--- 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