2 proposals). If Gen develops a pre/post payout expectations, proposals will start to reflect that. Today I see “give me X for Y, the end.”

My point is that if we say “this is how we manage our budget” then those who want to participate in that budget will be compelled to standardize.

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Makes sense, i guess what you refer to here is conditional funding.
I suppoer adding more budgeting tools to improve the way we decide, track and manage the DAO funding (and i totally think it will be a need to other DAO’s as well), but my aim here is to do the first step towards that goal - so i want to keep the MVP of this structure to avoid people having to vote on many new features.

My suggestion - let’s do one at a time to keep it simple and concise

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The Proposal has passed, and next stage will be to develop the technical framework to help the DAO manage it’s budget according to the guiding principals in this proposals.

I will be working on this in the coming week, and come back with a process proposal.

While the proposal in place will serve as the starting point, In parallel, few members raised questions on the split, so i invite all members to continue the conversation here and get to consensus on the longer term split, that can be proposed later on to further develop the process and the budget split.

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I have a suggestion: that we look into how the competition scheme can be used as a budgeting tool. It’s not exactly what you suggested originally, Lior, but imagine it being used this way: the DAO adds a competition scheme to select and fund the best 3 marketing proposals submitted to it in the next 3 weeks, splitting 10k DAI. Maybe that leaves out a first step where the DAO decides how to bucket all the money, but still, considering this is already being built, perhaps it can be factored in.

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I like your idea @ezra_w as for how to use the existing tools to “enforce” the approved budget framework:

The DAO decide on budget split (per the proposal passed we are currently at

Product and Tech 70%
Research 10%
Ecosystem 15%
Other 5%

Than upon each funding cycle, the $ are being loaded into 4 competitions with appropriate amount to each competition, and proposals are submitted to the relevant competition.

Is this what you had in mind ?

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This is a great idea but I wouldn’t immediately start with 4 competitions, let’s do baby steps :slight_smile: . I also think that it will be too constraining too quickly.

We can start with the ecosystem budget, Decide how many (‘N’) submissions we want to fund, the split, and time frame.