GaaS - Governance-as-a-Service. Oursourcing Governance to Polkadot's OpenGov. A Master Plan for Tokens Airdropped to the Polkadot Treasury (Or any Treasury)

After the DED memecoin airdrop to the treasury, the Polkadot treasury has received approximately the 5% of all DED circulating supply. It roughly matches the airdropped amount that the Polkadot users received during the initial airdrop previously. As of now, two proposals have sought to claim the DED tokens, the first one Polkadot referendum 1077 which aimed to “Conduct Targeted Marketing during KBW 2024” by an unknown party with immeasurable results and off timing as well as the referendum 1163 for “Social Media marketing for (the) dotisded (campaign)” by a more reputable proposer this time, Lunar Strategy for retroactive activities on social media.

Considering that there is no unified plan or intention expressed by the DED foundation (formed by referendum 469) and we have already had a very dubious referendum pass that will result in no measurable marketing impact, we have taken the liberty to propose a different master plan to make use of those tokens and for all airdropped tokens in the future. These alternatives have been discussed only internally and this is the first time it’s presented to the wide Polkadot community. The objective here, is to enact actions and planning through OpenGov referenda for foreign tokens willing to outsource the governance work to Polkadot’s Opengov.

The proposed plan goes in line with one of our ideas that have been in the recycling bin for quite some time. However, with the advent of these DED token referenda it seems like it can be applicable and expandable to other tokens willing to use OpenGov’s capabilities for their own token.

The core idea explained here:
https://saxemberg.com/articles/gaas-governance-as-a-service-outsourcing-on-chain-governance/

In a nutshell, the plan is to either liquidate or donate the assets if no plan or incentives have been presented in a timely manner. And if there is a plan and incentives then it’s subject to approval so that the decentralized governance body starts working for the interests of the foreign token according to the presented plan. In such a way Polkadot’s OpenGov not only becomes a governance body but also a potential attractive product for other tokens that want to outsource governance to Polkadot’s OpenGov.

1. The Liquidation Approach

The first and obvious approach for foreign tokens within a treasury. Without a plan or incentives the straightforward approach for foreign tokens is to liquidate them in exchange of either stablecoins or the native token. Other alternatives such as tokenized RWAs or top cryptocurrencies like Bitcoin could also be accepted. In this particular example airdropped tokens such as DED would be liquidated.

For this example we are only going to project it to one year into the future with a payout back to the treasury every 2 months. Our planned time for the start is December so that we have October for discussion and feedback on both the Polkadot Forum, the governance forums (Polkassembly and Subsquare) in addition to the 30 day voting time.

1st batch payment
https://polkadot.subscan.io/block/23650000
2nd batch payment
https://polkadot.subscan.io/block/24526000
3rd batch payment
https://polkadot.subscan.io/block/25402000
4th batch payment
https://polkadot.subscan.io/block/26278000
5th batch payment
https://polkadot.subscan.io/block/27154000
6th batch payment
https://polkadot.subscan.io/block/28030000

So the idea is to liquidate 30B DED tokens in 6 batches. This would still leave 30B DED to accomplish whatever is necessary and potentially any payments required for the Polkadot Community Foundation.

2. The Donation Approach. Also initially dubbed the Buterin Approach - A Charitable effort.

This is inspired by the actions taken by Vitalik Buterin with his airdrop allocation of SHIB and the ideas of Thomas Rivier, currently a Kusama DV x.com with the added strength that Polkadot’s OpenGov and the Polkadot Community Foundation will be able to transparently allocate this funds to charities so no doubts arise from these transactions. The main idea is to bet on the token’s liquidity and growth medium term. So in DED’s case, long term growth so funds won’t be allocated to charities all at once, rather transactions will be batched so that the process takes years, ideally for some years so we trace a full BTC halving cycle. This is only possible if it’s a large token otherwise to shorten the period significantly should be the appropriate approach. The final design will depend on the parameters selected however.

We propose to use the Polkadot Community foundation’s ability to operate on behalf of the DOT token holders so that it becomes a recipient of the airdropped tokens in order to redistribute them at a later time.

The concrete execution would be a batched payment of the airdropped tokens, in our example, DED tokens to the Polkadot Community Foundation every n-months, who in turn will be in charge to either send the tokens to the selected charities directly or to exchange the tokens for AssetHub USDC first and send them to the charity in case they don’t accept the donation in the form of DED tokens. The main idea is to push for the acceptance of the airdropped tokens or AssetHub USDC/T directly even if it gets liquidated later for other tokens or fiat. In that way, a charity narrative could be of use with the addition to the presence of the airdropped tokens and more likely Polkadot in the press releases of the selected charities.

Charity selection

Currently, we have a large number of charities on Polkadot that can be supported through TeddyDAO. In addition to those, given that we will be using the Polkadot Community Foundation, there could be other charities and even non-profits selected as part of this effort that accept crypto but not necessarily through TeddyDAO. For instance, The Rust Foundation, Coincenter, The Matrix Foundation and the football and Polkadot foundation that have presented their intentions on OpenGov with direct referenda that were rejected already, however, this approach could be great for these.
The selection will be chosen at random using a list of publicly approved charities, projects or non-profits. So only one charity from the list will be picked will be picked at random from the list every n-months. This is done in order to avoid favoritism and to be able to deliver a significant amount of funds and not only dust which would be the case we select a large number of charities to donate.
A selection procedure could be the final numbers of a hash. For instance:

Block 200682991
https://polkadot.subscan.io/block/22682991

corresponds to:
0xcfe2c588bd90819a073a8faa65499ca687e14b864520f82d85fcf7cdb68d9bc0

so we would select the charity that corresponds to “c0” in the previously approved list.
The payments would look as follows:

1st batch payment
https://polkadot.subscan.io/block/23650000
2nd batch payment
https://polkadot.subscan.io/block/24526000
3rd batch payment
https://polkadot.subscan.io/block/25402000
4th batch payment
https://polkadot.subscan.io/block/26278000
5th batch payment
https://polkadot.subscan.io/block/27154000
6th batch payment
https://polkadot.subscan.io/block/28030000

Each batch will donate 5000000000 DED tokens to 5HmLLCGUt1uvkHct3Rw7hbCxBEwibT5GDepV2cQDydY6fRFV.
That corresponds to the Polkadot Community Foundation. Another address could be provided if they required a new one.

So the idea is to send 30B DED tokens in 6 batches. This would still leave 30B DED to accomplish whatever is necessary to allocate and amplify the message and potentially any payments required for the Polkadot Community Foundation.

In this case such a donation would look something like this:
https://westend.subscan.io/referenda_v2/41
Only with corrected values for token amounts and times as the block times refer to Polkadot’s blocks and not Westend’s.

3. GaaS – governance as a service

At the moment the only statement about the intentions of the airdropped tokens is the following:

So in theory, DED could be the first case of Governance-as-a-Service for Polkadot’s OpenGov which would be our favorite approach.

Our quote “The airdropping party provides the tokens to the treasury as well as the tools to execute the airdrop for all future voters that will take part in the voting process and diligence required to investigate and track the proposals. The most straightforward way to select the recipients of the incentive is to select all participants who voted in any way, although other alternative approaches can be tried, either as a bribedrop or other more intricate selection mechanisms.”

Given that this is a novel idea we propose to use a hybrid approach in order to adapt on the go so that tools and the execution plan for the votedrop can become either paid by the DED located in the treasury in addition to financing the aligned DED referenda. Even if this approach is not in the interest of DED we propose to still create a structured approach for airdropped tokens so that future airdropped tokens and their referenda can start using this approach. So for now DED is the example but it could expand to other new airdropped tokens. However, the main planning should come from the party who airdropped the tokens and not from OpenGov itself hence the defaults are liquidation or donation.

So in practice and without a hybrid approach, a realistic and concrete plan to incentivize OpenGov voters to participate in foreign token governance should contain the appropriate incentives for future votes as well as rough planning for their tokens, otherwise OpenGov would just revert to the default actions which are liquidation or donation. Given that this will be the first time we try this, Polkadot could also try both approaches simultaneously and evaluate results in tandem: the attempt at incentivization of OpenGov voters willing to govern foreign tokens as well as whatever DED has planned for this treasury airdrop without any particular planning.

Alternatives courses of action.

  1. The Lottery Approach.

A harder to pull approach but still possible in our opinion as it would require more planning and structure. This comes as an alternative pushed by a few ChaosDAO members who contacted Saxemberg recently and concurrently that have argued that “memecoins created a narrative of winners on other chains”. So instead of using public funds to pump the value of the majority owners of memecoins, it’s preferable to skip all the middle part and create winners directly through a lottery model. All liquidity injections for memecoins are best provided by the owners of the memecoin and interested parties rather than public funds as these will be (re)directly to the owners of the memecoin so if people want to use a memecoin to create random winners then a random airdrop is preferable. We can see previous examples of this with the randdrop by Nois.

  1. No public plan. Referenda Free-For-All.
    The current status-quo of the DED tokens in the treasury. The idea could be productive if we didn’t have a request full of red flags already with referendum 1077. A more lenient approach towards airdropped memecoins from all OpenGov voters has already had a negative impact as it has approved already a very questionable referendum. So we have our doubts with respect to this approach as more dubious entities will see this weakness and will be quick to claim as many DED tokens as possible from the treasury. On the bright side, referenda which are risky, legitimate but unpopular or created by teams without traction could benefit from this approach but this would require some kind of incentive to OpenGov voters in order to function correctly as previously explained.

Feedback is welcome. Additional ideas as well as fine tuning of the parameters is also welcome.

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Just to remind everyone, the fact that one or two people out of 340+ members said something does not mean it is the stance of the entire ChaosDAO group :slight_smile:

It would probably be better to state who they are / what projects they are affiliated with, rather than saying ChaosDAO.

ChaosDAO was quoted as the source of discussion and ideas for the “narrative of winners” that in turn inspired our Lottery Alternative Approach. So it only made sense to include it as a reference as there is no other affiliated project attached to this narrative that we are aware of.
We are just reporting the facts as they were reported.

We have requested publicly that any interested party willing to create the votedrop process to join to this initiative so that it can also be funded with DED tokens. An important note is to have payments for this process be paid only in DED so DOT and stables should not be used for this votedrop design, execution and planning (other than the obvious fees).

Hey @SAXEMBERG, I would like to take a different approach. (going to ignore the entire DED saga and focus on external governance tokens in the treasury).

Multiple DAOs have previously “airdropped” their tokens to other DAOs as part of their token launch, and as trusted members of the receiving communities, @DAOplomats were able to leverage tokens to advance the stakeholders involved.
eg. of token airdrops to other DAOs

  1. Optimism in Airdrop 1 & RPGF
  2. Arbitrium DAO airdrop
  3. ZKsync native projects’ Airdrop
  4. Neurton Allocation to Cosmos Hub

Most communities that received those airdrops used the tokens for collective coordination between the DAOs. AaveDAO is active in Arbitrium governance; Uniswap and Arbitrium have commonly funded initiatives, and 1inch used the tokens to incentivize activities on those L2s.

The common pattern is that not all have dumped the tokens altogether. The DAOs with solid treasury management added those tokens to their balance sheets and used them to grow the metrics.

So, IMO, dumping the tokens in the open market or following Vitalik’s past actions might not be ideal, but it can only be considered when dealing with meme tokens.

Regarding governance as a service, I think the best option might be not to sell the allocated tokens but to use them to improve both ecosystems. Unfortunately, we are heavily focusing on getting the Airdropped tokens out of the treasury through ‘‘Votedrops’’ or Lottery.