Discussion: Value accrual to DAOhaus via loot shares in every V3 DAO

Warcamp (DAOhaus Core Contributors)
#1

tl:dr

  • An introduction to a potential new approach to DAOhaus value accrual
  • DAOhaus receives a small percentage of loot shares in all v3 DAOs, the value of which accrues to DAOhaus only if DAOs make their respective loot shares transferable
  • This would have strong alignment with (my interpretation of) the goals of the DAOhaus community

Background and context

My interpretation of the DAOhaus community is that it wants two big things simultaneously:

  1. That the basic DAO coordination tools DAOhaus builds/maintains be public goods available to all
  2. That development of those tools and infrastructure, by DAOhaus, be sufficiently self-sustaining to enable us to bring those tools to all who need them and continue innovating

There are likely multiple approaches to achieving these two goals together, and some or all of those approaches likely complement each other.

This post outlines one of those potential approaches, with the goal of sparking discussion on the merits, desirability, and feasibility of the idea.

h/t to @cupofjoseph, who first introduced a similar concept back in February.

Moloch V3 context

The idea below relies on a new Moloch framework feature. In Moloch V3, both shares and loot are ERC20 tokens. A DAO can turn on (or off) transferability of each of those tokens. The key to the following idea is that loot transferability can be turned on.

The idea

In this post I will refer to the governing body of DAOhaus, which is currently named UberHaus, as “DAOhaus”.

  • For every DAO launched from our v3 summoning factory, DAOhaus would receive X% of total shares as loot. For example, if a DAO’s members have a total of 100 shares (including loot shares), DAOhaus would be allocated X loot shares.

  • If/while those loot shares remain non-transferable, DAOhaus would not and could not do anything with them. No funds would be extracted from the DAO.

  • If/when a DAO votes to make their loot shares transferable (and therefore likely to have a market and a market value), the DAOhaus treasury would then increase in value accordingly. In other words, those loot shares would back the value of the HAUS token.

  • This X% would be controlled by DAOhaus governance. It could initially be set to 0%, and then turned on if & when the DAOhaus community felt it appropriate, at a level it deemed appropriate.

Impact and alignment with community objectives

  • Summoning and using a DAO would remain free of charge. The vast majority of DAOs would experience virtually no impact from this mechanism.

    • No funds would be extracted from their DAO, and the DAO could spend all the funds in its treasury (and vaults)
    • This is aligned with objective (1) from above
    • The only impact would be a small X% dilution of DAO member’s ragequit value

  • The only DAOs that would potentially experience an impact (such as those loot shares being ragequit) would be the ones that have already chosen to financialize their loot shares, and make ragequit access to their treasuries permissionless. It makes sense that these would be the DAOs that contribute to the value of the DAOhaus treasury.

    • (Those loot shares could be ragequit from these DAOs if a DAOhaus governance proposal passed to transfer those loot tokens to some recipient, who then ragequit them.)

  • No DAO would be locked in to using DAOhaus. They would only stay with DAOhaus if DAOhaus continued to be sufficiently valuable to them. This would maintain DAOhaus’ incentive to continue providing valuable infrastructure and services.

  • DAOhaus’ incentives would be aligned with all DAOs: since it would have a potential X% stake in the future value of each DAO, it would be incentivized to help each DAO grow its treasury over time

  • Similarly, DAOhaus would benefit from enabling as many and as wide a variety of DAOs as possible to use our infrastructure, which is highly aligned with both objectives (1) and (2) from above

    • DAOhaus would benefit from more projects building user interfaces on top of and with our infrastructure

  • The value of the HAUS token value would be aligned with the total value of DAOs on DAOhaus, eg “DAOhaus makes money when its DAOs make money”. Via the HAUS token, the entire ecosystem would be aligned behind the incentive to help DAOs using DAOhaus become more valuable over time.

  • This approach would be fully compatible with other value accrual mechanisms, such as (B2B) services, fee-split agreements with projects building on our infrastructure, curation w/ the HAUS token, and even boost- or services marketplace fees.

Potential implementation

I think this could actually be a relatively light lift to build

  • Add logic to baal.mintShares and baal.mintLoot that mints an extra X% in loot to the DAOhaus treasury
  • Make X a parameter controllable by DAOhaus governance
  • The most difficult part would be figuring out the multi-chain mechanics (if any)

Feedback Requested!

In case its not clear, this is not a proposal. It should not be construed by any readers (especially those outside of Warcamp) as a likely new policy. It’s simply an introduction to an idea and a possibility, and meant only to spark feedback and discussion.

With that in mind, please share your feedback!

3 Likes
Request for Comment: Should DAOhaus drive value to $HAUS by giving UberHaus loot shares in every V3 DAO
#2

A previous concern I had with approaches like this was that to actually get value out of the arrangement, DAOhaus would have to ragequit from DAOs. This would be both harmful to those DAOs and be very challenging for DAOhaus governance to coordinate.

However, if we focus only on loot shares that have been made transferable by their respective DAOs, we address both challenges. Since the loot tokens would likely have a market price, value would accrue to DAOhaus without removing the underlying assets from the respective DAO treasuries.

#3

Don’t think this should be part of the core contract for the following reasons:

  • I don’t think this satisfies condition 1, imo. Unless I’m misunderstanding something, this is a core protocol fee by another name. Loot has value, and if we’re potentially reserving the right to extract some portion of the treasury in exchange for use of the core protocol, then how is this really any different?
  • To those who don’t understand this system, it would come off as sneaky and pointlessly complicated. I wouldn’t like some entity I didn’t ask for diluting loot in my DAO. Especially if I wanted the value of loot to weighted a certain way.
  • Any revenue we generate from users should be simple, consistent and easy to calculate. Why? Because people will be considering that when choosing DAO platforms. This solution would have too much uncertainty for a lot of users.
  • A hardcoded loot amount is weird. Couldn’t a DAO just dilute their loot and shares to a really large amount and make that 100 worthless?

For those reasons, having this as an opt-in feature for select shaman contracts and periphery apps makes a lot more sense.

1 Like
#4

After re-reading

“If/while those loot shares remain non-transferable, DAOhaus would not and could not do anything with them. No funds would be extracted from the DAO.”

I can see that there’s some nuance here. However, in my mind, taking a portion of transferable loot is still a fee for the core product (albeit with many distinctions).

Also, having these tokens to back the value of HAUS sounds nice. But doesn’t that mean at some selling them at some point? That part was still a bit confusing to me. How does DAOhaus actually accrue value without RQ simply because the tokens have a market price. Wouldn’t DAOhaus accruing value based on a market price be based upon some assumption that DAOhaus could extract their share at some point in time? What’s the value of tokens we couldn’t sell or RQ?

Maybe this is going over my head.

1 Like
#5

Under this concept, DAOhaus accrues value under the following (and only these) conditions:

  • the value of a DAO’s treasury grows, AND
  • the DAO turns on transferability for loot

In other words, DAOhaus accrues value if and only if a DAO makes money and has made an explicit choice to financialize their treasury. Under this approach, DAOhaus will accrue no value from DAOs that don’t choose to put itself into that category.

To make DAOhaus sustainable, some value is going to have to “extracted” value from somewhere. To me it makes sense to do so under the above conditions.

The value to the HAUS token in this approach could come from one (or perhaps both) of the following paths:

  1. DAOhaus governance (which is mapped to the HAUS token) would control a number of valuable assets (transferable loot tokens from various DAOs) that have the capability of being sold for “cash”.
  2. The HAUS token could be made a literal economic claim on a pro rata portion of those valuable assets

DAOhaus governance doesn’t need to sell those assets for it and the HAUS token to see their value. The right to control valuable assets is valuable itself, since with said control you can spend those assets in ways that benefit you.

In my view, it’s actually pretty simple. DAOhaus gets an X% share in each DAO, but DAOs maintain full control over how all assets are used, and value only flows to DAOhaus if the DAO decides to turn on loot transferability.

And I don’t actually think there’s a lot of uncertainty here. X% is always X%, and the DAO remains in full control of when it turns on transferability. As long as we’re clear about the mechanism (which we’ll have to be for any value accrual mechanism we implement), it should be pretty straight forward.

If I’m missing something here, though, please do let me know!

It’s not hardcoded, it’s a percentage. For each new share (including loot) minted by a DAO, X / 100 loot are minted to DAOhaus. That can’t be diluted away.

#6

A few thoughts & questions:

  • This has a lot in common with a Freemium model, where there is no cost unless a certain set of features are activated.
  • I’m not totally clear on the motivation people will have to turn on this feature, or if there are other features that might also qualify for Premium activation costs
  • I don’t understand how Uberhaus benefits from just having the option to ragequit transferable shares - unless it can be used as collateral or there are dividends
  • Some kind of dividend on shares might allow value to trickle in without needing a RQ
  • the adjustable % might be concerning to people deciding if they want to turn on the features - I’m assuming that this plan includes the notion that this DAO would be a member of Uberhaus (which assumes UH has functional governance practices etc, which it doesn’t)

As with many conversations like this, I see there are many levers and where those levers are set calibrates the functioning of the system. Can we agree there should be levers? And can we accumulate a list of levers we could consider? And then move to calibrating the levers and deciding which can change how (UH processes, DAO configurable etc).

I see this in the domain of game design and game theory, and without playtesting we won’t know how a mechanism works out. If we could get specific with the parameters (ie limitations) of the game, and then play with them (Wargames is trying to do this) I think we’d get further along than debating a particular snapshot of one possible calibration setting.

Spencer, what are all the levers you see?

#7

Implications for Incentives

This approach will impact a number of incentive vectors within the DAOhaus ecosystem. Some are obviously good, while others are more subtle and/or may have drawbacks we need to think through carefully.

Agent landscape

Before we examine the potential incentives at play, it’s important to define the agents who will be facing these incentives. This is an important exercise because the players today may look very different from the players in the medium and long run.

  1. DAOs that use DAOhaus infrastructure.
  2. Members of DAOs that use DAOhaus infrastructure. If the long run from (1) comes to fruition
  3. DAOhaus stakeholders and governance, which is comprised of UberHaus (or whatever it gets renamed to) and holders of HAUS tokens. This, of course, should overlap with all other categories.
  4. Builders of DAOhaus infrastructure (non-user-facing). Today this is primarily Warcamp, and is likely to continue to be the primary thing governed and funded by (3)
  5. DAOhaus-incubated builders of DAOhaus user-facing applications. Today this is primarily Warcamp, but one of our goals is to enable a large number of projects and teams to build applications on top of the DAOhaus infrastructure.
  6. Other builders of DAOhaus user-facing applications.
  7. Developers integrating with or composing DAOhaus into their applications. This is a small category today, but one of our goals is to grow this significantly.

In the long run, its possible that DAOs (1) and DAO members (2) may not use any applications built by or explicitly “branded” as DAOhaus (5). Instead, they may use applications or tools built by other projects (6) or (7). In the most extreme case, they may not even know they’re using anything related to DAOhaus.

Incentive landscape

The following is a list of incentives created by the concept outlined in the op. For each, I’ll reference the relevant agents from above.

To foster individual DAO growth & success

A. DAOhaus governance (2) and DAOhaus infrastructure builders (3) would have a direct incentive to help DAOs (1) grow and bring more valuable assets into their treasuries.

To increase the total number of DAOs

B. DAOhaus governance (3) and DAOhaus infrastructure builders (4) would have an incentive to bring in as many and as wide an array of purpose-driven community DAOs into DAOhaus as possible, in order to increase the chances of including some highly successful DAOs that contribute a lot of value to the HAUS token.

  • One implication here is that (3) and (4) don’t need every DAO on DAOhaus to be a game-breaker; even the tiny chance that a given DAO could become highly financially successful means its worthwhile to bring into DAOhaus. In practice, this means all DAOs.
  • This aligns well with our vision of “a future where any human community can achieve its collective purpose while reinforcing the full sovereignty of individual members”

To increase DAOhaus composability

C. DAOhaus governance (3) and DAOhaus infrastructure builders (4) would have an incentive to make it as easy as possible for all other developers (5) (6) (7) to build on, compose, and integrate with DAOhaus infrastructure, no matter who controls the user interface.

After all, any additional DAO on DAOhaus infrastructure would be a positive outcome for DAOhaus governance (3). Value accrual would not depend on ad hoc partnership deals, social contract revenue splits, or periphery marketplace fees, which likely involve high coordination overhead and heavy resource requirements to pull off. Those other methods would of course be complementary and in no way constrained.

To build on DAOhaus

D. Developers of DAOhaus applications (5) (6) and of applications integrating with DAOhaus (7) would have an incentive to build on DAOhaus infrastructure since, because of the incentive driven by (C), they would have lots of help from DAOhaus infrastructure developers (4).

E. Those application developers would also have an incentive to be incubated by DAOhaus (5) since that incubation would likely include a stake of HAUS as well as in DAOhaus governance (3). This is especially true as the (expected) value of HAUS grows because of these other incentives.

F. DAOhaus governance (3) would have an incentive to directly incentivize early application developers (5) (6) (7) to build on DAOhaus in order boostrap the network effects by supplementing the natural incentives (D) and (E).

For loot transferability?

G. DAOhaus governance (3), DAOhaus infrastructure builders (4), and DAOhaus-sponsored application developers (4) would have an incentive to nudge DAOs (1) in the direction of turning on loot transferability.

This could be viewed as a perverse incentive. However, other developers of DAOhaus applications (5) are not explicitly incentivized in this way. If we anticipate that application development shifts from (4) to (5) over time, then the application / UX-level impact of this incentive will be relatively low.

To use DAOhaus?

H. DAOs (1) and members of DAOs/communities (2) might have an incentive to launch their DAO(s) using DAOhaus infrastructure, especially if in doing so they receive a stake in HAUS.

To launch a separate token to bypass loot “fee”?

I. DAOs (1) may have an incentive to deploy their own token rather than turn on transferability for loot in order to avoid the scenario where DAOhaus governance (3) controls X% of their treasury.

A DAO could do this, but that token would not have the same built-in ragequit rights as loot would, so there wouldn’t be as strong a connection to the treasury. In theory, also, a DAO could launch their own token and then attach it to their treasury via the Zodiac exit module, though that wouldn’t have the same grace period exit rights as loot would.

Nonetheless, this is a possibility and I’m sure some DAOs would do this, but I suspect that most would not, if only because of the power of defaults.

#8

The motivation for DAOs to turn on loot transferability is basically to create a liquid token that is tied directly to their DAO. I hypothesize that loot transferability will be a popular way to migrate from a fully permissioned DAO to a DAO in which anybody can participate in economic upside.

I’m sure there are others (such as shamans, certain minions, etc), but none that I can think of that are tied to the core contract. Those can and should be sources of value accrual for DAOhaus, but I would consider them outside the scope of this concept.

UberHaus benefits from the loot having a market value. HAUS – via HAUS’ ability to participate in goverance over the assets in UberHaus’ treasury, and perhaps even the ability to redeem HAUS for a portion of the UberHaus treasury (?) – will be valued by people as a method to use those assets for things people care about, including but not limited to enriching themselves.

Speaking of dividends, some DAOs may end up distributing dividends to their share & loot holders, in which case UberHaus would receive some as well.

It would be adjustable only by DAOhaus governance (aka UberHaus), the power over which is and will be widely distributed. This is the same way a number of other Ethereum protocols work, including Uniswap and

They certainly could be if they wanted! In fact, the desire to have some say over what this percentage would be could be a driver of value to $HAUS. But as currently conceived DAOs would not necessarily be members of UberHaus.

Perhaps, though, we could figure out a way to build in some flow of HAUS back to the DAOs to ensure even stronger mutual alignment and give them some governance power.

Yes, this concept does assume functioning DAOhaus governance (whether that’s UberHaus or something else). This is a long term thing, though, so even if UH isn’t currently functioning as we’d want/expect, I expect it to be functioning sufficiently to manage X on a reasonable time scale.

Here are a few (I’m sure there are more):

  • X, ie the percent of each DAOs’ shares that DAOhaus treasury would receive as loot, configurable by DAOhaus governance
  • Whether or not there is some mechanism in place for DAOhaus governance to ragequit non-transferable loot from DAOs (in the op, this is assumed to be “No”)
  • How easy it is for other developers (eg categories 6 and 7 from my incentives post above) to fork our code and/or deploy their own version of our core contracts