dGovernance: Basic governance structures

When to?

These tools are useful when there exists a common-resource (like a treasury, code or land-base, etc) that could benefit from governance by a decentralised group of humans sharing a common purpose.

The broadness of groups that could benefit from these tools are vast. Anywhere from Knitting Parties to Nation States.

Basic dGovernance Design

Co-article by Cece, Joachim, Julio, Joost, Keala, Bongani, Max, Rieki…

What is dGovernance?

dGovernance (decentralised and distributed governance) is the process by which we scale coordination across time and space for considered outcomes. This process ensures accountability, transparency, openness, stability, equity, inclusiveness, and DO's (Decentralied Organisation's) exist to support this process of cultivating human coordination.

What is a DHO? A DAO? - Acronyms of many meanings

Most "DAOs" today are not "DAOs" in that they don't embody the meaning of many of those words (as we'll see below). We'll explore the meaning of DHOs, DAOs, DAC's and how many structures being called DAOs today are really just a digital companies (DC).

Bitcoin is a Generation 1 DAO

Bitcoin is one of the first DAOs. It's technically decentralised, contribution payouts are autonomous, and so far it has successfully organised humans across the globe to consume a major Nation State's worth of electricity. It's an incredibly successful example of the power of DAOs to coordinate at scale.

Bitcoin tokens themselves are a "Contribution Accounting" token as they track contributions to the network. It's just a rudimentary one; as it only has the capacity to account for a singular contribution. That is, it only counts "who mints the next block" as a contribution towards the Bitcoin network and rewards this activity with a periodically decreasing amount of tokens. It doesn't have the sensory or governance capacity to account for community building, storytelling, development, legal support, or any other contribution type. This is why we call Bitcoin a "Generation 1 DAO" and what Hypha is building as "Generation 3 DAO's and DHOs" which are equipped with a greater sensing and decision making capacity for decentralised economic systems to more fully capture and govern contributions to a shared cause and protocol.

Decentralised means...

No one person or minority group has the ability to:

1. Control common assets (e.g. treasury, resources, etc.);

2. Control membership or participation;

3. Enforce outcomes (code changes, upgrades, payouts, etc.).

Centralised has 1 leader. Distributed has MANY leaders. Decentralised has NO leaders - but rather has nodes who contribute in some capacity but have no explicit authority to coordinate outcomes (though, implicit authority may still exist).

3 key systems that ecosystem may consider decentralising

1. Technical - Does a minority have the ability to make technical changes (alter code, alter the data, etc)? If so, it's technically centralized. This may not be a bad thing. Maybe it's better to have a centralised technical team where these roles, and who fills them, are governed by the whole network. Then the technical team is centralised, but the governance of who fills those roles is decentralised.

2. Governance - Does a minority have the ability to make protocol changes (update code, add new code, etc)? If so, it's not dGovernance. Do all parties who would be affected by a change have a direct route to participate in governing whether or not that change should happen? If participants are proportionately represented, then governance is distributed.

3. Financial - Does a minority benefit disproportionately from value created? Does a minority collect rents (fees, taxes, etc)? How does the protocol centralise or decentralise tangible benefits? Do contributors receive fair value for their contributions?

Notes on decentralisation:

1. Decentralisation is a spectrum starting at a single point (fully centralised) and expanding infinitely outwards towards greater degrees of decentralisation. There is no "fully decentralised", nor is it necessarily an ideal to be "fully decentralised".

2. Each ecosystem will find its own optimal level of decentralisation for each of the 3 systems they seek to decentralise.

3. Being decentralised is not an objectively 'good' thing in all situations. There are situations where centralisation will be a superior structure to achieve a community's purpose over decentralisation. Centralised, Decentralised and Distributed

Distributed means...

Chosen (preferably democratically) people and/or minority groups have the ability to:

1. Control common assets (e.g. treasury, resources, etc.);

2. Control membership or participation;

3. Enforce outcomes (code changes, upgrades, payouts, etc.).

Distributed:

While "decentralisation" is the abscence of centralised control "distributed" is the wide distribution of control across an organisation.

1. Splitting the authority across multiple circles/roles, each with their own accountabilities and domains of absolute authority. Each circle and role has all the authority to enact those accountabilities within their domain and across the organization authority is distributed.

2. Anyone affected by wielded authority should be able to alter governance if that effect is deemed harmful.

While decentralized means no-one is in control. Distributed means there are many people in control, with various layers of diverse authority.

Using "roles" and "badges" within a Hypha DHO groups can thoughtfully and purposefully democratically distribute and revoke power and authority throughout an organization.

Centralised means...

That a single group or individual has full authority. This way groups can choose to mimic corporate structures where the CEO has full authority and is voted into this "role" by the board (or token holders).

Also known as the Benevolent Dictator. Groups may find that at various stages of life (such as when forming), or during various environmental situations (such as a crises) the need for rapid and responsive decision-making may be best met with highly-centralised systems. This too can be accomplished with the Role and Badge tools of the Hypha DHO.

Peer to Peer means...

That there are no nodes of power and authority. Instead all members of the DHO/DAO are either in the same role earning the same compensation, or each member puts up a unique Quest or Contribution Proposal for each unique contribution. This means all members are on the exact same footing of power and authority. Groups can even opt to give all members a single Voice token so that all members have equal voice in governance.

Autonomous, Human, and Holonic

Autonomous:

The inverse scale of humans-at-the center is autonomous (meaning, human action not required, or in some cases, humans not required at all). For example, Bitcoin doesn't require humans governing block reward payouts in order to compensate miners for finding blocks. This happens automatically. Thus Bitcoin is DAO.

Human:

DHOs, opposed to DAOs, puts the human at the center as supporting humans is the entire reason for a DHO to exist. DHOs focus on the deeply human parts of governance. DHO’s consider the human by actively designing for the human, empowering the human, cultivating leadership and self-organization for humans to flourish. DHOs focus on what can encourage more engagement, more freedom of expression, more joy, more embodiment of one’s purpose (Ikigai), etc.

Holonic:

Holonic speaks to the structure by which DHO’s fractal governance based on wholeness and not division. By creating nested structures of organization (holons) of interdependent governance boundaries. For example, DHO’s are designed for mitosis (to create new DHO’s) if ever the purpose of one group of a DHO splits from the main purpose, that group is encouraged to “branch out" and create a new DHO. Or, holonic governance containers within “circles” of the DHO. Where individual circles within the organisation have the authority and autonomy to manage their own members, budget, milestones, etc

Holacracy blog - Showing a holonic organization structure.

Corporation, Community, and Organism

Community:

Any group forming to steward common resources to enact a shared purpose.

Organism:

Organism refers to the organic and biological mimicking properties of DHO governance (mitosis, meiosis, dynamic and constant evolution, etc).

Corporation:

A profit-seeking enterprise.

Who controls membership

Any members holding the "enroller" badge (obtained with a DHO proposal) can approve new members. Groups establish their own criteria for how a member can obtain this badge. The key principle is that the ability to enroll members can be granted and revoked by existing members.

Enrollment / Boundaries

Org/Organism Boundaries

Upon approval members are awarded 1 Voice token. Becoming an official member of the DHO and earning the right to vote.

Variations on membership (entry and exit):

1. Concentric circles (member = holding voice core-member = holding assignment/on-quest or holding N Hvoice)

Circle/Organ Boundaries

(? Proposed) a "Circle badge" confers membership to a circle. Each circle decides their own criteria for receiving this badge.

Variations on membership (entry and exit):

Circle-based governance VS organisation based governance

Circles can have their own governance and treasury boundaries.

DHO Governance:

1. Sense making (dialogue)

2. Decision making (voting)

3. Purpose making (execution/operations )

Governance can be broken into 2 "sensemaking" and "decision-making". First Hypha isn’t here to create fancy oligarchies (governance by the wealthy). So, for these reasons “Voice” (the token that governs the DHO) is a non-transferrable token (cannot be bought, sold, or traded) that can only be obtained by directly contributing to the DHO. In this way, DHO’s are governed by those who contribute to the DHO the most.

However, governance isn’t just about voting. The majority of governance happens before an official DHO proposal, in what we call “Sense Making”.

Sense-making tools:

1. Within Circles:

2. Discord:

3. Open-Source Meetings:

4. DHO Staging / Proposal Nursery and Comments:

Decision-making:

There are 3 main types of decision being made within a DHO (different optimums for different governance contexts (e.g. circle vs org)

1. Strategy / Coordination (What should we do next?)

1. Consent (default)

2. Voice Token voting (variation)

2. Treasury Management (How do we manage our resources?)

1. Voice Token voting (default)

2. Consent (variation)

3. Policy/Protocol Evolution (What rules/agreements do we add/remove/change?)\

1. Voice Token voting (default)

2. Consent (variation)

2 primary types of Circles: With or without treasuries

1. Circles with a treasury have full autonomy over their treasury (which additional assignments, quests, expenses, etc they approve). Along with full autonomy over circle membership, policies, strategy and execution of the circle's purpose.

2. Circles without a treasury require the whole organisation's governance in order to increase their expenses (e.g. all DHO members vote on additional assignments, quests, expenses, ect within that circle). However, they retain full autonomy over circle membership, policies, strategy and execution of the circle's purpose.

Circles obtain a treasury by:

1. creating;

2. successfully proposing/passing (to the whole org);

3. and managing a budget.

At this point all org members stop voting on individual assignments or quests within that circle and instead just vote on the treasury proposal(s) from that circle.

Example

Task - create a logo

1. Whole org generates a “Policy Decision” and uses “Tokenised Voice” voting to assign “Logo” as a domain to the “Brand Circle”

2. “Brand Circle” now has the authority to make a Logo. However, no current members in the Brand Circle have the ability to make a Logo. So, Members make a “Quest Proposal” with the task of creating a Logo and a bounty for the Member who does so.

3. A person just bought and Staked some Hypha tokens and have earned their first Hypha Voice. As a new member they come and explore the “Open Quests” and see that there is one open for creating a Logo.

4. This member applies for the quest and shares their experience and past work in their application.

5. “All organisation members” vote on whether to approve this member for taking on the Quest to create a Logo and make this decision by looking at their past work.

6. If the quest is approved, the decision making authority now moves to the “Brand Circle” to execute on making the Logo (no further organisation-wide decisions required to design the logo).

7. The “Quester” finishes the logo design and presents it to the “Brand Circle”. The Brand Circle is using “Consent” to make their decisions and use it to decide if this is the logo for their organisation. If approved the quester will make a “Quest Completion” proposal to the whole org.

8. Brand Circle reports to the org that the Quest was completed and to support the “Quest Completion” proposal to pay out the Quester.

9. Now the Quester can move on to any other available Quest and continue to contribute and earn more voice and value from Hypha.

A DHO comes with 4 main decision making levers:

1. Voice Issuance: Who gets Voice and how much?

   1. Default set: Members earn 1 Voice for every 1 [Insert DHO Currency] in value contributed.

   2. Bonus voice when receiving the “core member” badge.

   3. Stake Hypha earn Voice

2. Voice Decay: After Members earn Voice, how does it go away?

   1. Default set: Members Voice has a 1 year half-life (decays by ½ each year) so that after 3 years the majority of the voice earned 3 years ago has decayed.

   2. Variation Inactive members Voice increases decay by N if they haven’t interacted with the DHO in N period.

3. Unity: What level of consensus is required for a proposal to pass?

   The unity requirement is the “chaos vs stagnation” continuum. Low Unity leads to chaos, as proposals with low support can be passed. High Unity leads to stagnation, as any single member has the ability to stall a proposal. DHO’s seek to find their “sweet spot” within this continuum.

   1. Default set: Proposals require 80% unity (the 80/20 setup). In this way, if 20% of Voice is signalling a problem (voting down) with the proposal, there are likely critical flaws that need improving.

   2. Variation: increase or decrease unity to reach consensus (100%) or lower levels of agreement.

4. Quorum: What percentage of total voice needs to assess a proposal for it to be eligible to pass?

   The quorum requirement is the “efficiency vs collective wisdom” continuum. Low quorums lead to greater efficiency, requiring less assessment from members. High quorums lead to more intelligent decisions, requiring more assessment. DHO’s seek to find their “sweet spot” within this continuum.

   1. Default set: Proposals require 20% quorum (the 80/20 setup). In this way, at least 20% of the Voice of a DHO is needed to assess a proposal (and signal their approval) in order for something to pass.

   2. Variation: increase or decrease quorum or enable “dynamic quorum” that adjusts based on input of the participants.

Questions to assess the default:

Voice Issuance Differential: High: Select members with the most organisational insight hold the most Voice. Low: There little distinction among the voting power of members.

Voice Decay:

Fast: A new member earns equal voice as existing members (who have been there 10+ years) within the first month of 100% contributing. Slow: A new member earns equal voice as existing members (who have been there 10+ years) within 20 years of 100% contributing.

Unity:

High: A single member can block proposals that generally receive high support.

Low: Too difficult to fail proposals, where just about all proposals submitted make it through.

Quorum:

High: Members spend excessive time assessing proposals that are outside their realm of knowledge / passion in order for proposals to reach quorum.

Low: Not enough members are assessing a proposals merit. ^^ all of these levers can be adjusted to best suite a DHO's DAO's needs.

ADDITIONAL RANDOM NOTES

Contributing Quest or Assignment

Are assignments given more benefits than quests?

Are assignments considered “Core Members” while quests are not?

Levers

Consent vs tokenised voice for looseness of org boundaries (consent can work for tight and clear boundaries)

Culture:

5 options for voting

-- Try again (currently NO)

- Need Support

0 Neutral

+ Support (Currently ABSTAIN)

++ Vouch (Currently YES)

Try again - Reduces Unity % (making it harder to reach the minimum unity %) already exists as a no

"Try Again" says "the current proposal is lacking, please try again".

--

Need Support- Increases quorum requirement (making the minimum quorum higher)

This is saying "I'm not sure about this, I think more assessment is required here" (requiring that more quorum is obtained and more members need to support).

--

Neutral - does nothing and/or changes an existing vote to no impact. doesn't exist and as such there is no way for a member to withdraw an existing vote without reversing it.

Neutral is just to show that I was here and/or to withdrawl from another vote to neutral.

--

Support - increases quorum (helping it reach the minimum) already exists presently as abstain

This is a way to say "From what I see, I like this idea but I haven't done full Due Diligence and I'm not entirely sure". This allows members to support proposals with a bit more ignorance without diminishing others (who have done Due Diligence and see flaws with the proposal) from effectively voicing a "try again"

--

Vouch - Increases quorum and supports unity (helping achieve both minimum thresholds). Already exists as a yes vote.

This is to say that "I vouch for this proposal" I've done Due Diligence and I think this is something that ought to happen.

Expansive Governance Contexts (Add graphic)

Circle

Baby DHO

Sister DHO

Discourse:

At least one spectrum emerges... that's the bias towards action vs inaction spectrum.

For strategy a "move fast and break things" works wonders! For protocol evolution a "move fast and break things" would be outright devastating.

I think what you and @Joost are proposing governance tools fit right into section 1. Governing strategy... Which I agree with you both that the tools you present are great (let's try things as long as they're not blocked with a bias towards action!)

However... i don't think they work for sections 2 or 3.

For decentralised treasury management to work we need a whole lot more assessment than simply "I'm not against this". A bias towards spending treasury leads to a devestating outcome that I've seen played out in decentralised systems thrice in Dash and early in Steemit and Telos... I don't wish to repeat that here.

For decentralised treasury management (Section 2) to work we need people to actively assess and do DD on the merits of each proposal. We don't have HR, C-Suite or other identified role doing this...

A governance bias towards "just let everything pass unless it's blocked by reasoned objectives" , to me, isn't optimal (though it is for strategy!).

What we have the foundations for is a system where at least 20% (quorum setting) has actually assessed the proposal and vouched for it. This is great as we can ensure (if done right) that any given treasury proposal has had at least 20% of the wisdom of Hypha vouching for it. That's a trustworthy metric, and the beauty is, it can be different folks doing the assessment.

Where this breaks down, is if we use language like "agree" over "assessed" as we all find most everything agreeable... I don't think we're assessing agreeableness. We're assessing the financial sustainability of our ecosystem.

What happens here is people vote up because they like the person, not because they've actually assessed the proposal. This causes harm. I don't think a button for "I like this person" ought to exist - yet that is how people are using the "yes" or "agree".

If we can change it to "assessed" or "vouch" and even create a system where reputation is tied... Then we can have a system where we are actually doing decentralized treasury management and assessment.

Having an ACTIVE support button is foundational if we're to have a system where every proposal was assessed for its merits (not just assessed for it's potential harm).

Also, we have a lever (quorum %) to change how efficient we want our governance systems to be. If we want proposals to have a HIGH degree of assessment (less efficient, but potentially higher quality decisions) we raise quorum, or drop it for more efficiency...

Anyway, I think we've only been designing governance in Hypha optimizing for section 2 "treasury management" as that's the first thing we've been doing. Yet, we've been designing it (falsely IMO) to try to do the other 2 sections as well... I think if we take this path we're going to design a system that doesn't work for any of them...

I think it will be really helpful in all subsequent governance tools topics if we discuss what section we're talking about - otherwise we end up in forever discussions as it's quite unlikely there will ever be a reasonable governance system that works optimally for all 3 types.

Quick reflection to Expand here.

Is the point of a DHO to:

1. manage a treasury for an (already agreed upon elsewhere) strategy?

2. Manage a treasury BY determining a strategy via what we fund (in real time).

3. Both or neither?

Here's what I currently think...

I hear a desire to "have a clear strategy we all should be able to get behind". Yet the point of a DAO is to do exactly the opposite.

It's meant to drive shared outcomes and value in the absence of a clear or agreed upon strategy for how to do it- that individual members or groups (circles) create their own clear strategy in how they approach the DAO/DHO. But the DAO/DHO doesn't have a central strategy (e.g. there's no central strategy for how to support Bitcoin).

Instead what a DAO/DHO has is a purpose.

And groups self organise with a myriad strategies on how to serve that purpose and "real time" through govenance the DAO/DHO decides which strategies (emphasis on plural) to fund... Successful ones may be repeated, unsuccessful ones may not.

How many competitive strategies a DHO wants to allow to exist at any given time can be modified by adjusting the quorums and unity thresholds. Less competition (higher thresholds) more competition (lower thresholds).

If a group wants high coherence in strategies amongst players it increases quorum and unity thresholds (which is what I proposed). Meaning more members of the DAO/DHO need to agree on the strategy to move forward.

Too high and things stall, too low and there's chaos.

I'm seeing tension with this model, maybe because it's a structure none of us are used to and we're looking for familiar structures of previous organising styles (and getting frustrated when we don't find them)...

What I see as a benefit with this system is primarily that we DON'T need an explicit and shared central strategy the point here was to save groups from the time, effort and frustration in attempting to align on a single strategy for all players to adhere to.

Though, what I'm seeing emerging here is how flexible the DHO we created is...

As a spectrum we can have it mimic central strategies of legacy corporations on one side all the way to not even having a clearly articulated purpose in the other (like we're seeing with many DAOs today) .

I say this because we're approaching a fork in our path.

I hear some asking for more central/shared/unified strategy (same as any successful corporation).

I hear others (myself) asking for less central strategy and more decentralised strategy where the DHO itself determines what to fund through voting. So instead we have many strategies (represented by many circles / members) all approaching our (evolving) purpose in a unique way.

The first is more stable & more predictable (and with a DHO) it looks like an improvement/evolution of a traditional cooperative (still really epic!!!) Using sociocratic tools.

The latter is, chaotic, incredibly complex and highly generative (an altogether new type of organisation style humanity has never before been able to try before). It's representative by the massive ecosystems of Bitcoin and Ethereum (where there's no single strategy or purpose in those ecosystems) rather the direction becomes an emergent property of the ecosystem.

--

Both are great - though I'm personally more excited/invested in the latter.

For more clarity.

Instead of (as a circle/member) asking for a central/clear strategy for how to show up. Hoping that Hypha as a whole can decide one. Groups would instead design their own strategies and petition the memebrs to fund them and wether or not they're successful is all played out in the DHO via voting. If a strategy is voted down, the circle/member can regroup and design a new strategy to put forward. But, this doesn't require any "voted in" or "shared central strategy" and instead a funded strategy only requires the minimum quorum and unity to pass

As our community adapts to changing strategies groups are asking what their strategy ought to be, opposed to creating their own and pitching it to the community for support (and adapting if it doesn't receive it).

Either way - 2 approaches we can take here.

1 - towards a central strategy (a cooperative on a Blockchain with epic tools)

2 - towards an emergent strategy (a DAO/ecosystem).

The limits of growth to the former is that of a company.

The limits of growth to the latter is that of an economy.

Neither good or bad, just different. And I think dancing the line between them may cause more frustration. Opposed to committing fully to one path or another.

So, just for fun, for the few that have read this... What's the bias?

1 for Hypha as a sociocratic cooperative with a decentralised treasury and clear/shared strategy and purpose.

2 for Hypha as a decentralised Organisation, with a dynamic (though voted-in) purpose and no shared strategy (each circle sets thier own) where voting with the treasury is how the ecosystem votes for which strategies to fund (thus giving rise to an emergent shared strategy).

Don't call yourself a DAO if membership is closed - otherwise you're missing the D and most of the A... Don't call yourself a DHO if you're valuing one type of capital (financial) investment over another (time, wisdom, etc) this "feature" of capitalism (while amassing incredible wealth for a minority whereby "capitalists" benefit from all the "surplus value" created by workers because they "took the risk to start it") is threatening to destabilize civilization. Equitably compensate risk. But create less billionaires and instead create more millionaires (some catchy phrase here? ). Just call yourself a digital company. That's cool too...