[Temperature Check] Use Otterspace Non-Transferable Tokens for Distribution of Influence Mechanism

:memo: This is a proposal to implement non-transferable NFT badges within the RadicleDAO to better enumerate DAO membership and setup a foundational tool for improved governance. It proposes to work with Otterspace using their Badges Protocol to power a NFT-based membership model. This addresses the objective of the Distribution of Influence workstream, currently led by @abbey and @bordumb.

:mega: CALL TO ACTION :mega: The Otterspace team will be hosting an open call with the Radicle community to discuss this proposal on Monday, September 26th @ 6pm CET. If you have questions or feedback, please be sure to join this call (add it to your calendar).

Background

The objective of the Distribution of Influence workstream is to “design and implement a strategy for distributing non-financialized governing power within the Radicle ecosystem.”

“To truly be a self-sustaining, community-owned & governed, free and open source project, there must be an additional governance mechanism that allows for a non-financialized form of influence that can be distributed and earned. The reason is that influence in the project is currently disproportionately distributed among early team members & supporters, i.e. RAD holders. While a plan to distribute tokens to contributors is in development (see Workstream #2), participation within the DAO must be increased by designing a way to distribute non-financialized governing power.”

The Next Phase of the RadicleDAO

One of the challenges with distributing influence are the limitations of fungible ERC20 tokens. With coin-voting, governance is only able to take the single dimension of ‘number of tokens’ into account. Stakeholders such as project contributors are not recognized for their specific insight and context into decisions relating to their work.

This excerpt from Vitalik’s Moving beyond coin voting essay frames the problem space nicely:

"The problems with coin voting even without explicit attackers are increasingly well-understood (eg. see this recent piece by DappRadar and Monday Capital), and mostly fall into a few buckets:

  • Tragedy of the commons: people vote less when they feel that their vote has less power. Small groups of big holders (wealthy “whales”) are able to successfully execute decisions with much less coordination compared to large groups of small holders. The combination of smaller individual voting power and the need for greater coordination amongst small holders act as disincentives for voting. Otterspace badges can help address this by distributing influence to DAO members based on their badges rather than merely their coin holdings.

  • Coin voting governance empowers coin holder interests at the expense of other parts of the community: protocol communities are made up of diverse constituencies that have many different values, visions and goals. Coin voting, however, only gives power to one constituency (coin holders, and especially wealthy ones), and leads to over-valuing the goal of making the coin price go up even if that involves harmful rent extraction. Otterspace badges allow other community members’ roles to be enumerated on-chain, allowing them to be recognised as stakeholders in the governance process.

  • Conflict of interest issues: giving voting power to one constituency (coin holders), and especially over-empowering wealthy actors in that constituency, risks over-exposure to the conflicts-of-interest within that particular elite (eg. investment funds or holders that also hold tokens of other DeFi platforms that interact with the platform in question).:

In addition to these challenges, many token-governed DAOs have seen low-voter turnout and concentration of votes into a small number of people due to static ownership distributions and unadaptable delegation schemes. In order to build a more robust foundation for governance moving forward, a new token primitive in the form of non-transferable tokens (NTT) should be introduced to the DAO to help counter the negative externalities present in a purely token-governed system.

This proposal describes the short to medium term plan for implementing an NTT membership model within the RadicleDAO that can be used to distribute non-financialized governing power (influence) to active contributors in the current token-governed system.

Overview

The goal of the proposal is to work with the Otterspace team to build a self-sustaining system of NTT badges that are distributed and held by members of the RadicleDAO based on their role and participation, which may hold additional governance rights and access permissions. By doing so, the DAO can distribute influence among participants in a more nuanced way to further allocate governance power beyond that held by $RAD token holders.

What are badges?

Within the Otterspace Protocol, Badges are non-transferable tokens (EIP-4973) that are issued by organizations to their members. Communities can use Badges as a means of defining membership, roles, and reputation within a DAO, giving them a better way to represent the varying nature of ecosystems, improve member engagement, and coordinate the distribution of power and permission.

:otter: Read more about Badges and the role they play in realizing the Otterspace vision here.

How are badges issued?

Badge issuance is controlled by the organization itself (e.g. the RadicleDAO). Badges are currently issued by adding addresses to an allowlist, but the Otterspace team is working on extending the protocol such that badges may be issued automatically if certain on-chain requirements are met (e.g. a badge is automatically issued if a grant application is submitted or a PR is merged). Communities can already automatically issue badges programmatically using an API endpoint. Badges are never be “airdropped” - organizations issue vouchers which may be claimed by members.

They have a name, image, optional expiry date and are associated with an organization. An organization in the Otterspace Protocol can spawn sub-organizations that also have the ability to create badges. In this implementation, the RadicleDAO would be the umbrella organization, with sub-organizations associated with it (e.g. the Core Development Org).

Within the Otterspace Protocol, each organization and sub-organization is represented by a specific ERC721 token which is called a ‘Raft Token’. The holder of the Raft Token is the admin of the badges issued by the organization. In order to decentralize the control over the organization, the token may be held by a multisig or smart contract. The Org’s Raft Tokens reference the RadicleDAO parent organization in their metadata but each Org creates, issues and manages its own badges. This means all badges can be recognized and related DAO-wide, but are still managed locally at the Org level.

How can badges be used to distribute influence?

The first stage of this proposal will introduce Otterspace badges as a recognized membership primitive across the RadicleDAO by issuing Raft Tokens to its organizations as defined in [Org Design] Next Steps: Introducing the Core Development Org (see diagram below).

Once Raft Tokens are issued to the RadicleDAO Orgs, each organization can create and issue their own badges to their members and participants. As an example, the Core Development Org might have a ‘Community Team Contributor’ Badge, a ‘Funding Team Contributor’ Badge and a ‘Clients Team Contributor’ Badge. The contributors to those teams would be issued badges based on a rule-set agreed upon by the Core Development Org. The diagram below shows one way that the core development org might choose to structure badges:

Using badges

There are a couple ways the RadicleDAO and its Orgs can use badges in practice:

Distributing Influence

The second stage of this proposal will call for the delegation of a percentage of $RAD from the Treasury among badge holders in the Core Development Org, in an effort to distribute governing power to active contributors. The DAO will be able to decide how much and to which badge holders $RAD should be delegated. With this delegation, both coin holders and badge holders can participate in the same governance process.

Governance

Each of these badges can be used for off-chain governance with Otterspace’s Snapshot integration. We envision voting with badges being the one way the Orgs can make decisions within the new organizational structure. This is a further way to decentralize and distribute the influence over specific types of decisions.

Badges can also be a means of measuring reputation within Orgs, which could be used to further delegate governing power in a more dynamic fashion.

Permissions

Badges can also be used to manage access permissions, for example by automatically granting Discord roles to holders of a badge. The Otterspace team is also investing into integrations with decentralized project management and knowledge management tools Clarity, Wonder and DeWork. In the future, teams can use badges to automatically unlock access to team resources.

Proposal Phases

Phase 1 - Distribute Rafts to RadicleDAO and its Orgs

  1. Create the RadicleDAO parent organization within the Otterspace Protocol
  2. Create sub-organizations for the Core Development, EGF and Grants Org.

:exclamation: In this phase, the admin permissions over badges are held by @abbey and @bordumb in a Gnosis Safe multisig wallet.

Phase 2 - Orgs create and distribute badges

  1. Proposal authors and Otterspace team work with Orgs to design and propose badge systems, starting with the Core Development Org
  2. Otterspace team supports Orgs to implement and distribute badges to contributors

Phase 3 - Delegate $RAD to Core Contributors (details TBD!)

Phase 4 - Further decentralize and automate management of badges by transferring ownership of RadicleDAO Raft to the Timelock


:mega: CALL TO ACTION :mega: The Otterspace team will be hosting an open call with the Radicle community to discuss this proposal on Monday, September 26th @ 6pm CET. If you have questions or feedback, please be sure to join this call and/or reply to this post directly :otter::seedling:

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Thank you to the Otterspace team and the Distribution of Influence Workstream for putting this together! :pray:

The Otterspace NTT badges have many versatile, customizable features and use cases that could be used for a multitude of things as explained in this post. Beyond being a useful coordination & voting tool, but I could also possibly see them being used as a reputation-building element for contributors.

This is an important feature. We cannot always assume folks who want to contribute or participate in the project will want the responsibility or label that comes with the different badges.

I also like how these badges have use cases beyond on-chain mechanisms. While their use will be helpful to address some the issues posed with coin voting mentioned above, I think distributing influence should go beyond purely on-chain actions, and the badges allow teams to explore different ways they can organize themselves and interact with each other on a more “casual” level.

Beyond the badges themselves, the Otterspace team seems open and committed to working closely with their users to develop a product that fits their needs. A long-term partnership would be important as the needs of our community evolve over time.

While I am generally in support of this proposal moving forward, I would like to see more feedback from a variety of different contributors/core teams to gain a better understanding of how they personally could imagine using the badges and if they would enjoy coordinating with each other in this way.

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