A Governance and Collaboration Implementation Framework for the Distributed Autonomous Company (DAC)
In 1987, W. Brian Arthur was invited to participate in a high-profile and very appealing seminar with nine other phenomena economists and ten physicists at a chapel in Santa Fe, where the cross-domain collaborations among these economists and physicists initiated the glory of Santa Fe Institute and Complex Economy.
The origin of MetisDAO
Inspired by what cross-domain collaborations could achieve, Token Economy Institute(TEI) was founded at the end of 2018 in Toronto by a bunch of blockchain fanatics from Canada, the United States, China, and Isreal.
The mission of TEI is to study and practice Complex Collaborations with the help of blockchain and token economics. Complex Collaborations are so prevalent in our daily narrative that you might not even notice that when you take Uber, get your food delivered by Doordash, contribute code to an open-source project, join a volunteer group, or claim a task from a bounty website, you are getting involved in the Complex Collaborations.
The business model of TEI is to be a decentralized Accenture, hoping to leverage the different expertise from every member to create something magical in a decentralized world. Pretty soon, some synergy has emerged, the first article was published, the first keynote speech was arranged.
However, we found that something essential was ignored during the process: how to govern the distributed collaboration relationship and manage the implementation of these collaborations.
Many of these collaborations are conducted distributedly with many parties involved, across different disciplines, and without trust foundations. We all hope to collaborate and create something good, but how to make it happen if there are no rules to regulate and manage the distributed collaborations.
Then we realized that this is quite a fundamental issue faced by many distributed collaborators and decentralized projects, so we decided to steer to a much concrete direction, to buildup a governance and management framework for distributed collaborations.
As we are diving deep into the complex collaboration, TEI is not a suitable name anymore. And one of the co-founders proposed to name it as Metis, who was the ancient Greek goddess of wisdom, prudence, and deep thought. We all agreed these are the quality we are looking for to deal with the complexity in a distributed collaboration. So the new MetisDAO project is born.
MetisDAO, Metis Protocol and Metis Lab
So several names and the relationship need to be sorted out. MetisDAO is the project name, and it is the first DAC(a subclass of DAO, will explain later) built on, governed, and managed by the Metis Protocol. Metis Lab is one of the founding members of the MetisDAO, who will be responsible for the Fundraising, R&D, Operation, and Community Development at the Stone Age(where we are now) and the following Bronze Age and Iron Age.
With more community members joining the MetisDAO, the power will be transferred to the community’s governance starting from Firearm Age through to the Discovery Age.
The pillars of Metis Protocol
Metis Protocol is a governance and management framework for distributed collaborations. Based on Metis Protocol, anyone in the world can build up a DAC, to establish and govern the collaborative relationship with anyone else to achieve a business goal.
Metis Protocol also provides a framework to support and manage the implementation of the collaborations transparently and efficiently.
Metis Protocol is built on the below foundations.
- DAO and DAC
DAO is a great vehicle to sustain distributed collaborations as trustless collaborators can all believe in the smart contract to execute in a fair way.
However, it seems like DAO’s structure mainly focuses on collective decisions, which is the governance layer. The business operation layer of the project is not covered in the current structure of DAO. Just like you won’t purely register a company to vote, the actual purpose of building up a company should be creating value via doing business with other entities.
So, there is a part missing. And if there is no real business operation to support the DAO, where is the value of these governance tokens coming from?
In January 2018, Vitalik once proposed an updated ICO version: DAICO, which combined DAO’s governance structure and put the project progress under the DAO’s management. This idea is brilliant, but it’s hard for an ICO project to implement it when money was so easy to obtain.
But when this framework comes to complex collaboration, you will find it quite fitting because people collaborate to achieve a goal. All the collaborators are willing to implement the collaboration activities within some framework to guarantee the desired result.
So, we upgraded DAO to Distributed Autonomous Company (DAC). As the counterpart of the traditional centralized Company, DAC is an autonomous business organization for governing and organizing the Distributed Collaborations and Profit Distribution Mechanisms.
Distributed DAC members buildup collaboration relationship based on a universal governance principle, and they also implement the collaborations under the management framework of the DAC, so every DAC member could contribute to the growth of the DAC and gain profit sharing according to their contribution.
- Optimistic Rollup
No matter how complex the collaboration is, it could be decomposed to many pairs of Meta Collaboration(one to one collaboration). So, we believe that for most collaborations, you don’t have to ask for the global consensus to approve for you.
All you need is to talk with your partners, and if both of you agree, the decision process(aka governance) is finished. Of course, if you two have any disputes, you can always find a third party to help to judge or communicate.
Then we found out that the Optimistic Rollup(a layer 2 scaling solution for the Ethereum blockchain, aka OR) mechanism is an excellent match for our governance philosophy.
Any participants need to stake “bond” to join the network, if no one has any bad behavior, the bond will be returned automatically after the challenging period.
However, if any disputes arise, you can always ask for help from the Arbitrator. And the staked bond of the bad party will be pulled back as the penalty.
We really like OR’s “stake and pull back” mechanism, which has become the Metis Protocol’s fundamental principle to govern the setup, disputes resolution, and termination of the distributed collaborations.
- Wiki-Based Business Management Framework
DAC lives on the internet and blockchain, so all the business activities can be traced back, which offers the possibilities to combine the off-chain tools with on-chain governance.
We introduced a management framework with a time-stamped Wiki to store and record the boundaries, goals, measurable results, input, resources, and output(deliverables) of the collaboration.
The information will be agreed upon by all the collaborators, converted to the Transaction Statement Contract, and deployed onto the OR sidechain to be the witness.
So if any disputes are arising, the Wiki has all the track records to check. The state change of the OR sidechain(agree or disputes) will call the governance contract on the main chain to do the incentive allocation or staking pull back for Arbitration.
So, we are building a systematic mechanism to combine governance with collaboration implementations.
What Defi enlightened us is that you can pool the resources from the community member, and everyone can benefit from the business’s growth.
That’s how we design our token economics. When a DAC member stakes to join a DAC, he/she is contributing to the Total Value Locked(TVL) of the DAC. The higher TVL a DAC has, the higher reputation it accumulates.
A higher reputation means more collaboration opportunities and more profit sharing for all the DAC members.
- Team Topologies
As Metis Protocol is the infrastructure for constructing a decentralized world, all kinds of communities are welcomed to join! And they will serve as different roles in the ecosystem operation.
Team Topologies provided a systematic approach to defining different communities’ functions, such as the stream-aligned team, the enabling team, the complicated-subsystem team, and the platform team.
Just as the real business operation in the physical world, communities, or teams within a community may perform different functions when collaborating with other communities or other teams. Team Topologies has provided a methodology for us to refer to when designing the protocol and rules.
What to expect next?
Metis Protocol is an infrastructure for distributed collaborators to build up a DAC, to govern and manage the business implementation.
During the past one and half years, we have finished the theory system construction, protocol R&D, Proof of Concept development, Whitepaper and Purplepaper, and initial community development.
As now we are closing the Stone Age and starting the Bronze Age, there are pretty much to be expected:
- Launch of the POC and MVP system.
- Many different kinds of DACs(DApps) will be built on Metis Protocol and launch their business and collaborations.
- Bring DAO and Defi to a much larger audience, which is the general internet community.
- To explore the possibility of linking Reputation Power with more business opportunities.
- Some big fundraising and business partnership announcements.
It’s pretty exciting to announce that the MetisDAO project will be launching soon. Please stay tuned with us.
Just as Stephen Hawking said in the last part of his book Brief Answers to the Big Questions, “Remember to look up at the stars… Be curious… Unleash your imagination. Shape the future.” We believe what we are building will change the narrative of DAO and shape the future of Web 3.0.