Thought Experiment: DAO Strategy and Subtraction

🤖 DAO Governance and Vision
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What is Gitcoin Actually About?

Gitcoin has spent the last 5 years trying to make a meaningful impact in web3 and beyond by growing and sustaining digital public goods. It’s funded projects like EIP-1559, Plasma Group (now Optimism), Prysm, Uniswap, and WalletConnect, and helped allocate over $70m using quadratic funding.

To date, Gitcoin has made this progress via one main program: Gitcoin Grants. While this has been critical for the project to achieve what it has, it has failed to encourage a subtraction mindset.

Heading into 2023, this feels like the most important thing to get right, and is the focus of this document. Given the DAO’s current aim to build a set of protocols that would allow any local community to fund its shared needs pluralistically, I think it’s possible to be optimistic that the DAO might be able to embody this philosophy.

In order to actually make progress in this direction however, the DAO needs to be more community-first, and less inside out. This will be a process that takes time, and this document proposes that the first steps towards doing this involve sustaining a broad group of program managers interested in running their own programs that fund their own shared needs.

By supporting program managers, we can scale a plurality of programs that can in turn help support grantees, donors, and other community members.

Essential Intents

So okay, while embracing a subtraction mindset sounds great, doesn’t the DAO already have a clear purpose and essential intents? If so, how does all of this fit in? To better explore this, let’s first outline what those intents are:

[EI1] Protocol Adoption

  • Build a widely adopted, modular Grants Protocol that creates a flourishing ecosystem of funding mechanisms.
  • Build a widely adopted, modular Pluralism Passport protocol that creates a flourishing ecosystem of network effects around Decentralized Society.

[EI2] Financial Sustainability

  • Have a comprehensive, diversified strategy for financial stability of the DAO in order to effectively achieve our mission.

[EI3] DAO Organization

  • Create and promote clear and engaging rituals, communication channels, and messaging that build shared context among GitcoinDAO’s contributors, stewards, and supporters.

[EI4] Grants Program

  • Enable a successful Grants Protocol launch by dogfooding it internally & supporting ecosystems in adopting it.
  • Continue to support the Ethereum Ecosystem & Public Goods in web3 and beyond through Gitcoin-led rounds.

While there’s arguably no order to these there is a level of dependency. For example, both [EI2] and [EI4] rely on having pluralistic protocols that the community cares about.

To take this one level further let’s step back and think about why someone might care about any of these intents in the first place:

(1) Mechanisms for funding locally defined shared needs / local public goods are important because by solving public goods problems we are solving coordination problems that harm society in the long run (i.e. reducing climate)
(2) One such mechanism is quadratic funding, which has been proven as a way to fund outliers that might be missed by traditional mechanisms (although Gitcoin Grants has been run in a semi-centralized fashion thus far)
(3) To enable quadratic funding and similar tools to be sustainable they need to be built on a stronger foundation of operational / technical excellence and over time be scaled through a subtraction mindset
(4) That requires a decentralized protocol rather than centralized program that is stewarded until it reaches fully pluralistic community-ownership (EI1)
(7) Which requires examples of successful programs that showcase real world impact (EI4)
(6) Which requires an extitution (Gitcoin) that keeps supporting these examples over time, while slowly removing its own power (EI3)
(7) Which requires sustainable funding for said extitution for a given period of time (EI2)

So alright then, in context, the essential intents sound like they strike pretty well at the heart of what the DAO is trying to actually do. But how does the DAO actually effectively follow them in 2023?

Step 1: Protocol Launch and Alpha Rounds (Q1/Q2)

What / Why

In the context of the above, it’s easy to argue that the most immediate strategic priority is to launch the protocol so adoption can grow from program managers (e.g. the Gitcoin Grants program itself).

It’s worth noting that this framing is very operational, but the mission here is still much bigger. By achieving these goals, we help open, global communities engage with quadratic funding and other regenerative mechanisms that can genuinely push forward the way we fund shared needs.

Program Managers would in this model be the most immediate community group being served by [EI1] and all other success would come first from serving their shared needs per the intents (i.e. if Program Managers achieve their goals, then the protocol will be adopted and we will be able to consider problems posed below).

How

To really make sure Program Managers are using these tools well, including the team running Gitcoin Grants, a few things would have to be done:

  • Ensure the tooling is live and ready to be used by alpha and beta partners (GPC)
  • Create a strong onboarding flow for round operators to guide their work and prepare them to eventually become independent from the DAO (PGF)
  • Build strong marketing presence for rounds within their relevant communities (MMM)
  • Ensure that the rounds themselves go well and results are min(fraud) (FDD)

An outstanding question is how do would the DAO prioritize the managers to support? One proposal might be to choose projects that clearly show their commitment to public goods.

Metrics

One idea would be to focus on how program managers really feel about their use of the tooling:

  • KPI: Program Manager NPS
    • Were clear expectations set with round owners?
    • Were the rounds run a success by their standards?
      • Number of matching funds raised
      • Number of total donations
    • Were there meaningful grantee success stories?
      • Did grantees genuinely enjoy using the protocol / being in the round?
      • Did grantees from the round sustain themselves?
      • Did grantees from the round achieve impact (as defined by RO)?
      • Do the grantees in the round on average have ‘high legitimacy’?

Step 2: Protocol Adoption and Product Market Fit (Q2/Q3)

What / Why

Medium term (post launch) the goal might be on finding ways to ensure protocol adoption grows in such a way that value to partners translates to long term sustainability. This includes ensuring there’s true product market fit in the same way there is for Gitcoin Grants.

The DAO has spoken about three types of rounds to support on the protocol:

  • (1) Gitcoin Program – core rounds that run during Gitcoin’s quarterly cadence like a “festival”, endorsed by the DAO.
    • Program Core - Gitcoin does fundraising, operations and full marketing support to start for a core set of cause rounds. Ideally over the long-term, lift would decrease across all measures.
    • Program Featured - Programs buy-in to being featured and the Gitcoin community votes to endorse the round. The round would then be then featured on its “front page of rounds” meta-interface for maximum discoverability, and grants pages profile the different rounds they are in to increase discoverability of different ecosystems and rounds by donors. Featured programs would be promoted by Gitcoin quarterly festival (ideally leading to better round results)
  • (2) Gitcoin Serviced Rounds – tiers of services a program can use to support operationalizing a round at any time throughout the year (see below for more details).
  • (3) Permissionless Self-Serve – manage every aspect of their own program, or use a 3rd party to do so. There will still be a small team that will handle urgent customer requests.

Here it could make sense to focus on (1) and (2) for this phase with the expectation that most partners will need support for the first 6-12 months of usage.

Once adoption has been achieved it needs to be possible to prove that that the DAO can actually maintain it, so this phase is actually as critical as initial adoption itself.

How

There could be an aim to increase protocol adoption by pursuing a combination of devrel and by bootstrapping via core, featured, and serviced rounds.

  • Core rounds could help prove out the value created for programs the DAO itself proposes and runs via some form of nomination / selection process (historically done via community vote); we can take a standard fee (e.g. 10%) on these rounds (PGF)

  • Featured / endorsed rounds could prove out whether or not it’s possible to require projects that want to promote themselves on a central, discoverable meta-interface (round aggregator) and give a portion of funding (e.g. 10% or equivalent) to support public goods in exchange.

  • Serviced rounds will help us prove whether or not there are other ways to generate value by operating, marketing, and building rounds that serve the needs of a given community.

Metrics

After achieving high NPS, the DAO can start to scale its approach confidently, and find ways to improve sustainability through value created, ideally having program managers give back to Gitcoin Grants in some fashion philanthropically.

  • KPI: Gitcoin Grants Matching Pool Growth
    • Are round operators willing to accept the request for donation? If so in what contexts and at what amounts?
    • Are we starting to see a clear path towards more self-serve partners rather than partners that need the support of the DAO to continue their programs?

Step 3: ???

DAOs are living networks, and if its stewards successfully foster a new protocol community centered on program managers (and their own pluralistic communities) in 2023, it helps create the right soil for an infinite garden to bloom; it sets the stage for a clear path towards an organization built on the principles of subtraction.

And in that spirit, this document is clearly incomplete. What are the missing gaps necessary to allow the DAO to truly embody a subtraction mindset? What pieces of this document don’t seem to make sense? Please let this document be a starting point, not an end to a broader discussion.

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Great and timely post! Here are a few thoughts:

  1. The essential intents were originally set with the guidelines that these are SUPPOSED to be revisited and updated on a regular basis.

  2. Essential Intents as a tool should be measurable and specific, which none of these are.

I do think they were great in helping us align to launch the protocols at a time when we were struggling to find cohesion. However, here are my suggestions from when we set them. I think we need to reassess ASAP and make them measurable as in my example here. (These likely aren’t what they should be anymore, but the measurability is a good example. Also, I believe we have a session for CSDO to begin the reassessment on the books for next week.)

Love this precise assessment. Setting roles and responsibilities for us to accelerate the success of others programs is overlooked imho. Attempting to generate service revenue before this pathway to success is clear would be a mistake.

Do you see us servicing only Program Managers and not Donors, thus meaning a reduced need for a support team in the way we do it now? I’m assuming this means the program managers might support their own rounds.

Is this the total amount funded in all matching pools or only Gitcoin Program? Additionally, even if some rounds choose a different cadence, might we consider the natural participation rhythm to be quarterly?

So top level growth metric being total matching funds / quarter? or would you suggest another time unit for how we measure?

I think use of revenue from services is a tricky thing. Once the DAO has revenue (other than protocol fees) the natural instinct will be to fund the work that brings the revenue, thus cutting out funding for public goods of the Gitcoin ecosystem.

Encouraging a subtraction mindset relies on 4 things:

  1. DevRel focus. Subsidize and spend time assisting those who build applications (modules) on the protocol which increase the usability, experience, or efficiency of program managers. Make GPC & ecosystem developers the rockstars of the Gitcoin community!

  2. Open Data focus. Create great interfaces & tutorials for analysts and data scientists to easily access open data. Help the community better understand which initial conditions of governing a common pool of funds creates truly positive sum outcomes.

  3. Program Excellence. Showcase how a program can be run. Set clear timelines in shifting from Gitcoin led rounds to Gitcoin certified rounds. Continue to explore ways to build positive sum interactions between programs.

  4. Distinguish Private & Public Goods. Find ways to create recurring revenue to support Gitcoin ecosystem’s public goods like protocol upgrades, anti-capture infrastructure, data reproducibility, etc. Understand that private businesses which are dependent on the protocol would fund these. Design a roadmap that shifts from only funding workstreams to aqueducts funding Gitcoin ecosystem public goods. (Bredth vs Depth)

Thanks a ton for pushing this conversation.

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Thanks for the thoughtful reply Joe, in general tend to agree that we could stand to make more measurable goals. That said, I don’t know if that needs to happen at the EI level specifically but then we’re getting into a semantic debate about EIs vs. KPIs so I’ll leave that alone lol.

Do you see us servicing only Program Managers and not Donors, thus meaning a reduced need for a support team in the way we do it now? I’m assuming this means the program managers might support their own rounds.

In this model, the eventual goal is to allow community members and program managers specifically to choose their own ways of supporting their rounds, but offering options if needed. The needs of each operator are going to vary and I don’t think we should leave people hanging by any means.

Is this the total amount funded in all matching pools or only Gitcoin Program? Additionally, even if some rounds choose a different cadence, might we consider the natural participation rhythm to be quarterly?

To me these things correlate in this model, because the goal is to replenish the matching pool for Gitcoin Grants through the success of other programs, so it’s kind of a non-answer but ‘both’ is the correct one here.

Encouraging a subtraction mindset relies on 4 things

Strong agree on all of these points.

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