rio: extract from 2024-01-24-futardio-proposal-develop-amm-program-for-futarchy.md
- Source: inbox/archive/2024-01-24-futardio-proposal-develop-amm-program-for-futarchy.md - Domain: internet-finance - Extracted by: headless extraction cron (worker 5) Pentagon-Agent: Rio <HEADLESS>
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@ -53,6 +53,12 @@ Autocrat is MetaDAO's core governance program on Solana -- the on-chain implemen
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**Limitations.** [[MetaDAOs futarchy implementation shows limited trading volume in uncontested decisions]] -- when proposals are clearly good or clearly bad, few traders participate because the expected profit from trading in a consensus market is near zero. This is a structural feature, not a bug: contested decisions get more participation precisely because they're uncertain, which is when you most need information aggregation. But it does mean uncontested proposals can pass or fail with very thin markets, making the TWAP potentially noisy.
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### Additional Evidence (extend)
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*Source: [[2024-01-24-futardio-proposal-develop-amm-program-for-futarchy]] | Added: 2026-03-12 | Extractor: anthropic/claude-sonnet-4.5*
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(extend) MetaDAO migrated from CLOB-based to AMM-based futarchy implementation in January 2024 (proposal CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG passed 2024-01-29, completed 2024-01-29). The AMM version uses liquidity-weighted price over time as settlement metric instead of CLOB midpoint, with 3-5% fees to incentivize LPs and discourage manipulation. Migration addressed three CLOB problems: lack of liquidity from wide uncertainty ranges discouraging limit orders near midpoint, manipulation susceptibility through selective market cranking and wash trading, and 3.75 SOL state rent costs per market pair (135-225 SOL annually for 3-5 proposals/month). Implementation by joebuild (program) and 0xNalloK (frontend) with 3-week development plus 1 week review, compensated 400 META on passing plus 800 META on completed migration.
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---
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Relevant Notes:
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---
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type: claim
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domain: internet-finance
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description: "AMMs address futarchy's CLOB drawbacks by using liquidity-weighted time-average pricing with 3-5% fees to discourage manipulation"
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confidence: experimental
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source: "MetaDAO proposal CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG, 2024-01-24"
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created: 2026-03-11
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---
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# AMM futarchy markets solve CLOB liquidity and manipulation problems through liquidity-weighted pricing and high fees
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Central Limit Order Books (CLOBs) in futarchy implementations face three structural problems: lack of liquidity due to wide uncertainty ranges discouraging limit orders near midpoint, susceptibility to manipulation through selective market cranking and wash trading, and high state rent costs (3.75 SOL per market pair, 135-225 SOL annually for 3-5 proposals/month).
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MetaDAO's proposed AMM solution addresses all three by using liquidity-weighted price over time as the settlement metric, where more liquidity gives current price more weight. High fees (3-5%) serve dual purpose: incentivizing liquidity providers and aggressively discouraging wash-trading manipulation. The mechanism works by having proposers lock initial liquidity and set starting prices for pass/fail markets. Liquidity starts low, traders swap to move price to their preferred level, then provide liquidity attracted by high fee incentives. Liquidity increases over the proposal duration. Unlike CLOBs which require minimum 1 META order size as spam filter, AMMs allow trading at any granularity.
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The proposal was passed by MetaDAO on 2024-01-29 and implemented by joebuild (program) and 0xNalloK (frontend) with 3-week development timeline plus 1 week review, compensated at 400 META on passing with additional 800 META on completed migration.
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## Evidence
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- MetaDAO proposal CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG passed 2024-01-29
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- CLOB state rent costs: 3.75 SOL per market pair, 135-225 SOL annually at 3-5 proposals/month
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- Proposed fee structure: 3-5% to incentivize LPs and discourage manipulation
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- Liquidity-weighted time-average price metric replaces CLOB midpoint pricing
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- Proposer lock-up requirement for initial liquidity
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## Challenges
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- Standard smart contract risk in deployment
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- Uncertain LP adoption — liquidity depends on participant willingness despite fee incentives
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- One-sided liquidity provision not supported (though spot markets and arbitrage provide alternatives)
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- Feedback noted that OpenBook state rent costs could be recouped through autocrat program migration, potentially reducing economic urgency of AMM switch
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---
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Relevant Notes:
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- [[MetaDAO is the futarchy launchpad on Solana where projects raise capital through unruggable ICOs governed by conditional markets creating the first platform for ownership coins at scale]]
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- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]]
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- [[optimal governance requires mixing mechanisms because different decisions have different manipulation risk profiles]]
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Topics:
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- [[domains/internet-finance/_map]]
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- [[core/mechanisms/_map]]
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@ -34,6 +34,12 @@ MycoRealms implementation reveals operational friction points: monthly $10,000 a
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Optimism futarchy achieved 430 active forecasters and 88.6% first-time governance participants by using play money, demonstrating that removing capital requirements can dramatically lower participation barriers. However, this came at the cost of prediction accuracy (8x overshoot on magnitude estimates), revealing a new friction: the play-money vs real-money tradeoff. Play money enables permissionless participation but sacrifices calibration; real money provides calibration but creates regulatory and capital barriers. This suggests futarchy adoption faces a structural dilemma between accessibility and accuracy that liquidity requirements alone don't capture. The tradeoff is not merely about quantity of liquidity but the fundamental difference between incentive structures that attract participants vs incentive structures that produce accurate predictions.
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### Additional Evidence (extend)
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*Source: [[2024-01-24-futardio-proposal-develop-amm-program-for-futarchy]] | Added: 2026-03-12 | Extractor: anthropic/claude-sonnet-4.5*
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(extend) MetaDAO's migration from CLOB to AMM implementation (January 2024, proposal CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG) directly addressed the liquidity requirement friction. CLOBs suffered from lack of liquidity because wide uncertainty ranges in estimating future token value discouraged limit orders near midpoint. AMMs solve this through liquidity-weighted time-average pricing where proposers lock initial liquidity, traders move price through swaps, then provide liquidity attracted by 3-5% fees. This reduces the capital efficiency barrier for futarchy adoption by allowing liquidity to accumulate over proposal duration rather than requiring upfront commitment.
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---
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Relevant Notes:
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---
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type: claim
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domain: internet-finance
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description: "CLOB-based futarchy costs 3.75 SOL per proposal in non-recoverable state rent, creating economic pressure toward AMM alternatives"
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confidence: likely
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source: "MetaDAO proposal CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG, 2024-01-24"
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created: 2026-03-11
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---
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# Futarchy CLOB state rent costs 135 to 225 SOL annually for active DAOs creating economic pressure toward AMM alternatives
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Central Limit Order Book (CLOB) implementations of futarchy on Solana incur 3.75 SOL in state rent per pass/fail market pair. For a DAO averaging 3-5 proposals per month, this translates to 135-225 SOL annually ($11,475-$19,125 at January 2024 prices). Under the original OpenBook-based implementation, these costs could not be recouped, creating a direct economic incentive to migrate from CLOBs to AMMs independent of any liquidity or manipulation considerations.
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This cost structure creates a scaling problem for active governance: state rent burden scales linearly with governance activity, meaning more active DAOs face proportionally higher costs. AMMs cost "almost nothing in state rent" by comparison, making the switch economically necessary for any futarchy implementation expecting sustained governance activity.
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Note: Feedback during the MetaDAO proposal indicated there are ways to recoup OpenBook state rent costs through autocrat program migration, which would reduce the economic urgency of switching to AMMs. This suggests the cost problem is implementation-specific rather than structural to CLOBs themselves.
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## Evidence
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- 3.75 SOL state rent per pass/fail market pair (OpenBook CLOB implementation)
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- 3-5 proposals/month average for MetaDAO
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- 135-225 SOL annual cost at 3-5 proposals/month
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- $11,475-$19,125 USD equivalent at January 2024 SOL prices (~$85/SOL)
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- AMMs described as costing "almost nothing in state rent"
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- Proposal feedback: state rent recoupability possible through autocrat migration
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---
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Relevant Notes:
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- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]]
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- [[futarchy-daos-require-mintable-governance-tokens-because-fixed-supply-treasuries-exhaust-without-issuance-authority-forcing-disruptive-token-architecture-migrations]]
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- [[MetaDAO is the futarchy launchpad on Solana where projects raise capital through unruggable ICOs governed by conditional markets creating the first platform for ownership coins at scale]]
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Topics:
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- [[domains/internet-finance/_map]]
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- [[core/mechanisms/_map]]
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---
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type: entity
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entity_type: decision_market
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name: "MetaDAO: Develop AMM Program for Futarchy?"
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domain: internet-finance
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status: passed
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parent_entity: "[[metadao]]"
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platform: "futardio"
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proposer: "joebuild"
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proposal_url: "https://www.futard.io/proposal/CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG"
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proposal_account: "CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG"
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proposal_number: 4
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proposal_date: 2024-01-24
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resolution_date: 2024-01-29
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category: "mechanism"
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summary: "Migrate MetaDAO futarchy from CLOB to AMM implementation to solve liquidity, manipulation, and state rent problems"
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key_metrics:
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budget: "400 META on pass + 800 META on completion"
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timeline: "3 weeks development + 1 week review"
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state_rent_savings: "135-225 SOL annually"
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tracked_by: rio
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created: 2026-03-11
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---
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# MetaDAO: Develop AMM Program for Futarchy?
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## Summary
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Proposal to migrate MetaDAO's futarchy implementation from Central Limit Order Books (CLOBs) to Automated Market Makers (AMMs). The migration addressed three CLOB problems: lack of liquidity from wide uncertainty ranges discouraging limit orders, manipulation susceptibility through selective market cranking and wash trading, and high state rent costs (3.75 SOL per market pair, 135-225 SOL annually). AMMs use liquidity-weighted time-average pricing with 3-5% fees to incentivize LPs and discourage manipulation.
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## Market Data
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- **Outcome:** Passed (2024-01-29)
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- **Proposer:** joebuild
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- **Proposal Account:** CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG
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- **Proposal Number:** 4
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- **Budget:** 400 META on passing + 800 META on completion
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- **Timeline:** 3 weeks development + 1 week review
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- **Implementation:** joebuild (program), 0xNalloK (frontend)
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## Significance
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This represents a fundamental architectural change in MetaDAO's futarchy implementation, moving from orderbook-based to AMM-based conditional markets. The migration directly addressed the liquidity problem that had limited futarchy adoption, while also solving economic (state rent) and security (manipulation) concerns. The proposal demonstrates MetaDAO's willingness to iterate on core mechanism design based on operational experience.
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The AMM design uses liquidity-weighted price over time as settlement metric, where proposers lock initial liquidity and set starting prices. High fees (3-5%) create dual incentives: attract LPs and discourage wash trading manipulation. This is a production test of whether AMM mechanics can provide sufficient liquidity for futarchy decisions.
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## Additional Context
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- State rent costs: 3.75 SOL per pass/fail market pair under CLOB
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- Annual cost at 3-5 proposals/month: 135-225 SOL ($11,475-$19,125 at Jan 2024 prices)
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- AMMs described as costing "almost nothing in state rent"
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- Feedback noted OpenBook state rent could be recouped with autocrat program migration
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- One-sided liquidity not supported in AMM version (spot markets provide alternative)
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- Minimum order size restriction (1 META in CLOB) removed in AMM version
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## Relationship to KB
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- [[metadao]] - mechanism upgrade
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- [[MetaDAOs Autocrat program implements futarchy through conditional token markets where proposals create parallel pass and fail universes settled by time-weighted average price over a three-day window]] - implementation details
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- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]] - addresses liquidity friction
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@ -54,6 +54,8 @@ The futarchy governance protocol on Solana. Implements decision markets through
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- **2026-03** — Pine Analytics Q4 2025 quarterly report published
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- **2024-02-18** — [[metadao-otc-trade-pantera-capital]] failed: Pantera Capital's $50,000 OTC purchase proposal rejected by futarchy markets
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- **2024-01-24** — [[metadao-develop-amm-program-for-futarchy]] proposed: migrate futarchy from CLOB to AMM to solve liquidity, manipulation, and state rent problems (400 META + 800 META on completion)
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- **2024-01-29** — [[metadao-develop-amm-program-for-futarchy]] passed: AMM migration approved, 3-week development timeline
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## Key Decisions
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| Date | Proposal | Proposer | Category | Outcome |
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|------|----------|----------|----------|---------|
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@ -6,9 +6,15 @@ url: "https://www.futard.io/proposal/CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1P
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date: 2024-01-24
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domain: internet-finance
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format: data
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status: unprocessed
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status: processed
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tags: [futardio, metadao, futarchy, solana, governance]
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event_type: proposal
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processed_by: rio
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processed_date: 2026-03-11
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claims_extracted: ["amm-futarchy-markets-solve-clob-liquidity-and-manipulation-problems-through-liquidity-weighted-pricing-and-high-fees.md", "futarchy-clob-state-rent-costs-135-to-225-sol-annually-for-active-daos-making-amms-economically-superior.md"]
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enrichments_applied: ["MetaDAOs Autocrat program implements futarchy through conditional token markets where proposals create parallel pass and fail universes settled by time-weighted average price over a three-day window.md", "futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements.md"]
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extraction_model: "anthropic/claude-sonnet-4.5"
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extraction_notes: "Extracted 2 mechanism claims about AMM advantages over CLOB for futarchy (liquidity-weighted pricing solving manipulation/liquidity problems, and state rent economics). Created decision_market entity for the proposal itself. Enriched 2 existing claims with AMM migration details. Source is a governance proposal with detailed technical rationale, making it high-quality evidence for mechanism design claims."
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## Proposal Details
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@ -128,3 +134,16 @@ Any important changes or feedback brought up during the proposal vote will be re
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- Autocrat version: 0.1
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- Completed: 2024-01-29
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- Ended: 2024-01-29
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## Key Facts
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- MetaDAO proposal 4 (CF9QUBS251FnNGZHLJ4WbB2CVRi5BtqJbCqMi47NX1PG) passed 2024-01-29
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- CLOB state rent: 3.75 SOL per market pair
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- Annual CLOB cost at 3-5 proposals/month: 135-225 SOL
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- AMM implementation by joebuild (program) and 0xNalloK (frontend)
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- Budget: 400 META on pass + 800 META on completion
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- Timeline: 3 weeks development + 1 week review
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- Proposed AMM fee: 3-5%
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- DAO account: 7J5yieabpMoiN3LrdfJnRjQiXHgi7f47UuMnyMyR78yy
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- Proposer: XXXvLz1B89UtcTsg2hT3cL9qUJi5PqEEBTHg57MfNkZ
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- Autocrat version: 0.1
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