diff --git a/inbox/archive/2024-03-13-futardio-proposal-develop-futarchy-as-a-service-faas.md b/inbox/archive/2024-03-13-futardio-proposal-develop-futarchy-as-a-service-faas.md new file mode 100644 index 00000000..11c646b0 --- /dev/null +++ b/inbox/archive/2024-03-13-futardio-proposal-develop-futarchy-as-a-service-faas.md @@ -0,0 +1,224 @@ +--- +type: source +title: "Futardio: Develop Futarchy as a Service (FaaS)?" +author: "futard.io" +url: "https://www.futard.io/proposal/D9pGGmG2rCJ5BXzbDoct7EcQL6F6A57azqYHdpWJL9Cc" +date: 2024-03-13 +domain: internet-finance +format: data +status: unprocessed +tags: [futardio, metadao, futarchy, solana, governance] +event_type: proposal +--- + +## Proposal Details +- Project: MetaDAO +- Proposal: Develop Futarchy as a Service (FaaS)? +- Status: Passed +- Created: 2024-03-13 +- URL: https://www.futard.io/proposal/D9pGGmG2rCJ5BXzbDoct7EcQL6F6A57azqYHdpWJL9Cc +- Description: Develop Futarchy as a Service (FaaS) + +## Summary + +### 🎯 Key Points +The proposal aims to develop Futarchy as a Service (FaaS) by creating a minimum viable product that enables DAOs to utilize market-driven governance and improve the user interface for better functionality. + +### πŸ“Š Impact Analysis +#### πŸ‘₯ Stakeholder Impact +This initiative provides DAO creators and participants with a more effective governance tool that leverages market predictions, potentially enhancing decision-making processes. + +#### πŸ“ˆ Upside Potential +If successful, FaaS could attract numerous DAOs, significantly increasing MetaDAO's revenue through licensing and transaction fees. + +#### πŸ“‰ Risk Factors +There is a risk of cost overruns and project delays, which could impact the financial viability and timeline of the proposal. + +## Content + + +![ecosystem](https://hackmd.io/_uploads/r1PShQkCa.png) + +Type: Business project + +Entrepreneur(s): 0xNallok + +*A note from 0xNallok: Special thanks are owed to the many parties who've supported the project thus far, to those who've taken massive risk on utilizing the systems and believing in a better crypto. It has been one of the most exciting things, not in attention, but seeing the β€œaha!” moments and expanding the understanding of what is possible with crypto.* + +See also: [A Vision for Futarchy as a Service](https://hackmd.io/@0xNallok/rJ5O9LwaT) + +## Overview + +The appetite for market-driven governance is palpable. We have a tremendous opportunity to take this labor of love and shape it into a prime-time product. Such a product would be a great boon to the Solana ecosystem and to the MetaDAO's bottom line. + +If passed, this proposal would fund two workstreams: + +- **Minimum viable product**: I would coordinate the creation of a minimum viable product: a Realms-like UI that allows people to create and participate in futarchic DAOs. This requires some modifications to the smart contract and UI to allow for more than one DAO. +- **UI improvements**: I've already been working with engineers to add helpful functionality to the UI. This proposal would fund these features, including: + - historical charts + - improving UX around surfacing information (e.g., showing how much money you have deposited in each proposal) + - showing historical trades + - showing market volume + +The goal would be to onboard some early adopter DAOs to test alongside MetaDAO. A few teams have already expressed interest. + +## Problem + +Most people in crypto agree that the state of governance is abysmal. Teams can loot the treasury without repercussions[^1]. Decentralization theatre abounds[^2]. Even some projects that build DAO tooling don't feel comfortable keeping their money in a DAO[^3]. + +The root cause of this issue is token-voting. One-token-one-vote systems have clear incentive traps[^4] that lead to uninformed and unengaged voters. Delegated voting systems ('liquid democracy') don't fare much better: most holders don't even do enough research to delegate. + +## Design +![Screenshot 2024-03-07 at 1.40.37 PM](https://hackmd.io/_uploads/Hyg89FDTa.jpg) + +A possible solution that MetaDAO has been testing out is futarchy. In a futarchy, it's markets that make the decisions. Given that markets are empirically better than experts at predicting things, we expect futarchies to perform better than traditional DAOs. + +Our objective is to build a product that allows DAOs in the Solana ecosystem to harness the power of the market for their decision-making. This product would look and feel like [Realms](https://realms.today/), only with futarchy instead of voting. + +Our short-term goal is to create a minimum viable iteration of this. This iteration would support the following flows: +- I, as a DAO creator, can come to a website and create a futarchic DAO +- I, as a futarchic trader, can trade in multiple DAOs proposals' futarchic markets + +To monetize this in the long-term, we could: +- Collect licensing fees +- Collect taker/maker fees in the conditional markets +- Provide ancillary consulting services to help DAOs manage their futarchies + +The minimum viable product wouldn't support these. We would instead work with a few select DAOs and sign agreements with them to migrate to a program with fee collection within 6 months of it being released if they wish to continue to use MetaDAO's offering. + +### Objectives and Key Results + +**Release a minimum viable product by May 21st, 2024** +- Extend the smart contract to support multiple DAOs +- Generalize the UI to support multiple DAOs +- Create docs for interacting with the product +- Partner with 3 DAOs to have them use the product at launch-time + +**Improve the overall UI/UX** +- Create an indexer and APIs for order and trade history +- Improve the user experience for creating proposals +- Improve the user experience for trading proposals + +### Timeline + +**Phase 1** +Initial discussions around implementation, services and visual components +UI design for components +Development of components in React +Program development +Data services / APIs construction + +**Phase 2** +Program deployed on devnet +Data services / APIs linked with devnet +UI deployed on dev branch for use with devnet + +**Phase 3** +Audit and revisions of program +Testing UI, feedback and revisions mainnet with limited beta testers and on devent + +**Phase 4** +Proposal for migration of program +UI live on mainnet +Create documentation and videos + +**Final** +Migrate program + +## Budget + +This project is expected to have deliverables within 30 days with full deployment within two months. + +Below is the inclusion of estimated **MAXIMUM** _costs and hours_ for the following roles[^5]. **If costs do incur beyond this estimate the cost is to be borne by the Entrepreneur.** + +A fair estimate of `$96,000`[^6] for the two months including the following: +- 1 smart contract engineer (\$15,000) (160 hours) +- 1 auditor (\$10,000) (40 hours) +- 2 UI / UX (\$32,000) (400 hours) +- 1 data/services developer (\$13,000) (140 hours) +- 1 project manager / research / outreach (\$26,000) (320 hours) + +The Entrepreneur (0xNallok) would fill in various roles, but primarily the project manager. + +This will be funded through: +- Transfer of \$40,000 USDC from the existing funds in the multi-sig treasury. +- Transfer of 342 META[^7] which will be used when payment is due to convert to USDC. +- The funds will be transferred to a 2/3 mult-sig including 0xNallok, Proph3t and Nico. +- Payments to the parties will be done weekly. + +> The reason for overallocation of META is due to the price fluctuation of the asset and necessity for payment in USDC. This takes the cost minus the \$40k USDC (\$56k) divided by the current price of 1 META (\$818.284) multiplied by a factor of 5. + +> Any remaining META once the project is completed will be transferred back to the MetaDAO treasury. + +MetaDAO Executor (`FpMnruqVCxh3o2oBFZ9uSQmshiyfMqzeJ3YfNQfP9tHy`) + +MetaDAO Treasury (`ADCCEAbH8eixGj5t73vb4sKecSKo7ndgDSuWGvER4Loy`) + +FaaS Multi-sig (`AHwsoL97vXFdvckVZdXw9rrvnUDcPANCLVQzJan9srWy`) +> 0xNallok (`4LpE9Lxqb4jYYh8jA8oDhsGDKPNBNkcoXobbAJTa3pWw`) + +> Proph3t (`65U66fcYuNfqN12vzateJhZ4bgDuxFWN9gMwraeQKByg`) + +> Nico (`6kDGqrP4Wwqe5KBa9zTrgUFykVsv4YhZPDEX22kUsDMP`) + +This proposal includes the transfer instruction from the MetaDAO treasury, the additional funds will be transferred from the MetaDAO Executor. + +## Business + +Ultimately, the goal of the MetaDAO is to make money. There are a few ways to monetize FaaS all dependent on what appeals most to DAOs: +- **Taker fees on markets**: we could take 5 - 25 basis points via a taker fee on markets. +- **Monthly licensing fees**: because the code is BSL, we could charge a monthly fee for the code and the site +- **Support and services**: we could also provide consultation services around futarchic governance, like a Gauntlet model. + +In general, we should aim for **vertical integration**. The goal is not to build this product as a primitive and then allow anyone to build front-ends for it: it's to own the whole stack. + +### Financial Projections + +Today, 293 DAOs use Realms. Realms is a free platform, so plenty of these DAOs are inactive and wouldn't be paying customers. So we estimate that we could acquire 5 - 100 DAOs as customers. + +As for estimating ARPU (average revenue per user), we can start by looking at the volume in the MetaDAO's markets: + +![Screenshot from 2024-02-26 19-52-03](https://hackmd.io/_uploads/H1HbnwcnT.png) + +Note that this only includes the volume in the finalized market, as all trades in the other market are reverted and thus wouldn't collect fees. + +So assuming that proposal 6 - 8 are an appropriate sample, we could earn ~\$50 - \$500 per proposal. If DAOs see between 1 - 2 proposals per month, that's \$100 - \$1,000 in taker fee ARPU. + +As for monthly licensing fees, Squads charges \$99 / month for SquadsX and \$399 / month for Squads Pro. I suspect that DAOs would be willing to pay a premium for governance. So we can estimate between \$50 - \$1,000 in monthly licensing fees. + +Putting these together: + +![Screenshot from 2024-02-26 19-54-59](https://hackmd.io/_uploads/BJvsnvc3p.png) + +The support & services business is different enough that it deserves its own model. This is because consulting / advisory businesses have non-zero marginal costs (you can't earn $25,000,000 in revenue from one consultant) and have lower defensibility. Both cause them to receive lower valuation multiples. + +Here's what we project: + +![Screenshot from 2024-02-26 19-29-19](https://hackmd.io/_uploads/B10c8vq3p.png) + +Of course, you can use your own numbers if you'd like to come up with your own estimates. + +## Footnotes +[^1]: DeFi Project Parrot Holds Contentious Vote on Future of $70M Treasury. Danny Nelson. Jul 21, 2023. https://www.coindesk.com/markets/2023/07/21/defi-project-parrot-puts-fate-of-over-70m-treasury-prt-token-to-vote/. + +[^2]: Crypto’s Theater Is Becoming More Surreal. Camila Russo. Aug 14, 2023. https://www.coindesk.com/consensus-magazine/2023/08/14/cryptos-theater-is-becoming-more-surreal/. + +[^3]: Aragon Fires Back at Activist Investors in Early Stages of DAO Governance Fight. Danny Nelson. May 5, 2023. https://www.coindesk.com/business/2023/05/05/aragon-fires-back-at-activist-investors-in-early-stages-of-governance-fight/. + +[^4]: The Logic of Collective Action. Wikipedia. Mar 7, 2024. https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action. + +[^5]: As this is an approximation and development and integration depends on a number of factors, inclusion of roles and estimates seems appropriate but may be in flux given changes which arise, however costs would not extend beyond the estimate. + +[^6]: This breaks down to an average estimate of ~$90/hour and 1060 (wo)man hours total. + +[^7]: $$(56,000/818.284) * 5 \approx 342$$ + +## Raw Data + +- Proposal account: `D9pGGmG2rCJ5BXzbDoct7EcQL6F6A57azqYHdpWJL9Cc` +- Proposal number: 12 +- DAO account: `7J5yieabpMoiN3LrdfJnRjQiXHgi7f47UuMnyMyR78yy` +- Proposer: `prdUTSLQs6EcwreBtZnG92RWaLxdCTivZvRXSVRdpmJ` +- Autocrat version: 0.1 +- Completed: 2024-03-19 +- Ended: 2024-03-19