Ever since we started work on Wildland the User-Defined Organization (or UDO for short) - our decentralized governance framework which aims to tie a platform’s governance to its usage, we knew we wanted to challenge our ideas and get as much feedback on them as possible.
July brought the publication of a two-part research project conducted by Blockscience, an engineering, R&D, and analytics firm specializing in complex systems.The team, made up of Kelsie Nabben (Senior Researcher/Project Lead), Eric Alston (Senior Researcher), Burrata (Researcher) and Michael Zargham (Chief Engineer), took a closer look at the tokenomics of the Proof-of-Usage (PoU) token, as well as the UDO as a governance framework. You can read both parts of BlockScience’s research on their Medium blog - the following is an extremely brief summary.
This post introduces the ideas of Wildland and the UDO. The authors ask:
- Who are the users?
- What is being organized?
- Is the organization an entity and/or an ongoing process (noun or a verb)?
- Does the act of “defining” organization change depending on the meaning of “organization”, and if so, in what ways?
Overall, the authors of the report are intrigued by the concept of the user-defined organization, however, they also raise some concerns about our initial design, sharing some important questions and recommendations along the way:
The current User Defined Organization design puts many constraints on user control and governance (token properties, token distribution, voting mechanisms, etc). This is a paradox because if an organization is defined by users, then you can’t define the organization until there are users, but if you define the organization a priori, then it’s not defined by users. For example, many of the ideas proposed by Wildland seem to assume that a system has a clear purpose so that you can constrain governance around that purpose. Yet, if an organization and its purpose are defined by users then you can’t pre-apply constraints. Yet, this is what the current design does (stating that PoU holders will determine the inner workings of the Wildland payment system, the parameters of PoU token generation, and UDO governance itself), without defining who the different classes of users are, what their goals might be, and how those might be aligned or misaligned.
A potential compromise might be creating a simple and minimal initial design for UDOs that involves setting initial parameters, that are then modular and upgradeable. This way, while initial conditions might be set from the top down, the organization could evolve over time (and be defined by users) from the bottom up.
The second part of the research report analyses the Proof-of-Usage model and the ideas behind it through the lenses of Constitutional Public Finance, a sub-field of economics concerned with institutional constrains on public spending. The post is based around the following idea:
Constraining and balancing government authority is the essence of more representative collective action organizations.
The analysis looks at both the PoU’s governance opportunities as well as public finance challenges, noting a few important takeaways.
The inevitability of a constitutional political economy as sketched throughout means that governance design necessitates a clear mapping of stakeholders and incentives created by the animating purpose and constraints on collective action. Only given sufficient clarity as to these essential institutional features, can potential users of a network understand that incentives are well-aligned to the point they want to become contributing users of the system in the first instance.
BlockScience’s research was made possible thanks to our grant program at Golem Foundation. We are open to working with people in the space to further exciting ideas, especially those around the tokenomics of the UDO and the idea of decentralized governance. If you think you have any ideas around these subjects you’d like to explore with the help od our grant program, please drop us a line.