DAO Technology

Menu...

DAO Technology

Nexus is building DAO (Decentralized Autonomous Organization) technology based on mathematical regulation to improve the overall network governance model. The technology will enable groups that share similar knowledge and interests to vote together on subject matters that they have expertise in. By encapsulating values that are alike into groups that determine a smaller part of the entire decision itself, we can improve the overall reflection of value in a system as a whole. This concept can be observed in the human body: the lungs value certain resources over the stomach, heart, kidneys, liver, although they all work together as components of a decentralized system to form the basis of a healthy body.

”The dilemma is not that people have conflicting value systems, but rather that they are usually required to decide together in one group. We believe the best way to enforce the keys is by a public vote on their issuance.”

This is an important step towards the longer term sustainability of our Ecosystem, and the creation of direct accountability of those who are paid to complete work on behalf of the community. In order to fully maintain an active contract, Ambassadors or Developers will be required to uphold the utmost transparency, accountability, and performance necessary for continued support. Mathematically enforced management of the funds will prevent the mismanagement of funds, corruption, coercion, and complacency that can arise in growing organizations.

Proposed Architecture

The DAO will be released as a Tritium++ hard fork. This technology is necessary for a stronger community, consensus-oriented fund allocation, and improvements to the overall governance of the network. The DAO will prevent governance issues such as hard forks (such as Bitcoin vs Bitcoin Cash), and it will create a stronger ecosystem through community participation in decision-making, resulting overall in a more resilient and secure public network.

”The keys are like a castle. To encourage accountability, they have to be cryptographically enforced, and we believe the best way to enforce the keys is by a public vote on their issuance.”

With the completion of the Tritium++ upgrade, votes will be recorded on the ledger, and keys will be automatically allocated without the requirement for ‘hard coded’ updates to the protocol, i.e. the process will be fully decentralized, streamlined, and automatic. The DAO (Decentralized Autonomous Organization), will govern project funding through real time democratic voting. That is there will be no scheduled election; you will be able to change your voting spread between contracts every so often (e.g.. every month or quarter.)

Currently, we envision two types of contracts: Developers and Ambassadors Embassies:

Developer Embassies

These are non-profit entities of at least three directors. These organisations are responsible for the technological development of the public network, and support the development of DApps being built on the public network. For profit development, private networks will not be funded by public funds.

Ambassador Embassies

These are non-profit entities of at least three directors. These organisations are responsible for content writing, graphics, public relations, social media, event organisation, exchanges, and outreach to public DApps.

Voting groups

Voting will be actioned in voting groups, where the values of people and the resources that they contribute to the network define the group. Developers and Ambassadors contracts obtain a voting weight based on the trust bestowed upon them by the voting groups. The voting groups have yet to be decided, though each of the individuals in these spheres will embody similar expertise and interests. Possible groups are:

  • L2 (Trust) Validators
  • L3 Miners
  • Ambassadors
  • Developers

Voting

You will be able to abstain, vote, or withdraw your support for a contract (the frequency of voting is yet to be decided). Votes will be weighted by Trust and Stake (algorithm yet to be decided). Therefore, your power to vote will be determined by your total NXS staked, combined with your Trust. This protects against gaming of the voting system by short term holders of NXS.

Voting is zero-sum, meaning that contracts can only gain voting weight, by another losing it. You will have a total voting weight, which can be allocated by percentage to the contracts you wish to support. An example would be 35% to the German, 35% to AU, and 30% to the US Embassy.

Contracts will become active when they exceed a voting threshold (to be decided), creating resilience to individual gaming if one voter happens to have a large voting weight.

We welcome anyone who would like to shape the architecture of the DAO, to join the DAO working group.

Social Stack

The social stack will also enforce votes through cryptographic verification. It is designed to bring the highest integrity to an organization, while maintaining the ability to ‘socially scale’.

The design provides the tools for the formation of a ‘meritocracy’, meaning that everyone has an equal opportunity to be voted into their level of capability, and reward is based on acceptance of responsibility across different roles. This technology will enable groups that share similar knowledge and interests to work together and vote on operational decisions that they have expertise in. Following the same reasoning as the design of the DAO, by encapsulating values that are alike into groups that determine a smaller part of the entire decision itself, we can improve the overall reflection of value in a system as a whole.

When you apply layers to a meritocratic structure, you get a very different picture than when you apply it to an autocratic structure. The difference is a model where those of higher merit have no power over the people they serve, for they truly are ‘public servants’. Leading is but an act of serving, and when we apply this model now into a social system, where merit gains you more responsibility, not authority; then we end up with a model that might just have a chance of showing us that the autocratic model is severely outdated, and that now, it’s time for an upgrade.

Scaling through Layers

Our social stack concept utilizes Fibonacci number sequences for the expansion of the groups through each layer, and is designed to be extensible to accommodate varying organizational sizes. This stack is a ‘bottom up’ design, meaning that all contracts allocated are accountable to the most fundamental peer group: The Community.

There are no limits to the available layers that can be created, though in this article we describe a six-layer social stack with a working group size of thirteen. This six-layer model can support an organizational size of 520–1040 individuals, with no need for central management. If an additional layer was added using a group size of twenty-one, this would result in an organizational capacity of 10,920–21,840 individuals respectively.

Below are a description if the six layers:

  • Community - This is the foundational layer to the stack, which is responsible for global contract level decisions, which will be governed by the DAO voting groups. This layer has the power to appoint or remove any contracts from on-chain funding.

  • Contract - This layer represents each individual type of contract: Ambassador or Developer. Ambassador contracts are reserved for individuals or teams that facilitate communication between developers, community, and the greater world. Developers are responsible for producing verifiable code that can be audited and reviewed.

  • Allocation - This layer is responsible for deciding on the internal budget allocation for the organization. It is a collection of up to three individual groups which include a board of directors as one group, that only carries voting power if the other groups are unable to come to consensus. This layer purely deals with financial decisions.

  • Strategy - This layer is important for overall organizational strategy, that defines longer term goals, aspirations, budgets, etc. This group is composed of a maximum of five individuals, with each individual being selected by their Creative layer for Strategic representation.

  • Creative - This layer is the ‘task defining’ layer that takes the higher level strategies, and expands them into a series of tasks and pursuits. This group is composed of a maximum of eight individuals, with each being selected by their Working layer for Creative representation.

  • Working - This layer is the ‘task oriented’ layer that essentially executes tasks that have been passed to them by the creatives. This layer is composed of a maximum of thirteen individuals, of which some could be volunteer roles.

DAO API

The DAO technology is being built to enable voting on the allocation of Nexus funds. However, the DAO API will be able to be used by other organizations wishing to provide localized governance tools for the formation of individual DAOs. This will be facilitated by the use of token votes that represent a share or partial ownership of the organization, similar to how traditional public companies function. This is important as it is becoming more evident that there are flaws within current shareholder voting structures, with new research coming to light that reveals:

“Since 2003, there have been about 75% more shareholder proposals rejected by a margin of one percent of shares outstanding than proposals that were approved by a similarly narrow margin. As a result, there is a large and discontinuous drop in the density of voting results on these proposals exactly at the majority threshold of each proposal. These anomalies in the distribution of voting results reveal that there are substantial effects of vote rigging on the success rate of shareholder proposals.” [1]

Though our consensus mechanism can go only so far in relieving the above symptoms and psychological tendencies inherent to some, we believe mathematics and cryptography can help improve the condition of our current voting systems.

Cryptocurrency

Though decentralization is a fundamental component of the blockchain movement, systems of governance are still largely centralized. The negative results of central decision-making can be seen evidently with Bitcoin Core vs. Bitcoin Cash, and Ethereum vs. Ethereum Classic. Projects such as EOS have attempted to solve this through the election of twenty-one delegates in order to operate the protocol, though they still lack the ability to maintain a truly decentralized model.

The infamous block size debate was limited to only Developers and Miners, resulting in a large portion of the Bitcoin community leaving Bitcoin to support Bitcoin Cash, dividing the community into separate factions. In the case of Bitcoin, the following voting groups would be desirable: Miners, Traders, Merchants, Exchanges and Developers.

Politics

Throughout history, we have seen the models of society move in cycles of varying degrees of centralization, from the formation of monarchies, oligarchies, to democracies, and republics. Our current governance systems are failing, and we believe this is because they are managed as top-down structures. Current voting systems deem their perspective encapsulates the value of the whole system, although it is apparent that politicians continue to be heavily influenced by their own values.

It is evident that democracy creates a two-party system, where many people feel unrepresented. Democracy often results in ‘mob rule’, as the majority decides for everyone. It allows the majority to ignore the minorities in decision making, inevitably producing conflict. The traditional approach of voting negates the weight associated with each corresponding value and individuals’ influence on society.

This dualism promotes competition and dominance over collaboration and innovation, and this ethos influences the spirit of most educational systems and businesses. The swing of power from one party to the other creates instability and short-termism, precluding the creation of holistic decision-making for the greater good of humanity. Factions inevitably lead to chaos, which ultimately pave the way to tyranny and dictatorship.