Executive Summary
This proposal offers a governance architecture modeled after plural management, decentralized decision-making, capital allocation efficiency, and community-driven participation. The core innovation is using management credits, a dynamic, non-transferable influence currency, to reward contributions and distribute governance power. By integrating Quadratic Voting, Prediction Markets, and a SubDAO-centric model, this framework guarantees optimal resource allocation, broad stakeholder engagement, and long-term sustainability.
Core Mechanism:
- Management Credits as Influence Currency: Members accrue credits for their strategic thoughts and contributions. Voting, setting priorities, and making predictions are all done with these credits.
- Quadratic Voting for Decision-Making: Ensures balanced governance by giving smaller contributors proportional influence.
- Prediction Markets(Futarchy): Participants receive extra credit for correctly forecasting vote results, which promotes active participation and thoughtful decision-making
- Dynamic Prioritization System: An issue board with a credits-based priority setting ensures that the most critical initiatives receive immediate attention.
- SubDAOs operate semi-autonomously, focusing on specific verticals such as research, dev studio, devrel, etc
Governance Model
A Sub-DAO
A sub-dao operates semi-autonomously from the parent dao as described but this concept correlates with an open question in the paper, where we explore multi-layered decision-making. Developing independent yet interconnected systems
- The parent DAO defines high-level strategy & investment theses.
- Allocates funding and management credits to SubDAOs based on Voting outcomes.
- Manages the parent treasury, ensuring sustainability across all investment verticals.
The Parent DAO, mechanisms are:
- Voting for high-impact decisions
- Management Credit-weighted proposals for funding allocations.
- Prediction Market data informs treasury rebalancing & capital flows.
Management Credits
Management credits are earned by contributing to the DAO and are spent to influence decisions.
- Earn Credits: Members gain credits by completing tasks, submitting high-quality contributions, or accurately predicting voting outcomes.
- Spend Credits: Credits are used for:
- Setting priorities on tasks through quadratic funding.
- Voting on proposals and funding rounds with quadratic cost scaling to prevent dominance.
- Betting on outcomes, where correct predictions earn additional credits.
Credits are non-transferable and only valid within the DAO. This ensures that influence is tied to participation and cannot be bought or sold.
Prioritization via Quadratic Funding
An Issue Board will list strategic challenges and opportunities. Members spend credits to set priorities using quadratic funding, amplifying widely supported issues without letting large credit holders dominate.
- Matching Fund: Early contributors or administrators create a matching pool to increase the reward for high-priority issues.’
- Dynamic Prioritization: Priorities can be adjusted in real-time as credits are added or withdrawn from tasks.
Prediction Markets(Futarchy)
Prediction markets incentivize high-quality governance. Members can bet their credits on the outcome of proposal votes:
- Correct Predictions: Double their bet, earning extra credits.
- Incorrect Predictions: Lose the bet, making it costly to manipulate outcomes.
- Parameter Adjustments: The cost and reward structure can be adjusted to encourage participation from lower-credit members, for more inclusivity.
Why Credits Matter: Influence is tied to participation, preventing anyone from dominating governance. Credits can’t be traded for monetary gain, ensuring governance remains meritocratic and community-driven.
Technical Implementation
1. Core Infrastructure
- Management Credit Ledger: Tracks the earnings, spending, and current balance of management credits for each member.
- Issue Board: A real-time task board where members prioritize and track DAO initiatives.
- Prediction Market Contracts: Enable members to place bets on vote outcomes, with adjustable parameters for incentives.
- Quadratic Voting Module: Scalable and modular contracts to prevent dominance by large credit holders.
built on Allo V2.1 contracts, ensures secure, modular, and scalable capital allocation.
- Core Smart Contracts (Allo V2.1)
- Registry.sol – Manages profiles for investors, contributors, and SubDAOs.
- Anchor.sol – Handles fund reception and transaction execution.
- Allo.sol – Manages funding pools, linking them to Quadratic Voting and Prediction Markets.
- BaseStrategy.sol – Defines custom investment allocation strategies.
- New Contracts for Governance & Capital Allocation
- IssueCredit.sol – Implements Management Credits and Quadratic Voting for decision-making.
- SubDAOTreasury.sol – Allows SubDAOs to manage their own funds while contributing back to the parent DAO,
- Futar.sol – uses prediction markets to incentivize rigorous due diligence and investment forecasting.
2. Security and Audit Measures
- Regular smart contract audits and bug bounty programs will protect against exploits.
Conclusion
This proposal aims to create a dynamic, adaptive governance system for Allo Capital using Plural Management and Sub DAOs principles. Combining management credits, quadratic voting, and prediction markets ensures transparent, community-driven decision-making.