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Should DAO funds be released as grants or as investments?

Discussion in 'General Discussion' started by HedgedAndLevered, May 20, 2017.

  1. HedgedAndLevered

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    I've been reading over some of these proposals which fund privately owned companies in their business operations. I was wondering why exactly the DAO doesn't take any sort of ownership stake in these businesses?
    I mean, choose one:
    1) The company takes 100% of profits, forever
    2) The company must use 5% of profits earned after year X of operation to return Dash to the DAO.

    seems like if we're funding businesses, why not return the profits directly to Dash holders?

    I get that just by growing the network, you add value to Dash, and this is one way that there is a form of pay back. You want to have some incentive for businesses to invest in growing the Dash infrastructure and really create a global currency here.
    That being said, this payback alone is a little short-sighted.
    I'd urge everyone to have a much longer term plan in mind; eventually, the block reward is going to get smaller and smaller, and the DAO funds will shrink along with it. By taking an ownership stake in some of these companies, we could ensure that the DAO persists indefinitely, and is not solely dependent on network fees (in the far future). Any reduction in dependence on network fees would be of great help to the network later.

    Imagine if we could eventually even get to the point where there are no fees at all to send dash. All of the masternodes and miners (or stakeholders if PoS at that point) could be paid with DAO holdings instead of network fees if the right investments have been made.

    Now is a time when we can really afford to grow the network AND ensure that the endgame of dash is a global payment network that can be sent instantly, privately, and for free.
     
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  2. akhavr

    akhavr Active Member

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    Because Dash DAO is not a legal entity in any jurisdiction.
     
  3. jimbursch

    jimbursch Active Member

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    Who is going to sign and enforce the contract?
     
  4. HedgedAndLevered

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    There is a contract created as part of the funds distribution. The proposal and fund release counts as a contract.
    Who enforces the contracts now anyway?
    Really, we should have these proposals with distributions written up better than they are now, in legalese.
    If a company doesn't pay, you sue them, just like any other contract.
     
    #4 HedgedAndLevered, May 21, 2017
    Last edited: May 21, 2017
  5. jimbursch

    jimbursch Active Member

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    Who? Me?

    The MN network is a bunch of people (thousands?) located all over the world, most of whom choose to remain anonymous mainly because they wish to minimize their exposure to the "state". So, good luck getting them organized to bring suit in some jurisdiction that most of them don't reside in, over money that's not theirs.
     
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  6. HedgedAndLevered

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    Im familiar with the MN governance system. The MNs would hire legal representation, not deal with it directly.
    of course, nobody wants an expensive legal battle... but its definitely an option, and the threat of it would be necessary.
    Id disagree with you that it isnt the MNs money. If a company isnt fulfilling their contractual obligations, theyre costing anyone who holds dash.
     
  7. dashdisciple

    dashdisciple Member

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    Investment in whatever the proposal owner is putting out is an interesting idea, but Jim's right that the legal enforcement would be impractical.

    For the moment, the old mutual benefit through trade concept seems to be the idea. Being able to receive payments back into the network (perhaps though burnt coins?) could be a golden ticket if creative enforcement were worked out, though, that's for sure.

    Right now, there are delinquent proposals going off left and right without a system for accountability. That one might have to be figured out first, before anything fancier.
     
  8. HedgedAndLevered

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    I certainly didnt mean to imply that it would be easy or practical! These are really tough things to work out, and involve a lot of work. Its crucial to strike some balance between suing everyone that doesnt comply, ruining the reputation of the network and scaring away future potential good investments, and having no consequences, inviting scammers.
    Whatever the case though, its a lot better to have some legal protocol ready to go for enforcement of these contracts.
    Anyway...
    I think that avoiding taking an ownership stake in proposals just to avoid a (large) hassle is a bit weak for a DAO of this size, with these resources. Its just a matter of time before the network has to sue for breach of contract in a (non-DAO-owned) proposal anyway to deter future scammers...
    Im not saying I have all the answers here, Im just trying to call for action on having more of a directed effort to make sure we're giving out grants because we want to give out grants, and not because we're unwilling to dedicate some resources to setting up a structure whereby the network would stand to gain even more.
    This isnt pocket change any more. Its time to treat these like the investments they are.
     
  9. dashdisciple

    dashdisciple Member

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    I completely agree with you on all of that. Taking this DAO to the next level will mean more than just spending more each month. You're totally right.
     
  10. Leonidas

    Leonidas Active Member

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    @HedgedAndLevered . I agree with you. As far as I'm concerned, I see the budget proposal as an investment and not a grant.

    Although for the moment it would be legally complicated to enforce anything, it doesn't mean that it won't be in the future. Before bitcoin was invented nobody thought a decentralized currency would be possible. And here we are...

    Every month, any funded project should put a report stating about the evolution of the reach of their project. That's what @stellabelle is actualy one of the few doing, keeping up posted with the number of people reached and the number of suscribers. It would be easy to any project to add a line about the earnings and give some back to the network (that would be use to decrease transaction fees - that is so important - nobody from the real world will pay more than 0.1 cent to buy somehting that cost 1 dollar).

    How to do that remains to be seen, but agreeing on it as a community is a first step.
     
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  11. stan.distortion

    stan.distortion Active Member

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    I think that may have been the reason for Evan setting up the DAO research lab in Honk Kong, a zero-profit DAO is perfect for that kind of thing (ie. everything coming in gets paid out) and can do just about everything any corporation can do but in many cases can do it far more efficiently. It will take a while for that to get established though, folks simply getting their head around the concept of DAOs could take a decade or more and the costs could be incredibly high for many projects so funding more regular methods of doing business is about the only option for now, burning coins as a method of giving back makes a lot of sense though.

    And talk of DAOs and jurisdiction?? That's an extremely touchy subject, something like suggesting raising Bitcoins cap to 42 million would be trivial in comparison! A DAOs inherent lack of jurisdiction is probably their most powerful feature. Sure, in most cases they'd need a real world presence of some sort but that link is a danger to their security and should be very well guarded.
     
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  12. grams

    grams New Member

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    I would say it would depend on the stage of the startup. If it hasn't traded yet then it wouldn't be expected to get as much as a company with a long-standing record.
     
  13. HedgedAndLevered

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