The Telos of the DAO

This post was prepared with discussion, feedback and edits from @polar

Telos : the goal, the purpose, the end game

Introduction

The airdrop of the ZK token earmarked the genesis of the DAO. Now we have the governance processes and it’s time for the delegates to take action. So, given that we’re at this watershed moment and it hasn’t gotten busy yet. We thought it would be good to unpack the mechanisms we have in their current state and deliberate the direction we are looking to go in. To set the bearings for the DAOs direction of travel.

As delegates, we are coming into formed mechanisms, systems and a chain that has had significant amounts of deep technical work, deliberation and investment. The initiation of the governance system is an important moment. It is the point at which the DAO and chain gains its own life and agency.

It’s important for us, as delegates, to get as clear a view as possible on the intended direction. Essentially catching us up with the deliberative action that has happened so far, so we can best shape our inputs to maximally align with the intended ethos, values and direction of the network.

The DNA of this system is the protocol, the initial state of the governance mechanisms and the ZK Credo. All of these have the potential (perhaps the most potential) to nucleate a high quality ecosystem that could shift the space culturally into the right direction. In many ways, as it stands, the DNA of this chain embodies the whole point of crypto and what many of us came here for (including why we are here now).

We also have a “North Star”, a zero incident security mindset, expanding on chain assets, increasing builders and active addresses.

The question is, how do we get there? The path to these is what will shape the action in the DAO and how delegates should optimally behave.

The Mechanisms

The paths to action in the DAO are currently three fold, in the form of ZKSync Improvement Proposals (ZIPs), Token Program Proposals (TPPs) and Governance Advisory Proposals (GAPs).

ZIPs are relatively clear, this is protocol governance and metagoverance. The mechanism by which the protocol and the core governance process evolve and upgrade. This ideally, will be seldom used since it will materially change the core structure and reality of the protocol. Proposals in this track should have a higher consideration than the others. They will have different risk profile and deeper requirements of technical understanding.

TPPs is interesting. This is really quite different to the standard DAO structure and it’s clear that we’re pushing into a more governance minimised design here. It seems that the idea is that actors bring a new token mechanism that integrates rather directly into the ZK token economics via an approved execution payload. This is cutting edge, as is the minter mechanism, and could really push the space forward.

GAPs are a little more unclear. It seems at the high level to be an onchain snapshot-like signalling mechanism. We can use it to modify documents like the Credo and do elections for things like the Guardians, but it has considerably less teeth than the other two paths, and in particular doesn’t seem to have spending powers.

All in this is perhaps the most advanced protocol DAO design we’ve seen in the space. We have three governor contracts and novel mechanisms for token minting and direct permissionless fully onchain governed paths for modifying the token economy. Very cool.

The Culture Vs Mechanism Trade Off

But there are trade offs here. The lack of obvious classic grant paths, will limit the usual congregation of people here that can bring the DAO / chain culture. That of course also means that you mitigate the grift attacks and noise that can occur around treasuries, so the trade offs can make sense. But, if we want to at least coordinate a group of high quality delegates who can make those high stakes decisions we will need to get more eyes on these forums and ideally build a culture that helps the network grow in the right direction very soon.

Governance minimised designs push humans out to the edges who operate as rational economic actors aligned by incentive structures alone. This minimises the problems that humans bring, but also eliminates human expression and ultimately culture. This may be what is desired for the DAO, pushing cultural formation out to the wider ecosystem. But ultimately, we need artists, creatives, consumer applications and social layer schelling points, or we create another soulless space driven entirely by speculation. This is an important topic at this time, as we’re seeing real evidence that raw unguided economic incentives manifest as toxic unsafe environments in the real world. There is an opportunity here to shape culture at the source. The action here could lead to positive spaces in the real world if it is curated wisely

Some questions come to mind:

  • To what degree do we want a DAO culture here? The mechanisms as is, seems to close off many of the paths that would attract people to the chain through conventional means.

  • The token programme is innovative, but consequently a new barrier, what are we doing to build the pathway to these mechanisms and how can that be achieved through the systems we have at play here?

  • What is the intended scope of GAPs? We will get onchain decision making here, so in theory outcomes of GAPs can be very broad and permissionless, but it would be interesting to more clearly outline the intended scope of what this path can and will do.

  • It is becoming the norm to build direct incentive structures for delegates. What is the incentive for delegates to come to the DAO and participate.?

  • How often do we expect guardians and security council members to intermediate decisions? Their positionality as veto holders gives them considerable power, do we expect them to be active in shaping decision making (with their veto’s) or only intermediating as a course of emergency course correction?

The ZK Credo

The Credo is aspirational and we wonder if it’s feasible that all proposals align fully to it.

For example, will only proposals that incorporate privacy be expected to be passed by the DAO?

It’s clear there will be a degree of variable alignment to the credo with each proposal. What are the boundary conditions for this? And how do we embody the culture outlined at the ecosystem level. It seems like the DAO would be the place for this kind of action, but the mechanisms don’t seem to provide a space for that to manifest.

A discussion on how the Credo can manifest through the action in the DAO is welcome here. The illustrative examples provided in the docs are helpful, but I think could be broadened and perhaps an ongoing discussion of the kind of things that the DAO desires to see and articulations of the paths a builder would take to get them to market on the chain is needed.

Risks

Delegative systems are the norm and have been used here, but they also have trade offs and risks. There are a number of delegates with comparatively high levels of delegation power in the DAO. In pure one token, one vote systems, this becomes the de facto structure of power in the Token Assembly and if the wider delegate set disagrees with them, there’s a large coordination job to overpower them. Not impossible, but if the typical DAO apathy manifests we may see a very small number of people ultimately control the decision making.

The proposal threshold seems to be set well at this point, leaving a few dozen actors that have proposal creation rights above the threshold, but we also have a small number of anons with low trusted numbers (the number of accounts delegating to delegates is an illuminating metric), which are close to the proposal threshold. The risk here is mitigated by the veto structures, but we really don’t want to use them unless we have to. It’s worth thinking about strategies for coordinating against toxic proposals amongst the assembly.

The guardians and security councils are well composed and contain high quality actors, with excellent levels of experience and trust within the space, but given their ability to intermediate all proposals they have the potential to shape the DAO more than any other actors. The association structure mentioned that delegates can enter sounds again, market leading. It would be great to learn a bit more about that and why it’s there.

As mentioned above, the more governance minimised design is excellent but creates a new barrier to adoption. Ideally, we would see a pluralistic set of token mechanisms plugged into the DAO, but we could end up with a kind of first mover, winner takes all, situation simply due to the ability for financially and technologically capable actors to build aligned and compatible proposals more easily over an open bootstrapped community of builders.

Summary

The intention of this post is to initiate a discussion that closes the gap between the desired performance of the DAO prior to its launch and the work we can do as delegates and wider voting community going forward. To avoid wasted work and frustrated discussions it will be good to align as much as possible on the intended direction and ‘telos’ of the DAO at this point in time.

Finally, there is the potential here to shape a vibrant culture that separates this ecosystem away from the more bland and banal state of many other ecosystems in the space. For example, nurturing a strong cypherpunk / hacker culture with an emphasis on social layer applications that leverage the chain’s native account abstraction would be perfectly timed at the moment. The question is: is that where we want to go? And how do we get there?

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Thanks for writing this.

This resonated with me a lot! and I had anticipated something like this, given the ‘minimal-human-involvement’ policy, so to speak.

Culture doesn’t only involve artists, creators, etc. Culture exists among builders, developers, innovators, and so on, and it’s important to build one correctly.

The way this is currently designed is how I see the end goal of governance, but it can’t start off like this. Progressive decentralization will be required initially. Later on, we vote to remove governance bodies/groups, and optimize and automate certain processes.

This is a tricky topic. I would like to propose a separate discussion (or a call) around the pros and cons of having incentives for delegates to be active. I’ve seen a lot of really good arguments for and against this.

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Thanks for the response.

Yep! As I hinted towards the end of the post I think a hacker builder culture is upstream of the more creative cultural players who probably don’t have the technical knowledge to innovate on chain. But, I do think it’s important those people are in the mix somewhere to provide the inspiration for what is built. I find myself thinking about the ETHBerlin experience this year a lot, which had an amazing mix of hacking and artistic inputs that was really one of the best expressions of the cypherpunk aesthetic I’ve seen. Code with culture is a killer mix.

Totally agree on the latter point, worthy of it’s own separate discussion just wanted to flag the emergent norm here.

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I would emphasise culture here. Personally, I would place artists, creatives, etc. as just as important as builders and developers. Without them you end up overly-indexing on the technical and to most people the technical minutiae in and of themselves are not inspiring. It has to be coupled with narrative builders who know how to present zkSync’s identity. Optimism is perhaps the best example here. It’s brand identity is very striking and appealing to wider audiences. It’s welcoming, even if you don’t like the vibe personally. I don’t think there’s enough of a visual identity for us yet and, well, Arbitrum already beat us to the blue/black schema, techy, cypherpunk look. This situation is only going to consolidate as more L2s emerge. No culture, no momentum.

One possibility here would be to explore more how to work with the Lens Network who have decided to build on zkSync. IMO that’s one of our strongest relationships and we should find ways to place Lens, Orb, etc. more to the front, to show zkSync is just as much Consumer Crypto as any other L2, something I doubt a passerby would grok right now. When I go to the Ecosystem page most of what I see are the same DeFi protocols I can find anywhere else. I’m not sure if I was on the Consumer spectrum I’d see much to entice me in. Perhaps we need to study Berachain here, which is highly effective at appealing beyond its tech core.

Regarding delegate incentives this is one we don’t need to be coy about. It is the standard at the DAOs adjacent to us (Arbitrum, Optimism) and all the major DAOs in Ethereum (Sky, Aave, Uniswap, all mentioned in the article linked above). We can now add Lido to that list. Delegate work is work, work is paid. But that’s probably something we settle with a vote and see if that’s what people want.

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this is a great conversation starter @drnick ! thank you for the write up!

I would like to highlight 2 points:

  1. I believe there should be a big emphasis on brand from the start. like @polar mentions, this is already a crowded space, with some players that have very well funded brand awareness efforts, and there is an opportunity to differentiate zkSync from the other players, with a unique positioning and brand to go along with it. I think we should start working on that asap.
  2. regarding a delegate incentive program, it’s already the default at most big DAOs, and also here, I think we have the opportunity to go for something innovative and unique to zkSync. for example, it doesn’t make much sense to me, that we have the same delegates accross all L2s. So for example, If I would be designing a delegate incentive system, it could maybe be done in a way where it would reward highly the delegates that are focused exclusively on zkSync, then others that aren’t.
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I think this touches upon the crux of the issue, which is about defining the arenas we want to focus on. The time for generalist L2s (jack of all trades, master of none) and for tech-first value propositions is behind us (ZKP are cool but what for, why should people care? and who should care?).
Unless zkSync can define focus areas (from a user perspective, which means defining users) and then focus there, any branding or fund deployment exercise will fall flat.
So basically, I’m advocating for (brand) strategy to be a top priority. And that will allow for a branding conversation beyond “I like it / I don’t like it” which would be a nightmare in such a decentralised community.

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Great points! I agree that building and shaping our culture is key. It’s happening either way, but if we’re aware of it, we can actually shape it. So, being active on Lens Network and other web3 social platforms like Farcaster is a must. Also how we present zkSync and zkNation at events, and meetups. This is also part of the culture and brand we push out.

It doesn’t make sense to exclude delegates from incentives just because they’re active in multiple DAOs, even if they’re on different L2s. I became a delegate by promising to support new builders, especially those creating consumer dapps.

I’m committed to helping DAOs create strong grants programs and using my voting power to build a supportive environment for builders. If I’m putting in the time and effort as a delegate, I should receive the same incentives as other delegates. Don’t you agree?

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Agree on all counts with all comments.

I want to emphasize one key point: ZK technology has a natural, inherent advantage compared to other L2 chains like Optimistic rollups. This advantage includes faster tx finality, enhanced security and privacy, and the different use of cryptographic proofs across various dapps and industries.

This may naturally guide any onchain development toward privacy-preserving solutions, such as privacy payments, identity-related apps, enterprise solutions, or even social networking platforms that prioritize privacy, or dapps and projects where fast tx finality is necessary. We’ll see.

Our role, in my view, especially early on, is to create fertile ground for developers, creators, and innovators, to build and grow their dapps, networks, and communities, and remain ‘neutral’ towards any industry and offer equal opportunity to everyone who brings value.

I believe ZKsync has the capacity to support everyone equally, allowing the market and other external factors to determine what flourishes on the chain. Once we have some data, we can make more informed decisions.

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Thanks, @drnick for writing this up, it’s a solid foundation for the discussion ahead. I appreciate the detail you’ve provided on the governance mechanisms and their potential.

I agree this is the right time to align on the DAO’s long-term direction. Balancing governance minimization with fostering a strong culture is crucial. Your points on ZIPs, TPPs, and GAPs are spot on, and ensuring accessibility for smaller actors, especially with TPPs, is something we need to focus on.

I also resonate with your concerns about culture. We need to avoid becoming purely economically driven and find ways to invite creativity and community into the DAO. Clarifying the role of the ZK Credo and its impact on proposals will also be important as we move forward.

This is a great starting point for the conversation, and I’m looking forward to seeing how we can collectively shape the DAO’s future.

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I didn’t say exclude. I don’t think delegates that are active in multiple DAOs should be excluded from delegate incentives. I do think delegates that are exclusively active in one DAO should be rewarded highly than others.

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it doesn’t have much choice tbf :stuck_out_tongue_winking_eye:

This is no doubt, at the very least, a weird phenomenon to see. It does seem like it creates a meta-centralisation effect across DAOs. Not only do we have a small pool of delegates, but the same pool of delegates are congregating into positions of (non-linear) power across all of the DAOs. Even ones effectively in direct competition with one another.

On a long enough timeline this will at least create a kind of homogenisation of approach, if not direct conflicts of interest. It does seem like incentive schemes shaped towards people focussing on individual DAOs might make sense, although the notion of exclusivity does seem antithetical to the DAO idea. A curious problem. It would be interesting to think about an incentive scheme as the means to shape the structure of power in the DAO towards diverse high quality delegates. I’ve seen arbitrum wrestling with this problem recently and ending up at qualitative assessment technique, which could get messy.

I’ve been saying something like this for a while, but I do think there is space for a market of a handful of generalist Ethereum aligned L2s. I also think it’s likely the time is now passed for more of them to meaningfully have a chance at making it into the pack, but I do think ZKSync might have been one of the last through the door.

From there, it’s going to be down to how the ecosystem is cultivated over time, which probably does need to start with some kind of values based selective pressure towards particular use cases until there’s enough of a baseline economy for permissionless take off. It’s probably going to settle at which L2 spends it’s treasury the best and which one develops a cultural moat around it’s core affordances. The (perhaps) good news is, no one has cracked this yet so the market is very open.

The brand question generally is an interesting one. If you think about the brand of say Bitcoin, or Ethereum you could easily say that they don’t really have one, or you could say they are two of the strongest brands in the world, depending on your perspective. What is true is that they didn’t have a top down branding exercise determine what it is. In decentralised systems culture is the brand.

Like @cap said I think ZK is a huge hook and once the world gets ZK-pilled there’s a huge brand advantage to be had as people get curious and come looking for what’s possible with ZK. So certainly it would make sense for ZK enabled applications (this would be a great hack focus) to be something to encourage to find a home here. As @polar pointed out it’s all a bit generic ecosystem at the moment and if anything the ecosystem page gives a bit too much prominence to the products at the top of the page (which might explain some of the current delegate weightings).

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regarding the brand issue, I feel it’s not a fair comparison to use Ethereum or Bitcoin brands as a reference here. It’s much fairer to use Berachain, Optimism, and Base, for example. and nobody can deny that these ecosystems have very deliberate and competent branding executions. I would even venture to say, that they have totally top down defined branding, and I think they are winning, in part, precisely because of that. I think it would be a great exercise to try to define a brand, that is community generated for something like zkSync.

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There are a lot of discussions about decentralized vs centralized sequencers these days and I think the decision for zksync is crucial. There could be a uniquely position zksync ecosystem if it max decentralizes and pushes privacy. At the same time I am not sure that this combination is a huge market vs potentially faster centralized L2s. Still zksync obviously needs a distinct positioning that will likely be driven by both tech and values.

+1 with regards to the treasury spending. We can only spend every ZK once and only if it’s really spent in the best possible way this will have an impact. I think this means (parts of) delegates should study other L2s and how they spent their treasuries, results, feedback.

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Yeah, I think the Ethereum / Bitcoin examples are kind of outliers and I used them to set a kind of boundary case example for totally emergent brand that’s dictated by culture. I suspect it might be impossible to ever replicate again, certainly in the current market context, but still I think it shows that decentralised brands can be (are) different.

Whether the likes of berachain’s pre-market hype remains once the token is live remains to be seen and Base’s brand feels really quite corporate and bland to me. Optimism is an interesting one because it has developed a strong DAO culture, but has spent an awful lot to get it.

There could certainly be a middle ground that is more curated from the community, which I think would be a stand out thing to do.

One thing worth flagging is the notion of Psychological Ownership if people feel like they have genuinely contributed to something (ilke an organisation, or a network) they value it a lot more. The wider and more meaningful the participation the better generally. But again, I think this gets us into the question of how much of that happens here, and how much of that happens further away from the DAO and deeper into the ecosystem.

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Even Arbitrum with it’s massive treasury is unable to spend enough to be fully generalist. They did a 200mn bet on gaming but good luck getting another sizable program through. ZkSync has a significantly smaller treasury and I think we would be quite misguided to not pick 2-5 pressure points at least for 1-2 years (and then add more maybe).

What @cap is putting forward here is a good place to start exploring

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When I say generalist L2, I mean a chain that doesn’t have an overtly bounded use case or domain of focus e.g. the IP chain, NFT chain, gambling chain or whatever. ZKSync hasn’t bounded itself around a particular use case, neither has aribtrum or optimism. My point is that future chains probably will have to, but ZKSync has the potential to compete in the generalist set.

This doesn’t mean that it shouldn’t prioritise supporting particular areas of focus. I also suggested ZK enabled tools and privacy focussed tools, given it’s clear alignment with the technology and brand so far, but they aren’t as sexy as gaming (but perhaps more valuable culturally).

The reality is, the best chains will have a broad distribution of diverse consumer level applications that can play into and ideally seed some of the narrative trends that occur in the space. For example NFTs are going to bang again at some point, it would make strategic sense to have the tools and projects down necessary to monopolise on that when it happens.

We also need very clear paths to novel token flow. Discovering new tokens is the prime user driver of economic activity on any chain, the first one that gets beyond the pure vapour token frenzy that is memecoins into a consistent flow of sustainable token economies could generate a massive market advantage.

What is also interesting here is that the ZK architecture lends itself to that kind of domain specific focus on its ZK Chains in the wider elastic chain ecosystem, which can bootstrap their own DAO treasuries and run focussed funding there, with perhaps a more classic grant model.

For example, web3 gaming chain sets up as ZK Chain, bootstraps a treasury and then funds gaming projects on their chain. This effectively achieves what arbitrum did with their gaming fund but without being a drain on the core ZK treasury.

In which case the activity here becomes more about tools and support that all those future ZK chains might need, making this more of a metaDAO structure.

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Ok, so we have two opposite views:

  1. we need a strategy and prioritisation to avoid falling flat. (see business clusters, arenas in platform strategies, etc.
  2. we don’t know yet where the key usecases will come from and we need agility to respond.

Bringing these together, we have a nice design space to play with staged innovation pipelines: having some responsive mechanism to deploy increasingly big amounts of capital (not just financial capital but also network access, human capital, brand backing, etc. ) as new ideas mature and are derisked.

In system design, a common principle is to design a handful of systems optimised for the key use case(s), and then have a ‘high variety’ (generalist) backup system that can catch that which the main systems don’t. We can apply that principle here to both focus and keep open to emergent opportunities.

I would caution against only doing a generalist pipeline as those lack depth (instead of exploring everything we tend to explore nothing), but a combination can work wonders:

  1. small-ish generalist pipeline
  2. 3-5 specialised pipelines
  3. reserve capital to respond to new needs

With regular assessment cycles across the pipelines, and the ability to allocate extra funding to emerging needs, the whole system can be operated quite dynamically.

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Hey folks! I wanted to drop a reminder in this thread that the first standing Delegate call is happening tomorrow and it might be a good opportunity to discuss some of these points in person.

You can see the thread of suggested conversion topics for the call here. Feel free to add themes from this thread there as well.

You can subscribe to the Delegate call calendar here to gain access to the invite and call details.

Your post is great but I think this point and your subsequent post hit the nail on the head as to the answers to your questions–culture comes from apps, not from ‘governing’. When, as and if apps take off within the ZKsync ecosystem, that will filter ‘up’ to governance as naturally those cultures will want to have and be able to achieve a strong voice

I think ZKsync eco is well set up for this, due to the very governance-minimized structures you have some concerns about. It creates the conditions for credible neutrality, which creates space for true organic cultures to emerge and eventually fight for governance power. Contrast with Base and their recent kemonokaki controversy–this shows how bad things get when ‘governance culture’ as such runs out of control. Culture (including the governance culture) should organically grow from real communities based on non-governance people doing what they love rather than growing based on governance people’s ‘love of governing’ as with many DAO cultures

I’d also like to challenge the very concept/idea that delegates should ‘align on a DAO strategy’ or something similar here. Who should align and how can they align? And how would this ‘alignment’ be subsequently enforced, assuming it is agreed upon?

The delegates are not a joint venture collectively running the system as a business, nor should they try to become anything like this. Positively that may be considered ‘alignment’ but a negative interpretation of it is ‘collusion’.

IMO we should stick to the real facts and mechanisms. Those are the onchain voting/delegation mechanisms with each delegate (including any self-delegates) having an independent voice, power and evaluation responsibility. ‘Alignment’ in this context could only mean that certain delegates pre-commit to vote together or vote a certain way on certain issues, but the first sort of commitment is collusion which should be discouraged as it defeats decentralization, and the second sort of commitment is practically unenforceable on a group basis and therefore not super useful.

this post is being made in my capacity as a delegate and not any other capacity (eg Guardian)

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