Proposal making in DAOs: the limitations of “Anyone Proposes Anything”

If democracy were equivalent to voting, we wouldn’t need separate words to describe them. Unfortunately, when it comes to DAOs, too often, the focus is on the voting mechanisms, with an assumption that “anyone can propose anything” is both fair and sufficient. Some DAOs are very successful with this methodology, but it doesn’t scale well, nor does it account for the variety in the types of decisions that an organization makes.

This article is a first attempt to categorize the types of proposals we might want to include in a DAO, and goes on to discuss a few different mechanisms that have come up in the course of discussions during Berlin Blockchain Week, in the dGov node as well as in a brainstorm we (DAO Leadership) hosted on the topic.

Two types of decisions

Roughly speaking, and this is super-rough, we can talk about two categories of decisions in an organization.

If someone knows of a useful terminology, please let me know, but for now I’m going to call those categories “Just Go Ahead” and “Must Be Inclusive” decisions.

• Just Go Ahead decisions are ideas that can be executed without much impact on the environment or others. Creating a new feature, hosting a meetup, writing a blog post, or choosing a charity for discretionary funds would fall into these categories. If you can raise the funds or get the followers and developers, go ahead.
• Must Be Inclusive decisions are those which will affect many stakeholders and should include the stakeholders in the decision. The tragedy of the current economy is that governments, corporations and other organizations are making decisions that affect many people without including them in the decision. If you are building a highway, regulating 5G bandwidth, producing sugary drinks, harvesting timber, or throwing a loud party in your apartment building, those are decisions that affect other people.

As a whole, DAO tech doesn’t seem to recognize the shortcomings of “anyone can propose anything”. This procedure is winner-take-all, and favors early proposals over better proposals. This system is a bit like looking for a restaurant in a foreign city with no data connection. As you walk down the main street, you vote yes or no based on the menu at each restaurant, without knowing if the next one is better, and blind to the options that aren’t on the main street. “Anyone can propose anything” doesn’t require a well-defined problem statement, and as such it neither provides for collaboration nor competition for solving known issues.

Just-Go-Ahead Decisions

In most of the DAOs implemented today, most decisions fall into the just-go-ahead category. How should we use discretionary funds? Should we develop this new dApp? Is this a good logo to represent our DAO? In these types of decisions, anyone-can-propose-anything is good enough, because it’s not significant to the survival of the organism. Not having the best decision isn’t critical. If the team funds a meetup in Prague instead of Bratislava, using discretionary funds, it’s unimportant.

The main drawback of the Aragons and DAOstacks of the world in this type of decision is that the proposal process is probably longer and more complex than it needs to be for at least half of the decisions that are made on the systems. “Just Go” decisions should be expedited.

In any organization, it’s important to expedite the decisions that don’t need to take up the organization’s energy at all. In that respect, DAOs have so far failed to differentiate, treating all decisions as equally impactful and equally in need of deliberation and voting. On top of that, the DAO tech organizations are putting in mechanisms such as reputation systems and attention-optimization systems. Rather than recognizing that some decisions don’t need any deliberation or any voting, these systems create another layer of deliberation that unnecessarily burden the participants in the DAO. As a first step, DAO tech should look at filters that consider whether a particular proposal needs any deliberation whatsoever.

In Sociocracy an Holocracy, there are a range of options for decisions that won’t affect others dramatically. Following are the models our brainstorming group was familiar with (you are welcome to skim or skip, and please add more in the comments if you have more).

• Just go: If it can be done within the budget and resources the individual has at her disposal, she can just run with it. Most work in most organizations is done this way.
• Collect resources and go: Anyone within the organization can do any project for which they have the resources. Enspiral’s Cobudget application allows people in an organization to propose projects, and if they reach the funding goal, they can go ahead. Satalia’s internal IT system allows anyone to propose anything, and utilizes AI to suggest other participants to join. If enough people are interested in developing the feature, it goes forward. Features and projects that aren’t funded don’t go ahead.
• Delegation: Certain individuals or departments are given autonomy in a domain. This might look like asking for permission or a budget from a boss or domain-related team before going ahead.
• Seek advice: Individuals and teams can do what they want, but they are encouraged to seek advice. Most DAO processes follow this pattern. A proposal is made informally on a discussion group, and the community provides feedback before the proposal goes to a vote. The person making the proposal has the option of incorporating the feedback, or not. This process allows improvement of the proposal, and increases the probability of the proposal’s passing when it comes to vote.
• Consent throughout the organization: A decision can go ahead as long as there are no objections.
• Full Consensus: A discussion is required, and the decision needs to get consensus from everyone (or a quorum) within the organization. This methodology is often used for the second type of decision, that is “Must-Be-Inclusive”. For example, a number of departments within the United Nations allow decisions only by consensus, which means the people involved must come to an agreement. Interestingly, the budgetary committee is one of those groups, meaning that even in a (literally) zero-sum situation, it is possible to reach consensus.
• Arbitration: When there is a dispute within the organization, an arbitrator or arbitration process is brought to resolve the issue. Everyone agrees in advance that the decision of the arbitrator will be accepted.
• Competition: Many organizations have competitions such as hackathons, voting on the “best ideas” or other official types of games. Typically, this type of competition is used for new product development.
• Brainstorming or formal proposal-making processes: Formal decision-making processes are outlined in management literature, such as the book “Paid to Think.” Formal enterprise-thinking procedures allow companies to come to optimal decisions for everything from budget allocation to marketing campaigns.
• Polling and signalling: A variety of methods can be used for polling what people want and then making a decision based on majority sentiment.

What’s obvious from this list is that organizations implement multiple types of decision-making process, even for decisions that don’t have major implications for the entire organization. In other words, even if Holographic Consensus turns out to be gloriously fantastic (as its recent adoption by some Aragon DAOs would suggest), it won’t be the only way DAOs want to forward proposals. It will be one of many ways that humans want to organize.

Must-Be-Inclusive Decisions

Much of the cypherpunk community’s enchantment with DAOs is specifically in the realm of inclusion. Decentralization, the argument goes, will allow more inclusive decision-making and distribution of resources. In other words, we want to make better decisions in situations where society has benefited some populations at the expense of others, or at the expense of the environment. Colony.io stands out as an example of a system that encompass proposal-making processes that are more appropriate for “Must Be Inclusive” decisions, though it doesn’t have any mechanism for including all parties who might be affected by the decision.

The terminology used in the capitalist system for those affected is “externalities.” It’s a bizarre term, given that one of the “externalities” is clean air, and everyone has air in their lungs. It’s hard to imagine anything less “external” than air and water, but this mis-labelling has led us to the current Tragedy of the Nobility. (Tragedy of the Commons is a term invented by the Nobility, and at the time it was introduced, there was no evidence to support it.) Harming other people isn’t an externality, either. You feel bad the moment you do it, or you numb yourself, which is a different form of self-harm.

The first step in creating DAOs that takes into account everyone who might be affected, the process should be inclusive and allow visibility of multiple perspectives. It will take time to develop systems that are good at bringing in every stakeholder, but with 2 billion Facebook users and close to 3 billion smartphones, it’s not a huge stretch to imagine a system with enough behavioral, geographic, demographic and biological information to identify the groups and individuals who are affected in an extremely broad range of decisions.

In any case, whatever group is making the decision, when it’s a decision that should be inclusive, again, there are multiple approaches. Some are similar to the approaches above, so I don't elaborate. Other methodologies are different when applied to issues with multiple stakeholders. Again, please skim and feel free to suggest others:

• Consensus-only. Unanimous or almost-unanimous consensus. In cases where lives are at stake, unanimous probably makes sense.
• Arbitration
• Brainstorming or formal proposal-making processes: Our vision of this process would be to have groups work together to make the best possible proposals, rewarding people for collaboration rather than competition. The best proposals would be voted on in a multiple-choice fashion rather than yes-or-no.
• Random sample focus groups: One successful model that has been used in public policy is to take a random sample of citizens, give them accurate and balanced information on a topic, and have the group come up with solutions. In real life, groups of 20-100 have come up with balanced proposals and the studies have shown that people automatically consider the needs of others in these groups when they see it as their civic duty.
• Delegation, particularly useful in crisis or deadline-oriented decisions. Delegation can be random, but in crisis, it’s essential to have a clear rule set decided upon in advance.
• Wisdom or expert model: In the wisdom model, people with experience or reputation in the realm make the proposals, rather than “anyone.”
• Collective intelligence: Research of similar models and application of data modelling to suggest proven methodologies for solutions.

Again, this isn’t an exhaustive list of proposal-making methodologies, but it gives a feel for how different situations may require different approaches. It is almost certainly the case that it's unjust to make decisions on behalf of others without their knowledge or consent. As an industry, we have done very little to address this issue, which is why DAOs have been used so far mainly for on-chain governance and distribution of funds. The real issues that face society are still too complex for a DAO technology solution to provide a viable democratic process.

Better decision-making systems account for different types of decisions

The current iteration of DAO technology is good for certain types of decisions. It’s been interesting to observe each tech company defending its way of proposal-making and/or improving upon it, rather than recognizing that different methodologies of proposal-making are appropriate in different situations. While these stacks recognize different types of voting, proposal-making has eluded the industry as a whole. I’ll be addressing a paradigm for proposal-making in an upcoming blog. For now, what seems appropriate is to at least suggest that DAOs need to look at the myriad of decisions the organization wants to make, and implement some type of intelligent flow.

The basic flow would look something like this:

We have been conditioned to believe there is a zero-sum game and that competition is best, or that there are always some winners and some losers. While it is certainly true that we have one earth to live on (at least for now), in most cases, deeper discussion does lead to more inclusive, non-obvious and creative solutions. The earth we live on now does produce enough food for all of the human population, thanks to agricultural technology. Desalination provides ample water in locations that once were water-poor. As people become educated, populations shrink instead of grow. We are not, in fact, living on a zero-sum planet.

But… isn’t that difficult?

Yes.

It’s difficult and the industry is at a very early stage. At the same time, these types of processes are in place in governments, businesses, and even in social media. We already have technology that enables a wide range of behaviors, at scale. It will take years for DAO technology to encompass all of these different instances and types of behaviors, and to determine which types of decision-making processes are best for each type of decision.

What’s imperative at this point in time is that technologists in the DAO space recognize the need for a variety of processes before voting, rather than being stuck in one position about how to improve proposal-making.