Initial Reputation Distribution Methods

Initial Reputation Distribution Methods

This is a collection of methods that are technically feasible and battle tested to initialize Reputation in a new DAO on DAOstack.

It’s important to note that there isn’t a universally right or wrong way to distribute Reputation. How you do it depends on several factors like what kind of members the DAO’s looking to attract, what’s the specific DAO model and how much time the founders want to invest in the process itself. Another important factor to take into consideration is the DAO’s cohesiveness during the early stages. A group of early Reputation holders needs to be comprised of people who will agree on how to contribute to the DAO, otherwise the DAO will fail before it begins.

As of July 2019, these are some ways to distribute Reputation:

Founders Choosers

The DAO’s founders agree on the list of initial Reputation holders (i.e. ETH addresses) and decide exactly with how much Reputation each holder starts.

  • This is how the Genesis DAO was instantiated. It’s also by far the most used & proven method
  • The only method currently supported by dOrg’s DAO Creator tool (under re-development).

Token Holder Opt-in

Reputation can be redeemed by a certain token’s holders as a function of how many tokens they’re holding.

  • This is how PolkaDAO was instantiated; each $DOT holder got Reputation equal to the square root of their $DOT holdings (the square root was applied to prevent “Rep whales”)
  • A more complicated function can be used to distribute Reputation (linear, square root, power, etc)
  • The redemption process happens manually by the token holder on Etherscan. If they don’t opt-in, they won’t get Reputation!
  • The token holder can choose any address to get Reputation
  • Reputation can still be redeemed even after the DAO is launched.

Token Holder Automatic Distribution

Reputation is given to all of a certain token’s holders based on how many tokens they’re holding on a specific date and time.

  • This is how the KyberDAO Experiment #2 was instantiated
  • This is essentially a specialized approach to the “Founders Choosers” method, since the list of initial Reputation holders is simply extracted from the list of token holders
  • Unlike the “Token Holder Opt-in” method, all of the chosen token holders will get Reputation, regardless if they manually opted in
  • Conditions can be set for how much Reputation each address will receive based its holdings (please read how KyberDAO did it)
  • Token holders will receive their Reputation in the same address as the one they’re holding their tokens.

Staking Tokens for Reputation

Prospective Reputation holders can lock their ETH or ERC-20 tokens (the founders choose which) for a certain time and then receive Reputation in a pro rata fashion

  • This is one of the methods used by the dxDAO
  • Stakers will need to manually take an action to receive their tokens back
  • This method is best implemented with the creation of a user friendly staking interface, similar to the dxDAO

Bidding

Prospective Reputation holders can bid their ETH or ERC-20 tokens (the founders choose which) during auctions and then receive their Reputation

  • This is one of the methods used by the dxDAO
  • Since this is an auction mechanism, higher bidders receive proportionally more Reputation
  • This is also a fundraising method. The tokens bid are transferred to the DAO’s treasury.

Reputation Sale

The “Bidding” method can be thought of as a special case of a Reputation Sale, or better put, a Decentralized Autonomous Initial Reputation Offering (DAIRO). In a DAIRO, prospective Reputation holders send tokens to an address and receive a Reputation amount based on their contribution.

  • No DAO has employed the DAIRO method to distribute 100% of its initial Reputation yet
  • A more complicated function can be used to distribute Reputation (linear, square root, power, logarithmic etc). Other features could be potentially applied like a limit per address or minimum contribution.
  • This is also a fundraising method. The tokens raised are transferred to the DAO’s treasury.

Any of these methods can be combined to initialize Reputation.

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