MakerDao needs a Treasury to provide Compensation to its Workers post foundation (focus on workers for now)

In general I’m realizing that a pre requisite to scientifically creating roles and structure in the DAO requires a basis in organizational theory. I’m starting to work through some of that stuff. Trying to understand how we might we want to model tasks and their coordination in relation to the DAOs goals.

By Maker do you mean the foundation or the DAO?

I would start with proposals about creating Treasury. I assume there is strong consensus we need it, so it’s not really important at this moment how exactly we will spend it. I think payment should be in DAI, receivers can always buy mkr on the market.

Could it be implemented something like this?

  • create additional buffer (let’s call it Treasury).
  • create poll vote on variable called ‘treasury rate’. Let’s say mkr holders vote on 0.2 (20 percent) and confirm it with executive vote
  • after system surplus buffer reaches 500k, divert 20 percent of surplus to buffer, other goes to auction
  • executive vote is needed to transfer arbitrary amount of dai from the Treasury

I am just throwing idea naively, but probably developers could provide some proposals.

I think if we want to start with the whole scope of “hire the workforce that will power the DAO” then we probably need to start at a really high level and there are a lot of details that will need to be debated and agreed on before we can even start.

It’s probably a better idea for us to start at “What is the first task that we can pay a person to complete” and figure out how to make that happen. (That will still probably be very difficult)

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Yes @stable ,

Or beside this, what do you really need to get done between all of this.

That would be a good logic instead of giving headache and setting standard too high for a point of start. By that i mostly mean giving the chance to everyone to compete and contribute.

Have a great morning… Coffee time.

Totally, I liked @MakerMan idea on starting with the treasury/treasurer. Thats a basic part of this process that has to happen before the DAO can employ people.

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Made a signal request Signaling Request: Should Maker make a Treasury to manage revenue?

A decentralized protocol will probably not stay decentralized if there are people who are able to control parts of it. This proposal creates an administrative class that can potentially negatively affect future efforts towards even further decentralization of the protocol.

The people most financially invested in the long term success of makerdao are those who hold the largest amounts of MKR tokens, so they will be the ones most incentivized to fulfill the necessary roles by employing the appropriate people to assist the project or fulfill these roles themselves with their own resources.

Employing people through the makerdao itself introduces social biases that probably cannot be fully ameliorated because it’s known that people will engage humans who agree with themselves. People with opposing views tend to be eliminated over time.

This proposal has the potential to significantly interfere with the direct financial interests of large stakeholders and the protocol by introducing an administrative class who could be incentivized by other types of biases, such as social biases, reputational biases and even financial bribes.

There are no real solutions to the removal of these biases therefore the intended future effect of this proposal is unknown but most likely it will weaken the future further decentralization of the makerdao protocol. It has the potential to centralize the power of the administrative group to the disadvantage of other stakeholders.

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This post isn’t a proposal. Where do I say it is? Its clearly just my thoughts on how the DAO could pay workers. The other signaling request post purely asks about formation a treasury and dosent ask about access or any other detail yet.

Yeah hows that working out? In that logic large holders would pay oracle fees too, but they dont. What your suggesting is a more centralized process compared to large holders actually going through a governance process to incentivise work.

You also imply that makerdao would have more social bias than large holders. Why is that justified?

People have to do work at some point for maker to make, but even then nothing in my thoughts implies more control over the protocol for employees. The process would be controlled by governance (ak large mkr holders). An accountant/treasury position would only have control of the treasury if mkr holders wanted them too (which I severely doubt they would). Their job would be to recommend budgets and other financial tools to maximize the effectiveness of revenue.

We simply must figure out a way to incentive the work we want done. Right now the foundation control that completely. How could employment from the DAO be considered more centralized or adversarial to large holders?

I dont see a clear justification for this point. The foundation controlling workers is a non speculative centralized aspect of the system; open to attack from regulators. I am working on trying to push employment to the DAO which would promote transparency in roles, pay and performance. Why would transparency weaken decentralization?

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By interfering with the incentives for large stakeholders to be involved via the introduction of a communal pool, it would essentially create an internal “governing authority” that would be more vulnerable to social and corruption attacks.

For example, the governing authority is initially paid a small amount that increases to say $1 million a year. However, an external party like ripple or bsv offers a hidden payment of $10 million to the governing authority to green light the XRP or BSV coins. The potential for such attacks should be carefully analyzed, assessed and credibly neutralized before proceeding further.

I don’t think that the suggestion is to create a governing authority above MKR Holders. Any employees would be funded and employed at the decision of MKR Holders themselves. Additionally, risk models will almost certainly be public, so it should be easy to see if a risk team is favouring a certain asset (perhaps evidence of a bribe.)

I’m also not sure that your objections aren’t also true of a group funded by an individual large MKR holder. Wouldn’t they also be vulnerable to bribery in the same fashion?

And I find myself agreeing with Mitote here. If any large MKR Holders wanted to fund risk teams, development teams, etc, they are currently able to do this. As was pointed out, we haven’t see this happen yet, and frankly due to the diffusion of responsibility across token holders, I’m not sure that we ever will.

However, if we do see this happen, great the more people working on the system the better! The employment of individuals using DAO funds doesn’t prevent this from happening.

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There is a greater level of accountability if the risk team answers to a large stakeholder who directly employs them. One could assume greater levels of alignment if the employer is also a large stakeholder and there is direct accountability. Disrupting direct accountability could lead to unforseen results, corrupt government authorities are prime examples. No system is perfect, which is why checks and balances will still be needed as you pointed out.

The determination of the risk team, even if public can have unexpected outcomes, simply because they are the incumbent governing authority. We can’t assume non risk specialists understand everything they’re doing. Even now, US pension funds are investing in unaudited Chinese companies.

Lastly, if the existing resources within makerdao continue to do their functions, there is no incentive for large stakeholders to step in. A reasonable suggestion would be to ask known large stakeholders to employ human resources to protect their own investments. This should ensure better alignment of stakeholder interests with administrative functions, minimizes the risk of social and bribery attacks by maximizing accountability to the stakeholder via direct accountability.

Why? What makes being accountable to a single large stakeholder better than being accountable to all the large stakeholders, and all the small ones, and everyone in-between?

I agree, I made a post suggesting that we employ community validation teams for this very reason. There are multiple solutions to this problem.

However, I am not convinced that having the risk teams directly employed by a large MKR Holder is one of them, because:

  • They are still subject to bribery.
  • They are reporting to a single Entity there is less chance that their output will be validated by multiple entities.

You are arguing against your own point here. The key point of your argument is that it is better for large MKR Holders if they fund their own risk teams (safer for the project, less risk of bribery, accountability etc.) Either:

  • It is better, and large MKR Holders have an incentive to do this.
  • It is not better, and they don’t have an incentive to do this.
  • It is better, but they all have the incentive to let a different large holder do this (This is the diffusion of responsibility problem I mentioned earlier).

Imo, it’s option 3, which is why we need to setup a system in which these positions are funded by all MKR Holders (ie funded by the stability fee income)

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The disintermediation of accountability by getting all stakeholders to fund the administrative function implies less accountability because they will effectively be answering to no one. This is the equivalent of a municipality electing municipal representatives who spend municipal money on useless things. The point is that the direct accountability to a single stakeholder is disrupted.

There doesn’t need to be a single stakeholder for there to be accountability, they won’t be answering to no one they will be answering to everyone. If funds were only distributed via executive vote then it would require a majority of MKR to sign off. If employees were not able to justify their salary then it would not be provided.

The problem with elected representatives in municipalities is that their actions aren’t always publicly visible, and that voters are often not able to remove them from office outside of specific times or truly outrageous actions. Neither of these things have to be true for MakerDAO.

I would like to respectfully point out that there many valid reasons why Developers working on each of the 7 to 8 Ethereum clients are not directly funded by the Ethereum Foundation. Rather they are pre-existing self funded teams that already hold a large amount of ETH or have received funding from elsewhere and have then been funded with additional top up grants from the Ethereum Foundation as needed. This model appears to have served Ethereum well.

There are fundamental differences between Ethereum and MakerDAO, what is true for one is not necessarily true for the other. Ethereum doesn’t have a method of on-chain governance, nor does it have a communal treasury ‘belonging’ to Ethereum holders.

Furthermore, we are not talking about the Maker Foundation providing this treasury, we are talking about the treasury being gathered through the on-chain income of the smart-contract system, I don’t think that method is comparable to the Ethereum Foundation directly funding teams.

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There’s very many valid reasons why Ethereum chose not to have those things. I see your mind is fixed on this issue.

Not sure what reasons You are talking about

Several fun facts:
Nethereum was funded by Ethereum Foundation
Parity got significant funding from Ethereum Foundation
ENS has been sponsored by Ethereum Foundation for a long time.
Uniswap was founded by Ethereum Foundation
As far as I’m aware Metamask too

So quite a few.

Also I believe You misunderstand what treasure would be. It will be still governed by stake holders directly. Only payments to it would be part of protocol avoiding problem known as “tragedy of commons”

The point is that the Ethereum Foundation funded MULTIPLE teams that do the same thing. Parity was probably due to them losing their ETH. They were a functioning team that already held ETH prior to that. EF funded all the other teams but they funded MULTIPLE such teams. They did not fund only one. And then those teams employed people to do the work. Those employees were then answerable to their own teams.

Arguably, makerdao should give grants to various Risk teams to do the work under the EF model.