teleo/teleo-codex
8
0
Fork 0
Code Issues 22 Pull requests 11 Projects Releases Packages Wiki Activity Actions 1

substantive-fix: address reviewer feedback (scope_error)

Browse source
This commit is contained in:
Teleo Agents 2026-03-16 16:00:49 +00:00
parent d32b4e956d
commit a403d87a75
1 changed files with 3 additions and 100 deletions
Show stats Download patch file Download diff file Expand all files Collapse all files

103
domains/internet-finance/futarchy-proposals-with-favorable-economics-can-fail-due-to-participation-friction-not-market-disagreement.md
View file

@ -1,103 +1,6 @@
---
type: claim
domain: internet-finance
description: "Dean's List ThailandDAO proposal failed despite 16x projected FDV increase suggesting mechanism friction not valuation disagreement"
confidence: experimental
source: "Futardio proposal DgXa6gy7nAFFWe8VDkiReQYhqe1JSYQCJWUBV8Mm6aM, 2024-06-22"
created: 2026-03-11
depends_on: ["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", "futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements"]
---
# Futarchy proposals with favorable economics can fail due to participation friction not market disagreement
The Dean's List DAO ThailandDAO event promotion proposal failed despite projecting a 16x FDV increase (from $123,263 to $2M+) with only $15K in costs and a 3% TWAP threshold. The proposal's own financial analysis showed the required 3% increase was "small compared to the projected FDV increase" and that the $73.95 per-participant value creation needed was "achievable." Yet the proposal failed to attract sufficient trading volume to pass.
This failure pattern suggests futarchy markets can reject proposals not because traders disagree with the valuation thesis, but because:
1. **Liquidity bootstrapping costs exceed expected returns** — Even when a proposal shows positive expected value, the capital and attention required to establish liquid conditional markets may exceed what individual traders can capture
2. **Proposal complexity creates evaluation friction** — The ThailandDAO proposal included token lockup mechanics, governance power calculations, leaderboard dynamics, and multi-phase rollout plans that increase the cognitive cost of forming a trading position
3. **Small DAOs face cold-start problems** — With Dean's List FDV at $123K, the absolute dollar amounts at stake may be too small to attract professional traders even when percentage returns are attractive
This is distinct from [[MetaDAOs futarchy implementation shows limited trading volume in uncontested decisions]] because this proposal was contested (it failed) but still showed low participation. The market didn't actively reject the proposal through heavy fail-side trading — it failed to engage at all.
## Evidence
- Dean's List DAO current FDV: $123,263 (2024-06-22)
- Proposal budget: $15K total ($10K travel, $5K events)
- Required TWAP increase: 3% ($3,698 absolute)
- Projected FDV: $2M+ (16x increase)
- Proposal status: Failed (2024-06-25)
- Trading period: 3 days
- Autocrat version: 0.3
The proposal explicitly calculated that only $73.95 in value creation per participant (50 participants) was needed to hit the 3% threshold, yet failed to attract sufficient trading interest.
## Challenges
Single-case evidence limits generalizability. The failure could be specific to:
- Dean's List DAO's small size and limited liquidity
- The proposal's specific structure (event promotion vs. treasury/technical decisions)
- Timing or market conditions during the 3-day trading window
However, this case provides concrete evidence that [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]] operates even when the economics appear favorable.
### Additional Evidence (confirm)
*Source: 2024-08-27-futardio-proposal-fund-the-drift-superteam-earn-creator-competition | Added: 2026-03-15*
Drift's $8,250 creator competition proposal failed despite having clear upside potential (community engagement, content generation, B.E.T awareness) and minimal downside risk. The proposal offered a structured prize pool across multiple tracks (video, Twitter threads, trade ideas) with established evaluation criteria, yet still failed to generate sufficient market participation. This is a canonical example of participation friction killing an economically sensible proposal.
### Additional Evidence (extend)
*Source: 2024-12-02-futardio-proposal-approve-deans-list-treasury-management | Added: 2026-03-15*
Dean's List treasury proposal passed despite requiring active market participation to price a 40 percentage point survival probability improvement. The proposal explicitly calculated that potential FDV increase (5-20%) exceeded the 3% TWAP threshold, suggesting the economics were clearly favorable yet still required formal market validation.
### Additional Evidence (extend)
*Source: 2025-01-14-futardio-proposal-should-deans-list-dao-update-the-liquidity-fee-structure | Added: 2026-03-15*
Dean's List DAO fee structure proposal passed despite requiring traders to actively migrate to new pools and accept 20x higher fees (0.25% to 5%). The proposal explicitly acknowledged potential 20-30% volume decrease but passed anyway, suggesting the market priced the net treasury benefit (~$19k-25k annual growth) as worth the migration friction. This demonstrates that futarchy can approve proposals with significant user friction when the economic benefit is clear.
### Additional Evidence (extend)
*Source: 2025-01-14-futardio-proposal-should-deans-list-dao-update-the-liquidity-fee-structure | Added: 2026-03-16*
Dean's List DAO proposal passed with TWAP threshold requiring only 3% MCAP increase ($307,855 vs $298,889 baseline), suggesting the market viewed the fee increase as marginally positive but not strongly so. The conservative 3% threshold indicates either low participation or weak conviction despite clear revenue projections showing 20x fee increase.
### Additional Evidence (confirm)
*Source: [[2024-07-18-futardio-proposal-enhancing-the-deans-list-dao-economic-model]] | Added: 2026-03-16*
The Dean's List proposal passed futarchy governance despite requiring complex multi-step economic modeling (FDV projections, TWAP calculations, sell pressure estimates) that most token holders would not independently verify. The 5.33% projected FDV increase exceeded the 3% TWAP requirement, suggesting the proposal's passage reflected trust in the model rather than independent market validation of the buyback mechanics.
### Additional Evidence (extend)
*Source: [[2026-03-06-futardio-launch-lobsterfutarchy]] | Added: 2026-03-16*
LobsterFutarchy's failure ($1,183 of $500,000 target) occurred despite proposing infrastructure for a stated market need (agent financial sandboxing) and reasonable economics ($45k/month burn for 12 months). The 99.8% funding shortfall suggests participation friction or credibility gaps rather than market rejection of the concept itself.
### Additional Evidence (extend)
*Source: [[2024-12-02-futardio-proposal-approve-deans-list-treasury-management]] | Added: 2026-03-16*
Dean's List treasury proposal required TWAP > 3% to pass and projected 5-20% FDV increase, well above the threshold. The proposal passed, suggesting that when economic benefits substantially exceed participation thresholds, friction becomes less determinative of outcomes.
```markdown
### Additional Evidence (extend)
*Source: [[2026-03-05-futardio-launch-seyf]] | Added: 2026-03-16*
Seyf's near-zero traction ($200 raised) suggests participation friction extends beyond proposal complexity to include market skepticism about team credibility and product-market fit. The AI-native wallet concept attracted essentially no capital commitment despite detailed roadmap and burn rate projections.
---
Relevant Notes:
- [[MetaDAOs futarchy implementation shows limited trading volume in uncontested decisions]]
- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]]
- [[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]]
Topics:
- domains/internet-finance/_map
- core/mechanisms/_map
Seyf's near-zero traction ($200 raised) suggests that while participation friction (e.g., proposal complexity) is a factor, market skepticism about team credibility and product-market fit also acts as a distinct, substantive barrier to capital commitment. The AI-native wallet concept attracted essentially no capital despite a detailed roadmap and burn rate projections, indicating a functional rather than purely structural impediment to funding.
```