We are living in the dynamic and ever-evolving context of Web3 and Decentralised Autonomous Organizations (DAOs), and there’s a growing urgency to explore, innovate, and look for fair approaches to governance. Addressing this need, I’ve developed a revolutionary governance model called ‘Extreme Fractal Governance’.
Extreme Fractal Governance
This model is marked by its innovative structure, where the principles of decentralisation are taken to their extreme, allowing for the distribution of power and responsibilities across a series of levels or “fractals” that truly reflect the complexity and diversity inherent in our communities.
The “Proof of Love”
Simultaneously, I introduced a reward mechanism, the “Proof of Love”, aimed at recognising and valuing community contributions not just on their quantity but, more significantly, on their quality and impact on collective well-being. This system seeks to foster an environment where each member’s input is appreciated at its true value, encouraging engagement, collaboration, and innovation within the DAO.
These two concepts, Extreme Fractal Governance and Proof of Love are designed to intertwine harmoniously, providing a robust framework for participative governance that honours individuality while forging greater solidarity and cohesion. Together, they lay the foundation for a new era of DAO governance, where fairness, transparency, and love for the community are not just ideals but active principles guiding every decision and action.
Presentation of the Extreme Fractal Governance concept.
Extreme Fractal Governance is a vision I’ve developed from my experiences and reflections on how to maximize participation and engagement within a DAO.
This model relies on a non-hierarchical decentralised architecture, ensuring participative equity by awarding a governance token not listed on financial markets, thus assuring each member an equal voting right.
PODs (Points of Development)
The DAO is structured into specialised functional units, called PODs (Points of Development), each focused on specific areas of expertise and innovation.
Choosing a system of unlisted governance tokens primarily aims to reinforce internal engagement and members’ alignment with the DAO’s objectives. This encourages authentic participation centred on adding value to the community and keeps the focus on governance and actual contributions rather than market fluctuations.
Each POD operates autonomously, specialising in varied sectors, including technical development, marketing strategy, community management… Implementing this structure demands effective coordination and communication among distinct PODs, each unit being led by a “lead” who, while not having hierarchical authority, serves as an essential point of contact with the DAO as a whole.
Maximise Decentralisation.
This schema aims to maximise the decentralisation of decision-making processes, allowing each POD to act independently while remaining aligned with the DAO’s overall objectives. Important decisions or those exceeding a specific POD’s competencies are submitted to the entire community during plenary sessions. This ensures that all members, regardless of their role, actively participate in the DAO’s strategic decisions.
The core aim of this governance model is to amplify member empowerment. By granting them an active role in decision-making and acknowledging their contributions through a transparent points system, we aspire to enable them to actively shape the DAO’s future. This empowerment translates into increased accountability, where each member feels valued and invested in our collective success. This approach not only strengthens trust and commitment—crucial for fruitful and innovative collaboration within our community—but also aims to maximise member participation by decentralising decision-making, ensuring heightened transparency and accountability.
Extreme Fractal Governance is the excessive concentration of power prevention.
Extreme Fractal Governance prevents the excessive concentration of power, ensuring all voices are heard and considered. Members can delegate their voting rights to a chosen representative if they feel unqualified for a decision. To maintain power balance, each delegate is capped at representing a maximum of 2.5% of all votes, with a six-month term and no immediate reappointment.
Pioneer Contributors
“Pioneer Contributors” or an elected supervisory board play a crucial role, rigorously selecting potential delegates based on defined 8 criteria:
- Commitment: Assessing the candidate’s involvement in protocol development and governance.
- Expertise: Evaluating the candidate’s skills and experience in the organization’s key areas or “clusters.”
- Community Participation: Considering the candidate’s community contributions and reputation.
- Conflict of Interest: Ensuring the candidate has no conflicts that could compromise DAO decision integrity.
- Alignment with Organizational Goals: The candidate’s interests must align with the organization’s long-term vision and goals.
- Contribution to Decentralization: The candidate’s ability to enhance governance decentralization is crucial.
- Diverse Perspectives: The candidate’s inclusion should enrich governance viewpoints, avoiding groupthink.
- Ethics and Mission Adherence: The candidate’s values and belief in the DAO’s mission are fundamental for aligned, responsible governance.
If a member fails to vote.
Furthermore, if a member fails to vote or delegate their vote for x consecutive occurrences, thereby preventing the achievement of quorum and thus slowing down DAO activity, they will be removed from the rewards system. If this absence is repeated y times, a value is initially defined.
By the DAO, the member will be excluded. This approach aims not only to promote balanced and inclusive governance but also to ensure that every decision made accurately reflects the collective values and objectives of our community.
Managing Conflicts of Interest.
As a mechanism for Managing Conflicts of Interest in implementing this governance model within DAOs, special attention must be paid to managing divergent interests among members. To address this issue, I have introduced the concept of specific colleges, grouping members according to their interests (if they are divergent), (holders, users, providers, etc.), and presenting an innovative solution. This segmentation allows for fair representation of all stakeholders and ensures that each voice can be heard meaningfully.
Balancing and preventing dominant interest.
To ensure balance and prevent dominant interest groups from making decisions to the detriment of minorities, a crucial rule is established: for a proposal to be validated, it must receive approval from more than 50% of the members in each college. This democratic approach guarantees that all stakeholders must reach a consensus, promoting more balanced and fair decision-making.
Precise identification of stakeholders from the outset is essential for the success of this model. It requires a thorough analysis of the various interests and objectives within the DAO, thus forming colleges that accurately reflect the diversity and complexity of the members. This initial process is fundamental to ensure that the governance structure is truly representative of the community as a whole and can function efficiently and fairly.
Promoting a culture of collaboration and mutual respect.
This governance system aims to promote a culture of collaboration and mutual respect within DAOs, where decisions are made taking into account all perspectives. This contributes to strengthening the cohesion and integrity of the community, ensuring that the interests of all members are protected and valued.
The “Proof of Love” Rewards System.
To complement this governance structure, I have named the rewards system “Proof of Love,” a way to encourage and reward community engagement. This model allows us to approach the Nash equilibrium of game theory as closely as possible. Every action taken by a DAO member, whether contributing to a project, participating in discussions, or helping solve problems, is recognized by several points represented by an NFT periodically awarded to members based on their level of engagement. Whether on a monthly, quarterly, or annual basis, these NFTs accumulate points that reflect not only the volume but also the quality and impact of each member’s contributions. Several tools exist, such as Zealy, Meeds DAO, or SourceCred . These points are not just a symbol of recognition, they play a crucial role in the distribution of rewards from a community pool or DAO reserve.
Simplified example.
“To illustrate how the points work in terms of distributing earnings within a DAO, here’s a simplified example: Let’s assume the DAO has generated $100,000 in the incentive pool over the year. On December 31st, the value of each point is determined by dividing the total earnings by the total number of points awarded to members. For instance, if the total sum of points is 10,000, each point is worth $10. If a member has 100 points, they will then receive 100 * $10 = $1,000.”
The multi-signature mechanism.
At the heart of this governance approach is the multi-signature mechanism, or multi-sig, which is fundamental for the transparent and collective management of the DAO’s treasury. Members holding governance tokens are thus directly involved in financial decisions, ensuring actions truly reflect the collective will. In this model, the time and effort invested by members are valued in monetary terms, establishing a concrete correlation between the dedication and the rewards distributed.
Rewarding active engagement and contribution.
This system rewards active engagement and contribution, transforming commitment and effort into measurable benefits. It underscores the belief that the DAO’s success relies on the value brought by each of its members, which is the true essence of cryptography, open source, and decentralisation. A smart contract can automatically perform this operation on the defined date, sending the corresponding earnings to DAO members based on their accumulated points.
Fairly rewarded
This system is designed to recognise and value all forms of contribution, ensuring that member engagement is fairly rewarded. It creates an environment where members are motivated to actively contribute, not just for the community’s benefit but also for their personal gain, thus promoting an optimal Nash equilibrium where individual strategies lead to the best collective outcome.
The Impact of Extreme Fractal Governance and Proof of Love.
The combination of Extreme Fractal Governance and the Proof of Love system creates a powerful dynamic within the DAO. It encourages active participation, rewards engagement, and ensures every member has the opportunity to influence decisions and the direction of the DAO. This model not only promotes more equitable and transparent governance but also strengthens the sense of belonging and cohesion within the community.
As an advocate of this governance model.
I am deeply convinced of its potential to transform how DAOs operate and engage with their members. It’s an exciting journey we commence on together in the #Web3 ecosystem, and I look forward to seeing how these concepts will evolve and be adopted by communities worldwide.
You can contact Author Stéphane Chometton (STEF DAO) at:
https://daoconsultingweb3com.mydurable.com/
https://www.linkedin.com/in/st%C3%A9phane-c-a67609158/