DAO Proposal Minimal Standardised Reporting




This is a cross-post from the Dash Nation Discord #dash-talk channel where people asked me to post here as well before it "disappeared from view".

Things are concerning at the moment regarding the progress of some proposals.

Having taken a dip into community opinion using my community thermometer, I am of the view that the Kuvacash and certain other significant "Africa" proposals are not going to get funded again as opposition has become entrenched (or at least in danger of being defunded). Also, it's not as simple as people having a problem with antagonistic commentary, but there are all kinds of concerns including large, unjustified budgets, impact on other projects, uncertainty over the ultimate benefits, political associations with dubious governmental bodies and even the arbitrary nature of the projections. (e.g. one person cited the fact that a proposal hadn't changed their Dash-denominated "ask" when the exchange rate changed which I don't personally think is an issue as cumulative reserves are in play but it's still a concern amongst some).

However, I'm not going to pass judgment on who's view is more valid, nor how much water these concerns hold. It's irrelevant and the fault lies neither with proposers nor the voters. The problem lies with the DAO itself and its total absence of reporting standards and accountability. IMO the Dash DAO is desperately in need of an MSRP (Minimal Standardised Reporting Protocol). This needs to be implemented ASP IMO. (Not a blockchain protocol b.t.w., a "human-types-on-keyboard" protocol ;) ).

It can still be voluntary, but lack of adoption of the MSRP would be a justifiable reason not to support a particular proposal. IMO, the MSRP needs a skeletal framework which has to have 3 documents as a minimum:

1: A proposal financial projection that states:

a) whether it is service or equity oriented in nature
b) whether the expenditure is open ended or fixed
c) if service-oriented it should explicitly state whether it is Dash exclusive, non-exclusive and if the former, the period of exclusivity
d) if equity oriented (e.g the development of intellectual property or purchase of capital assets such as buildings or equipment) it should state who will own that equity

2: A per-cycle cash status

..for funds held in Dash or converted to USD (/local currency fiat) which rolls forward from one period to another. This should report the carried forward balances from previous funding cycles and the amounts withdrawn to the expense account for that period (i.e. "actually spent")

3: A per-cycle expense account

This should reconcile with the cash balance by detailing expense categories in enough detail that auditors (i.e. the network voting population and wider community interests) can make an appraisal as to their reasonable veracity. The expense account should also detail any capital expenses separately so that they can be reconciled with the original proposal projections and commitments regarding equity holdings/investments in document 1.

I've knocked up "back of the envelope" a couple of very basic examples of what I see being the absolute minimum reporting requirements for sections 2 and 3 of the MSRP:

Dash MSRP-02 example: Cash Balance Template

Dash MSRP-03 example: Expense Account Template

Why Distinguish Capital Expenditure ?

I've made distinct reporting provision for capital costs in the MSRP because - reading between the lines in successive proposal commentary columns - this has been a consistent source of controversy. The reason is that capital costs are generally not of direct measurable benefit to the Dash network but they do constitute an immediate asset on the proposer's corporate balance sheet.

For example: lets say I present a proposal to the DAO for 10 Dash to create and supply an MSRP template for the DAO. That is a service-oriented proposal who's cost can be directly evaluated in terms of cost/benefit.

On the other hand, lets say I made the proposal for 900 Dash on the grounds that I need to "buy an office" first before I can provide the service. If the office cost 890 and my labour hours cost 10 then the DAO would be reasonably entitled to question the 890 since that is a capital cost that I will own, not the DAO and that asset value does not reflect in the service provision benefit.

Intellectual Property

Following on from the example above, we can extend the analogy to intellectual property. Say a DAO proposer offers to supply a network commercial service for Dash that facilitates, for example, a liquidity exchange for merchants and/or a fiat gateway. That may be of a certain value to the network.

But if the proposer then adds the condition "but we need to develop the software first" then it's reasonable to expect the capital cost of the software development to be separately appraised since that will constitute an intellectual property value that will neither be owned by the DAO nor potentially be exclusive to Dash in the long run. In that sense it's similar (in accounting terms) to the example above where the budget was revised from 10 Dash to 900 Dash to cover the capital cost of buying the office.

Finally - with regard to capital costs - there is now a 3rd alternative emerging following from the developments that have occurred in the area of statutory status of the master-node network. There is possible justification of covering capital costs on the grounds that the masternode-network takes equity in the resulting property.
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