NoDW #10: Quantifying Reputation in DAOs (Part II)
The Newsletter of Decentralized Work: Data-driven insights on the world of decentralized work
Curated by the talentDAO community. Complied by ItamarGo
In this edition:
Our feature article: Quantifying Reputation in DAOs (Part II)
Elsewhere in Web3
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Quantifying Reputation in DAOs (part 2)
A Synthesis Toward Equitable Group Decision Making
By: Flowscience
Special thanks to ItamarGo and SaulThorin for feedback and comments.
The first part of this article describes a system for automating the calculation of reputation, via contribution scores, for each contributor in a DAO.
Implications for Governance
A common trope circulating through the memesphere is that DAOs are inefficient and only applicable to particular situations. When is decentralization the correct solution, and how much decentralization is optimal?
The so-called “DAO trilemma” consists of scalability, quality (security), and access (decentralization) of which we can only have 2/3 and must compromise the third. We can also think of this in terms of decentralization, organization, and automation.
What’s the real trilemma? Maybe I’ll explore that in another article.
We simply haven’t gotten good at automation and organization yet. We only just recently grew our collective consciousness to a critical mass of awareness about Moloch in the past couple of years.
Here’s my personal favorite and highly eloquent generalization about trade-offs:
Coordination challenges abound, yet, our rate of progress is ever accelerating at an ever-increasing rate. It’s the typical compounding “large number” problem that we as humans have faced so many times in our exploration of science and the universe. We haven’t tried enough to say one way or the other, however, existing progress seems pretty inspiring.
Back to the trilemma question. How do we choose whether it’s optimal, let alone appropriate, to pursue decentralization as the correct solution to a problem? When considering this in the framework of game theory in the context of rapidly changing technology, we have to incorporate how the decision landscape might change over time. Can the existing solution set for a problem evolve such that the landscape shifts from a convex worldview to a concave one?
As technology improves, applying moderate amounts of decentralization may become preferred over centralization. In the generalized scenario shown above, the maximum point on the curve will gradually increase in value along the Y-axis over time in any worldview. However, in a convex worldview, the option with a poorer outcome could be researched and developed more rapidly to eventually yield a better outcome.
Given the trajectory of technological advances, it seems reasonable to assume that many of the decisions we face in implementing decentralization today could be a product of our current stage of infancy. One can imagine the shape of a decision curve can potentially flip from a convex worldview to a concave given sufficient innovation.
I try to remind myself of our ignorance on a regular basis. Ignorance is bliss, after all. It helps to keep me happy and a shameless optimist when considering our ability to solve problems collectively as a species and approach problems with an abundance mindset. We can only have our cake and eat it if we first believe we can. Sorry, Ron.
Contribution Scores and Voting
There are numerous ways that quantifying contributions can be integrated into the voting process of an organization. Below is a list of common voting types and how they can be modified to integrate contribution scores.
One-Person One-Vote
Contribution scores can be integrated when evaluating the merit of proposal authors. They could even be used to gate permission for submitting proposals in either manually approved or in an optimistic/consent-based approval system.
Weighted (linear and quadratic)
Tokens become one of many factors in the model, instead of the only one, creating a contribution score-weighted voting system.
Ranked Choice
Can be combined with the concept of weighting to integrate contribution scores while considering overall order of preferences.
Conviction
Contribution scores can be used instead of allocating tokens. Voters delegate or “stake” their allocated voting power (determined by their relative contribution scores) on their preferred choice(s). This is distinct from applying the concept of conviction as a time filter when calculating contribution scores as described in part 1 (which also includes a link to the reference on conviction voting).
The limitations of coin voting have been discussed extensively and conceptual approaches to overcoming those issues include: 1) limited governance, 2) non-coin driven governance, and 3) skin in the game. Contribution scores utilize all three of these approaches to some extent. They limit governance with a highly customizable weighting algorithm that includes time delays and forkable components. As described above, contribution scores provide a variety of ways to proportion the effect of token holdings appropriately relative to other contributions and provide sybil resistance through a maximally pluralist approach to quantifying reputation. Lastly, there is a lot of skin in the game when it comes to reputation. The property of sybil resistance confers value which keeps those who use the system accountable because they have reputation on the line.
Modularity Increases Sensitivity and Specificity
A fractal-like governance system can support a flexible structure that encourages cooperativity among groups that wish to diverge. Members accumulate opportunities as they build up their contribution score through a variety of actions. This is a positive sum system that builds upon community interactions. We can achieve community value alignment through combination and normalization of scores between categories (e.g. category weights/ranks).
The modularity of this model allows subjective catering of contribution inputs that communities seem relevant. It also allows for fractal structures, with diverse topologies to emerge within the DAO where smaller groups have full customization of their internal governance - which pulls social graph data from the same sources as any other subgroup, and the umbrella DAO itself.
Contribution scores can be applied to any quantitative voting type.
Contribution scores are Sybil resistant due to the broad variety of inputs. The combined modularity of social subgroups in a contribution score model makes it possible to model the network topology in a way that flags automated fraud detection of potential Sybil attacks.
Contribution scores have net positive effect on the accuracy of decision-making by increasing the sensitivity and specificity of voting power.
Increased Sensitivity: By enabling groups of people to operate independently under shared conditions we incentivize groups to form of optimal size. (increased sensitivity).
Increased Specificity: Optimally sized groups can optimally choose which contributions to track, quantify, categorize and weight.
Lastly, inter-community functions can be used to bridge voting weights between any number of members in each community, for any amount of time/votes.
Zooming out, it's a simple overall concept. But, the underlying modularity and potential for complexity allow for maximizing self-sovereignty while preserving the social contract members consent to when first joining the umbrella/main DAO. A diverse mix of incentive structures including bounties, tips, peer-reward circles, algorithmic analysis (Contribution Scores), grant programs, and others can improve accessibility to funding and support limited governance through a balanced combination of permissioned and permissionless systems.
SubDAO Creation Platforms
It is becoming increasingly easy to create new communities with governance and incentive structures designed to align with an existing community. Seeking alignment ensures that both the original group and the new group are able to maximize their efforts by sharing resources and collaborating in a variety of ways. A few notable examples are AstroDAO, ADAM Vault, Colony, Govrn, and Metropolis (Orca Protocol).
Caveats and Limitations
Much of this has been said before.
Due to the flexibility of the integrated approach to governance described above, it could be possible to extend this theory of decision-making to any organization. However, there still exist subjective implementation decisions, such as classifying contribution types.
Inputs Metrics and Incentive Structures
The calculation of contribution scores can most obviously be skewed through the choices made to either include or exclude various input metrics. The ability to quantify an ideal set of metrics in a transparent way may also requires various levels of technical skill ranging from accessing a pre-configured dashboard to building out entire businesses and new platforms.
Similar to the choice of metrics, the incentives that exist outside of the direct translation to contribution score (e.g. token rewards for bounties, etc.) will have a direct impact on which metrics effect the final contribution score the most. Ownership is a large incentive and an underlying principle driving the formation of new networks in web3.
Calculating weights
Exploring the design space of DAOs using objective statistical modeling to identify key factors which truly represent what a DAO is will allow us to build systems focused on value creation instead of value extraction. Value flow, where does it lie?
Bureaucracy
The proposed system of calculating contribution scores requires a flexible iterative approach with numerous points where design decisions need to be made. Assessment of which metrics are working, how incentives impact the system, and implementing changes are all points which could be up for debate.
Typical governance forums on Discourse and other platforms can offer metrics to gain insight into their performance and community participation. The system itself should constantly be scrutinized using statistical modeling and testing. Implementing this should be done in a protocol-like approach with a core functional platform being delivered from the start capable of sustaining itself over time and being designed to resist failure.
Clear boundaries make it easier for contributors to fully occupy the space in the community which is available to them.
Transformers: Robots in Disguise
Are we all doomed? Not in the mere sense of failure. Rather, the complete existential demise of the human species. Why? How? One word: “robots”.
Does the entire history of biological life merely represent an arc along the evolution of technology? Do we unwittingly serve the machines while deluding ourselves of what we as a species collectively spend countless lifetimes pursuing?
Umm… That got dark quickly…
I take the phrase “spending time” quite literally. I subscribe to the theory that economics are subject to the constraints of thermodynamics. The world of things (contributions) has value because of scarcity, they aren’t easily obtained. Someone ultimately has to transmute energy into matter to make a thing, yet, the sum total amount of energy in the system cannot be created nor destroyed. At least not in the physical world and an economy based on the production of real assets.
The answer to whether thermodynamic constraints apply to digital scarcity seems to emphatically be “no”. This is the core principle of regenerative finance, that we can use economics to not just produce value, but to reduce the sum of entropy in the physical world. An economy based on the physical world is a human construct that extracts energy and converts it into financial value. An economy based in the digital world acts as a sink where endless value can be created and then transferred back to the physical world to create a net positive-sum outcome.
Money is the energy in the system. Money is time. Time is money. Bitcoin is money. Bitcoin is time.
Making decisions is expensive. Even more so with procrastination. An investment of time and money (across any time-frame) is pretty much a basic requirement to achieve efficiency for any sufficiently complex system. My hypothesis is that a system such as contribution scores can be general enough to find broad application and be communicated in a simple way, yet complex enough under the hood to facilitate highly detailed customization.
Managing an algorithmic governance system offloads the majority of the labor burden to a small number of people. This can be accomplished by delegating votes to respected members of a community to act on behalf of others and are incentivized to do so. With an ability to recall delegates at any time, the total governance burden in a population can be minimized.
Hardly anything anymore is truly novel. Most of what I’m saying here is repetition. Big data is everywhere. The only truly novel ideas remaining are bold paradigm shifts that require strong-willed early champions. I probably could have included 10x as many references in this article if I was less ignorant. People don’t need to add a disclaimer to everything they say, however, society seems to be going through some contortions over how to define ownership, particularly when it comes to intellectual property.
Our future will be governed by AI, which makes the power of small groups substantially more threatening. It raises the possibility that we’ll be reduced to a set of numbers even further than we are already. The ideas I present here could easily be utilized toward dystopian ends that berate humanist ideals.
What’s stopping this? Plurality. Natural evolution. Variation. Diversity. Equity. Inclusion.
Oh, and, zero-knowledge proofs.
Continue reading the final part of this article here.
Elsewhere in Web3
Web3 Credentials: A Primer / Nancy A. Rubel
Long-time readers of this newsletter know that we are particularly excited by the emerging uses of web3 for solving challenging problems around identity management. If you haven’t been tracking this topic, or could use a refresher on why this matters, this to-the-point primer by Nancy Rubel is the perfect resource for you.
Pairs well with Guild evolves: platformless memberships - a specific implementation of some of the concepts highlighted in Nancy’s primer.
Organizing Based On Algorithms And Smart Contracts / Joost Minnaar
What if we told you that one of the most impressive, “real world” applications of blockchain technology has been living this whole time right under your nose? Most likely in your kitchen, to be exact. Haier, a Chinese multinational and the number-one brand globally in major appliances for over a decade, has been using blockchain technology to coordinate the work of its >100,000 employees. This one is a must-read!
Lens Protocol Primer and Data Analysis / Ricky Esclapon
Social media, and Twitter, in particular, are back on the news cycles since Elon Musk’s takeover earlier this month. Can Web3 play a role in overcoming some of the thorniest challenges that exist in social media today? The Lens Protocol is one of the earliest attempts to explore this hypothesis and Ricky’s primer is a great jumping-off point to understanding the Lens protocol and its emerging ecosystem.
Gassing the Miracle Machine / Elliot Hershberg and Jocelynn Pearl
The Miracle Machine, our systematic efforts in funding basic science, have ultimately led to miracles like the Internet, artificial intelligence, cancer immunotherapies, and gene editing technologies like CRISPR. While the results to date have been miraculous, the machine doesn’t run itself: maintaining the system is absolutely critical. Funding basic science can be one of Web3’s killer use cases.
Gitcoin Through the Lens of Systems Science / Shingai Thornton
A wonderful 2-in-1: A great way to learn more about GitCoin, through the lens of Systems Science; and a great way to learn more about Systems Sciences, through the concrete example of GitCoin.
Like what you’re reading? Consider supporting our efforts at talentDAO by becoming a paid subscriber.