Shifting reputation dynamics

A discussion that came up a few times in Berlin was around reputation within dxDAO. Some of the points discussed included:

  • Why should people be motivated on working on a project that is controlled by rep whales, who are not adding any value?
  • How can we move towards a meritocratic DAO in which contributors what add value (financial, human capital, etc) are the ones who own reputation?

Do you agree / disagree? If there is clear consensus, we should begin taking actions to shift reputation dynamics, sooner than later.

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Every REP holder has a weight in any decision the DAO is making. Sure, the current distribution of power/REP is not optimal but bear in mind that we still have the initial group of people who started this whole thing. This will change as soon as we have funding for projects the DAO wants to deliver. With that, new developers/contributors will come in with new REP minted which will dilute the power of everyone else(especially whales).

I would strongly argue that people who are considered whales right now have been adding value quite substantially by providing liquidity to the DutchX protocol. They spent time in getting bots running and especially put capital at risk.

To summarize my views on this: I believe a more healthy distribution will come over time by making sure that newcomers know they will not only be rewarded with money but also with voting power if they adding value to the collective.

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Do you think we can make some statement that will increase contributors confidence in this?
Pass a statement proposal? Maybe even define standards for rep distribution for contributors?


I don`t think we necessarily need to put out a statement for now as we have a chance to indicate/show that we are in general willing to reward contributions generously. This means we need to have a good track record of rewarding newcomers. This will be very interesting especially when the DAO has funding for a variety of work.

Define standards for contributors could be a good think later on when we have an organic and healthy community/collective. It could hurt us if we do it straight at the beginning of our journey as it would hinder experiments which is definitely needed in this early age of DAOs.

Yes, value was added here, but many parties simply locked up capital. I hardly see this as a value add, it was just the way the rep distribution was designed.

There are many talented people willing to contribute: why would they contribute time and effort to a DAO where the majority rep is held by people who aren’t actively contributing value?

Also: do you think these whales are interested in seeing their reputation erode over time as people contribute “real” value? Clearly not. It is in their interest to have as minimal dilution as possible, so this is likely what will happen.

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I agree, many parties simply locked up capital but are they holding the majority of voting power?

Do you have proofs that the majority REP is held by people who are not actively contributing?

I actually believe that those whales understand that it is much more healthy and beneficial to bring as much people into the game as possible. They reputation will erode guaranteed as they can`t prevent new people joining the experiment. If they do, this DAO is doomed.

Well a brief analysis of how the largest 5 rep holders received their reputation would answer that question. On top of my head, loopring probably got most of theirs by locking up a couple of million $ worth of their native tokens.

They are however quite active in the discussions concerning the dxdao and even offered to reduce their rep, which I think is novel. Nevertheless they most likely offered that because they felt like they received too much rep for too little contribution at the beginning.

Overall I have to agree with @eric.arsenault’s sentiment.

I really believe an analysis of the distribution would be very important for the collective to determine the urgency of improving the distribution. Do you want to make a proposal out of it?

As someone who went to Dappcon/Ethberlin, Loopring/Matt was one of the few members who represented dxdao via a presentation. He did an amazing job! This is one example that members/whales do contribute quite substantially, but do that off-chain without visibility.

Thanks for keeping the discussion up @hilmarx, @eric.arsenault @cmagan, we need to find a way how to strongly signal that the dxdao wants to improve the distribution. Personally I am against punishing users who contributed to the initial period. What ways do you see to improve the distribution without slashing?


Here are two potential statements:

  1. Over time dxDAO would like to achieve Gini coefficient closer to 0 of it’s reputation distribution
  2. dxDAO will reward future contributions with reputation proportional to the contribution significance

We can achieve (1) by trying to get more contributors involved and applying (2)
If we have general agreement on guidelines without committing to something hard coded, we’d have a good ground for growth and iteration
Personally I think that concentrating our mind-share on reputation distribution is a distraction at this point in time


I don’t see a problem with slashing. If they are paying attention, they can write a comment in the proposal on why their rep should not be slashed. In the case of Loopring, I likely would vote against the slash, since they have been active.

This ties into another question of anonymity. If a whale chooses to remain anonymous, this is fine - as long as we are aware of their value contributions. I’m not OK having anonymous Overlord whales, with zero insight in regards to whether or not they are adding value.

Here are ideas on how to proceed:

  1. submit a proposal signaling our intent to move towards a meritocratic rep distribution, and transparency around who is contributing value
  2. submit proposals to slash anonymous whale overlords: individual rep holders can comment in the proposal why they should not be slashed
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It seems to me that the issue is not whether the current whales deserve the reputation they received, but rather the perceived arbitrary quantity of Rep they received and the lack of visibility in regards to the specific contributions being recognized.

What value does a presentation at EthBerlin bring?! (Thats hard to quantify!)

Was it a good presentation? Did they explain everything well? Who was in the audience? Am I supposed to take a fellow members word for it? Is this presentation the summation of their contribution?

The value brought by this action could have been amazing or it could have been detrimental. We don’t know what value it brought, and that is the point.

The initial distribution methods for rep should be expanded upon and further refined for future DAO’s. The issue now should be about clearing up what we missed before.

The intended purpose of the Reputation System is to facilitate an equitable method of voting that is secure – and as an output, reflects the values of the DAO and the individuals that contribute toward those values. << I think this is extremely important, because it seems to me that the current mindset toward the distribution of Reputation is used to reward value creation, and not values creation.

The most optimal method for the distribution of voting power, in my opinion, should not be based upon rewarding a specific contribution with a fluctuating perceived value, but rather rewarding the alignment between the values held by the community in regards to a specific contribution.

I believe this to be the difference between Automatic Reputation Flow and Manual Reputation Flow.

From my understanding, Manual Reputation Flow has been based upon a somewhat arbitrary practice heavily influenced by current rep holders. This is an overly simple system that rewards reputation based upon the perceived complexity of contributions for value creation that would be considered qualitative at best.

I think this conversation hits at the crux of the Reputation System.

Values creation can be defined as an action that seeks to satisfy a need. This definition of value is expressed not through the complexity of the contribution, but rather through the advancement of priorities that satisfy the needs and goals of the DAO.

My Question is: what type of value are we currently trying to reward with our reputation system? (In particular, what benefits are we seeing from Manual Reputation Flow?)

I think that Automatic Reputation Flow should be the dominant method for Reputation Distribution, and should also be enhanced if possible!

An Idea: Codify Automatic Reputation Flow through the use of a Reputation Curated Registry

I would like to see a system by which all contributions (deserving of rep) are categorized within a scale (very similar to the US federal governments, General Schedule), by where each contribution type implemented fits within a range of intrinsic values set by DAO members; each range has set parameters of min/max Rep allocation, and contains steps that reward long-term participants of that contribution type. The more experience you have producing that type of value pushes you to the higher end of that rep allocation class.

As the DAO’s priorities evolve, the values that dictate the parameters of these ranges will also be allowed such freedom, shifting the scale to represent the contributions that are most desired by the community, and rewarding the action of values creation as mandated by DAO members.

The function of reputation should be to reward the advancement of values created on behalf of the commons.

This function cannot be effective if the values of the DAO are not properly defined and the reward is not codified as a universal and dynamic standard.

A Reputation Curated Registry could enable the creation of a list, where the values of the DAO can be clearly and continually articulated by the community.

This would allow the contributions of differing complexity to move up and down the list, between different rep allocation classes and serving as a reflection of DAO needs. This also has the potential to create a fairer method of distributing rep among different contribution types, especially those with minimal complexity but of great value, which at the moment, are not adequately incentivized.

Forgive me if I have any misunderstandings!
Just throwing out my initial thoughts!


What would be an optimal distribution? (sort of a rhetorical question here, sorry, but I think an important one)

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Is maximizing token-holder value the objective of dxDAO? If not, what is, conveyed in one sentence, or a metric?

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If it’s not already, I’d recommend:

  1. Making the single objective to maximize the value of the dxDAO token (“DXD”?), which is a claim on dxDAO dividends
  2. Deciding on a charter of ethics, legal considerations, social contract ideals, that dxDAO wants to adopt as constraints to actions we take in maximizing DXD value. Ideally, this charter would fit on one page (with links, citations, of course).

THEN, we can discuss how to distribute REP to support this single objective with given constraints. How we mint DXD (which will be controlled by REP holders) will importantly fit into the mechanism design.

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