Introducing Optimistic Dual Governance, an efficient governance design using plugins in Aragon OSx. This governance design allows DAOs to create two different stakeholder groups with different governance permissions and then execute proposals optimistically.
Plugins will be audited, but you can check the progress of the first deployment. here.
Simply put, optimistic dual governance allows teams to work efficiently while allowing key stakeholders to veto proposals.
While any type of stakeholder group can be defined to meet the needs of your organization, this dual governance design was created for protocol DAOs with these two groups in mind:
- Teams that are actively building a protocol or doing operational work: such as a core team, guilds, developers and any other active participants who are making updates, parameter changes and improvements to the protocol itself.
- Members of a main DAO– Any arbitrarily defined group of stakeholders, which may be users, liquidity providers, participants, investors, governance token holders, or other group that has an interest in securing the protocol, but is not proactively involved in the operations, development or parameter changes.
Once you have defined your stakeholder groups, the next component of this design to understand is Optimistic Governance.
Optimistic governance is when proposals pass as long as they are not vetoed. Instead of standard token-based governance where proposals must be voted on to be approved, proposals in an optimistic governance structure are automatically approved after a time-locking period.
This means teams can move faster and don’t have to put proposals through a traditional governance process; however, this creates an attack surface if proposal creation is open to any wallet. For example, if the main DAO passes up a proposal that misuses treasury funds, there is no way to reverse the execution. Therefore, it is safer for the DAO to have a defined group (in this case, a list of allowed addresses) that can be responsible for proposals.
The design was largely inspired by teams that have been exploring optimistic dual governance for their own DAOs, including Pool and Bet FLIP. He design Jacob de Zora’s work was also an important inspiration.
This is how Optimistic Dual Governance works on Aragon OSx from proposal to execution:
- Proposal creation: Multisigs or subDAOs in the allowed proposal list can create proposals for the main DAO.
- Time lock period: During the time lock, the core members of the DAO can veto the proposal.
- Execution: If the parent DAO does not veto the proposal during the time lock, the proposal is automatically executed.
See the architecture in the following diagram:
He permit management system at the heart of Aragon OSx enables an agile and efficient optimistic dual governance design. It allows a parent DAO to have separate permissions from subDAOs, but all DAOs can operate within the same governance system.
This is the first version of this plugin. There are thousands of versions that can be created to meet the needs of your organization.
For example, in a future version of this plugin, different proposal types may have longer or shorter time periods. Minor updates could have a shorter time lock to make it easier for teams to push small updates quickly, and major updates could have a longer time lock, giving core DAO members enough time to review them.
We can work with your team to create the version of this governance design that best suits your protocol. If you are interested in using optimistic dual governance, ask here.
“OSx is the Unix of Ethereum: a future-proof DAO framework for building DAOs we can’t even imagine today. “Dual governance will play a key role in communities that need to iterate quickly while keeping valuable assets and rights in the hands of token holders.”
— Jordi, lead OSx developer
Separate stakeholder groups into active and passive roles.
Simple token-based governance It places all interested parties in a single, homogeneous group with the same permissions. But in reality, stakeholders range from active, high-context participants who create the protocol to users and infrastructure providers who want protection but are not actively involved.
This governance design allows you to separate stakeholder groups based on the role they need to play in managing the protocol. You can think of this as an active group of proponents and a passive group of vetoers.
Many key stakeholders may not want to actively create proposals, especially those that contain technical updates. However, they do We want to ensure that the proposals that are approved are secure and do not misuse funds, introduce vulnerabilities, or compromise the future of the protocol. Splitting stakeholder groups and giving them different permissions with Optimistic Dual Governance is a solution for this.
Efficient governance enables teams to ship faster
Optimistic proposal execution means that teams’ proposals are executed as long as they are not vetoed. This design allows teams to iterate quickly, benefiting the health of the protocol as a whole.
And, if voter apathy is a problem in the organization, the teams are not far behind. They don’t have to wait for proposals to get the necessary votes to be approved: they are automatically approved after the blocking period. Teams also don’t need to waste time on their work moving proposals through multiple voting or approval stages. Key DAO stakeholders still have final approval of the proposals, but the policy and process is significantly reduced.
Stakeholders in the main DAO maintain control with time blocking and veto option
Stakeholders who play a passive role (users, investors, liquidity providers, or others) do not need to actively vote to ensure that the protocol or product is maintained. However, they still have control, because they can veto proposals that are not aligned with the DAO.
This design gives token holders final control over what happens with the protocol without having to actively participate in the creation of proposals. They can review proposals if they wish, but they do not need to exercise their voting rights unless something needs to be vetoed.
Option to have completely tokenless governance
One of the possibilities of this design is that both teams and the main DAO could be completely tokenless. For the main DAO, you simply need an allowed list of addresses that are allowed to cast a veto vote. On the team side, you need an allowed list of addresses that have permission to create proposals.
Whether you are pre-token or not launching any, you can use this governance design. There is no component of the design that requires you to mint a token.
Additionally, these permissions and their implementation can be customized in multiple ways, such as assigning voting power or adjusting time locks.
You can find the first iteration of the Optimistic Dual Governance plugin herewhich will be subject to audits.
For more complex organizations, a variation of this design might be more suitable, because it includes autonomy for subDAO. Here’s what it could look like: Multisigs would be autonomous subDAOs, which could manage certain permissions themselves, such as the ability to add and remove new internal members. They could also have their own governance process, such as symbolic voting.
Governance minimization is a key goal of this governance design, and future iterations will further lean on this concept. By making the governance process simple and secure, both stakeholders and team members do not need to spend as much time on governance.
We are looking for partners to explore the limits of this model and receive feedback from more industry players. Ask about using this governance design in your own DAO or protocol by filling out the form above to let us know what you need!
We’re excited to hear more about what you’re building.
