by 0x858343382132b9ab46c857a7d52fdbafc039f784 (Zino)
Linked Pre-Proposal
Should we restructure the way our DAO operates?
Summary
This proposal aims to establish an Executive Arm for Decentraland DAO to manage operations and resource allocation under the oversight of a DAO Council. The DAO retains control over the governance process, Treasury, and the project’s smart contracts.
Abstract
Decentraland DAO faces numerous challenges, including inefficient resource allocation, difficulties in talent retention, short-term focus, and misalignment with the Decentraland Foundation. This proposal recommends establishing an Executive Arm to promote long-term planning, streamline operations, provide essential services to the DAO, distribute funds for community projects, and execute key initiatives under the oversight of a DAO Council. The Executive Arm will ensure all operations are aligned with the DAO’s mission, fostering strategic growth and sustainability.
This proposal came up after conversations held at the DCL DAO: Regenesis meeting in September 2024.
Motivation
The Decentraland DAO has encountered significant roadblocks in its current structure, impacting its effectiveness and long-term sustainability. Below are the key issues that need to be addressed:
- Resource Allocation Inefficiencies: Despite the introduction of new grant management systems like the Grants Support Squad and Revocations Committee, the DAO continues to struggle with resource allocation. These mechanisms have not effectively addressed the challenges of prioritizing impactful projects, leading to inefficiencies and misallocating funds. Additionally, malicious actors and a lack of clear context around the potential impact of projects often result in suboptimal funding decisions. There is a need for a more strategic, context-driven approach to fund allocation, ensuring that resources are directed toward initiatives that will have a meaningful and lasting impact.
- Misalignment with the Decentraland Foundation: The Decentraland DAO and the Decentraland Foundation remain misaligned in terms of strategic objectives, despite the establishment of improved communication channels like the Request for Information (RFI) process, Canny feedback, and Community All Hands meetings. This misalignment largely stems from the difference in organizational structures: the Foundation operates as a traditional, top-down organization, while the DAO follows a decentralized, bottom-up approach. These differing architectures make collaboration challenging, leading to inefficient decision-making and project execution. Achieving better alignment between the two entities is critical for the success of Decentraland as a whole.
- Short-Term Focus: The DAO’s current funding model tends to incentivize short-term, output-focused projects rather than fostering long-term, impactful initiatives. Many projects aim for quick wins to secure funding but often lack a sustainable vision that supports the DAO’s long-term goals. The DAO must shift its focus from short-term outputs to long-term, strategic objectives. This requires a comprehensive planning framework that prioritizes enduring value and growth for the ecosystem.
- Talent Acquisition, Retention, and Continuity: One of the most pressing issues the DAO faces is the difficulty in hiring and retaining top talent, particularly under the grant-funded Core Unit model. The reliance on short-term grants has made long-term planning and continuity difficult, resulting in critical disruptions when teams are dissolved or personnel leave. For example, the recent dissolution of the Facilitation Squad left key initiatives incomplete, highlighting the fragility of the current system. To ensure Decentraland’s long-term success, a more stable and sustainable approach to talent acquisition, retention, and role continuity is needed.
- Treasury Management Issues: The DAO has made several unsuccessful attempts to manage its treasury effectively, which has weakened its reputation with partners, vendors, and potential contributors. These failures highlight the need for a better strategy in terms of both treasury diversification and long-term financial management. The DAO must adopt a more comprehensive approach to managing its assets, ensuring that its treasury can support the project’s long-term sustainability. Without addressing these issues, the DAO risks continued financial instability, which could undermine its ability to fund important initiatives and achieve its mission.
Specification
Responsibilities of the Executive Arm:
- Annual planning and budgeting: develop a long-term strategy aligned with Decentraland’s vision of creating an open, user-owned metaverse, and the mission to ensure the sustainability of the Decentraland ecosystem through representative governance, management of collective resources, and technical innovation.
- Grant Management: oversee all community grants, ensuring that funds are strategically allocated to projects that align with long-term goals, reducing risks of misallocation to short-term or low-impact initiatives.
- Strategic Initiatives Management: will hire and manage staff to execute key strategic initiatives, such as seasonal events, improvements in creator tools, and alternative clients, and enhancing communication infrastructure to support the community.
- Operational Oversight: ensure full transparency by regularly reporting its activities to the DAO. This includes financial disclosures, maintaining legal compliance, managing staff salaries, and fostering collaboration with the Decentraland Foundation to ensure alignment across all operations.
Oversight by the DAO Council:
*Hire the Director of the Executive Arm: responsible for hiring, guiding, and, if necessary, replacing the Director of the Executive Arm. The Director’s performance will be regularly reviewed to ensure alignment with the DAO’s mission and strategic goals.
- Strategy and Budget Approval: The Director of the Executive Arm will propose an annual strategy and budget, outlining key initiatives, project plans, and financial allocations for the year. The DAO Council must approve this proposal before implementation, and the decision will be subject to veto by the DAO.
- Treasury Diversification Strategy: develop a strategy for diversifying the DAO’s treasury to generate sustainable growth. This diversification plan will be submitted to the DAO Council for approval, and the decision will be subject to veto by the DAO.
Governance Powers Retained by the DAO:
- Governance Mechanisms: The Executive Arm will not have the authority to modify the DAO’s governance mechanisms. The DAO’s current three-stage governance process—polls, drafts, and binding proposals—remains intact, ensuring decentralized decision-making.
- Ownership of the Treasury and Decentraland’s Smart Contracts: The Security Advisory Board (SAB) will continue safeguarding smart contracts and maintaining custody of the DAO’s treasury, ensuring additional security and oversight independent from the Executive Arm.
- Election and Oversight of the DAO Council: The DAO retains the power to elect and dismiss members of the DAO Council through hiring proposals. Additionally, the DAO will have the ability to veto any strategy or budget approved by the DAO Council.
- Veto proposal: The DAO will have the power to veto critical proposals proposed by the Council.
The Director of the Executive Arm will develop the organizational structure, departmental framework, budget, and resource allocation strategy, presenting these to the DAO Council for approval. This proposal establishes clear boundaries and responsibilities to ensure accountability while granting the Executive Arm the flexibility and ownership to define its operations. This allows the Executive Arm to adapt its processes over time, responding effectively to the DAO’s evolving needs. The DAO retains the power to veto critical decisions from the Council.
Conclusion
The establishment of an Executive Arm, supported by a DAO Council, is critical to overcoming the inefficiencies and challenges faced by the Decentraland DAO. This structure will enable more strategic, long-term planning, better talent retention, and improved resource allocation.
Also, the Executive Director’s responsibility is to transparently request feedback from the community when developing future strategies and to listen to the community’s needs. This, and the veto proposals, help the DAO to ensure that the Executive arm proposal is aligned with the DAO Mission and is a mechanism to avoid personal decisions over community needs.
Also, the DAO retains control over critical governance functions, ensuring that power remains decentralized.
This proposal addresses key operational challenges and positions Decentraland for sustainable growth and leadership in the open metaverse space.
