Introduction to the MyBit DAO

Introduction to DAOs

The common industry term DAO stands for decentralised autonomous organisation. This term describes a company which can run itself outside of a traditional management and operational model.

DAOs are directly controlled by users who vote on the action taken by code. Think of a shareholder vote, except that the voted on scenario is automatically executed by code, rather than relying on management to honour the vote and complete the task.

Before diving in further, let’s acquaint our readers with common terms associated with DAOs.

Consensus: The outcome is what a majority, or greater than 50%, of voters choose. This is commonly referred to as Consensus.

Quorum: Quorum is the percentage of registered voters which must participate for the vote to be valid. For example, if there are 100 users registered to vote and quorum is set at 20%, it means that 20 users must vote before the proposal can pass. This is designed to prevent foul play by requiring an ample sample size of voter opinion. If only 1 person voted, it may not be the outcome which most users would be satisfied with.

Dynamic Quorum: We are exploring a concept of a variable quorum using a moving average for voter turnout and a diminishing variable based on time. Voting itself is not a very efficient mechanism for achieving consensus, so we are planning to implement our version of dynamic quorum to prevent proposals from being “frozen” if an unexpected lack of voter turnout occurs. We will discuss this in much more detail in a future blog,

Staking: In this scenario, staking refers simply to locking one’s tokens to be eligible to vote or receive a voting multiplier. This ensures that those with voting privileges are actually stakeholders of our community and have an amount of “skin in the game.”

Smart Contracts: Terms of the contract and/or proposal presented in computer code, which can automatically execute after a vote concludes without any human intervention or risk of being altered. Smart contracts run on Ethereum and are immutable, meaning that they will function exactly as programmed and cannot be altered by any one individual.

Aragon: An Ethereum-based platform that provides many of the tools needed to design and run DAOs.

DAOs can be designed for simple actions or they can be quite complex. An example of a simple implementation is voting to send 1 ETH to a vendor.

Someone would create a proposal such as, send 1 ETH to a design firm for successfully completing a new logo. They would provide details such as who is the recipient (design firm), provide the job description the firm followed, and share the completed work.

Then it would be available for users to vote on. If the work was actually completed according to the conditions, then users would vote to approve. As long as quorum is reached, the consensus (yes or no) results in the 1 ETH either being sent or not.

That example does not seem like a very efficient use for a DAO does it? Well, let’s look into a more practical use case and why there is value in using a DAO for certain functions.

DAOs make the most sense when combined with a workflow tool such as a bounty platform. If someone sees that a product is missing a feature which could create more value if added, they could initiate a proposal for it. If consensus is reached and the vote passes, then the task to implement the new feature would be added to a bounty platform for anyone with the appropriate skill set to complete and be paid for.

This directly goes against traditional hierarchies where managers of a company make these decisions and then allocate tasks to employees on payroll or find an appropriate vendor.

So why is this better?

It’s efficient, inclusive, and creates products which are better for users, not profit-driven executives.

Traditional company overhead can be very high and salaries make up a majority of costs. Even if an employee has no work to do, they still must be compensated. Additionally, it is estimated that employees only work 60% of the time they are paid for. With the DAO structure there is no fixed overhead costs associated with salaries. Instead people are only paid for the work they produce, creating a 100% capital-utilisation rate when referring to human labour costs.

DAO models also create inclusiveness. They seamlessly enable companies to tap into a qualified, global work force. This saves vast amounts of money by not having to worry about HR — recruiting, training, or ongoing maintenance — and don’t have to maintain physical office locations for the employees.

Additionally, DAO structures result in better products, more optimised for users. In most traditional companies all that matters is the bottom line. This results in empty products that degrade over time as money is extracted from the product ecosystem and distributed to paying back investors. DAO models retain profits within the ecosystem and are community driven, thus resulting in products optimised for users.

The MyBit DAO

The goal of the MyBit DAO is to transfer ownership of the MyBit project from our centralised team to our distributed, global community. A core reason why decentralised applications have so much value is that there is no single point of failure or human risk. For dApps to truly reach their potential, the management structure needs to be decentralised, and DAOs enable this to occur.

There are three main actions a DAO user can perform: Propose, Vote, and Enforce.

Propose: If someone has a vision for a new feature, change to the business model, or anything at all related to MyBit, they can propose it to the community who can vote to approve or reject the proposal is opened.

Vote: Anyone who owns 1 MYB is eligible to vote. 1 MYB = 1 vote, and we use identity verification to ensure each individual only gets 1 vote. The only way to receive more voting power is to stake 100,000 MYB for extended intervals of time. The longer the stake period, the higher the multiplier. More details on this will be covered in a future blog.

Enforce: Individuals can be voted into a curator position where they are in charge of reviewing the completion of tasks voted in via the DAO. At any point in time curators can be impeached if they do not fulfil their duties. Initially members of the MyBit team will be the enforcers. Over time, elections will be held to replace core team members if the community chooses to do so.

Technical Components of the DAO consist of Consensus, Quorum, and Identity.

Consensus: All votes must achieve consensus, which means a majority, or greater than 50% of the community agrees to either approve or reject it.

Quorum: Voter turnout must reach a minimum amount. It is not reasonable to expect that 100% of eligible voters will participate for each vote. But there needs to be a minimum requirement for participation to preserve the security of the network so a small group cannot initiate a vote and pass it through if no one else votes. This is where quorum comes into effect. For example 25% of eligible voters may be required to vote for a proposal to officially be approved.

Identity: We want to ensure those with more money cannot buy their way into controlling the network. Therefore we have designed an identity solution to combat this. A separate blog will be released soon going into much more detail on the topic of identity and our implementation.

How is the DAO funded?

We utilise a self-sustaining revenue model where all profits from MyBit dApps are recycled into the ecosystem. This means that revenue is returned to the DAO to create a sustainable funding model, and since MyBit Go is not owned by any centralised entity, this is made possible. These profits are able to be reallocated towards maintaining and growing the ecosystem by applying them towards anything from development, to marketing, to business purposes.

In the upcoming weeks, the MyBit DAO will be released on main-net and anyone who holds a minimum of 1 MYB will be eligible to begin proposing and voting.

Subscribe to our Telegram Channel to be the first notified at t.me/mybitio.