The Community Proposal System and the Future of the DAO [Splinterlands]

There are many DAOs out there and most of them have no real function. It's a nice idea but most struggle with relevance. Even more than that, they struggle with funding.

Funding DAOs is such a big problem the many in the Splinterlands community believe the SL DAO will have similar problems. I don't think we will.

Right now there are two community proposals up that are extremely telling about the future of the DAO.

PeakMonsters Proposal

The first one is from @peakmonsters and its breezing through with a 98% approval rate. It's a feel good proposal really. We know PeakMonsters, they've been here since the beginning, and they make stuff we like.

They built a great little tool to help people to track and understand these proposals. They selflessly burned 100k DEC and are asking for a symbolic, one SPS for their work. And we jumped on it because, why not?

But, that proposal is not inconsequential. In fact, I'd say it's one of the most important proposal we've had in a while. What that proposal is doing is setting the stage for how outside contractors relate to the DAO. And ultimately this is one of the most important things we need to figure out if we want true decentralization..

@Yabapmatt has said in at least one town hall that in order for the game to be truly decentralized, the Splinterlands team needs to be just another contractor hired by the DAO to do work for the game.

Peakmonsters is setting themselves — and every one else — up to become an outside contractor the DAO can pay for services. And this is very important if you consider that the team simply isn't going to have the resources to keep up with delivering on all the proposals that the community may bring and pass.

I voted AGAINST the Peakmonsters proposal for a very specific reason I will talk about further down the page.

Genepool Proposal

The second proposal is from @genepoolchlrn8r. The proposal he put up is to stake 50% of the DAO funds so the DAO can grow. We need the DAO to grow but I personally don't believe this is the way to do it. It looks like much of the community agrees as it's pretty far from the 2/3rds majority vote it would need to pass.

I have a few reasons to vote against it but the biggest is that I don't feel like the DAO should be competing with players and investors in the DAO for rewards. There are better ways to fund the DAO through the actual economy rather than a mechanism that won't exist in a few years and removes value from players accounts.

Funding the DAO

The difference between the Splinterlands DAO and the DAO of so many other projects is that Splinterlands is an economic machine with plenty of room to grow. With over 1.8 billion blockchain transactions, Splinterlands is a beast with lots of voluntary interactions and ways to profit from the economy and community. These voluntary transactions should fund the DAO and bring value to the entire community.

I should be clear here. Voluntary doesn't mean you can choose whether of not you wan to pay in. What it means is if you choose to be a part of the peripheral economy that you can profit on, the DAO will get a cut.

The DAO is a government. Governments fund themselves through taking a cut of the economic activity they make possible. It's tried and true and we should use it.

There are five places in the economy the DAO should be dipping into to fund itself:

1. API-
   There's a lot of money sloshing around in Splinterlands and the easiest way to hook a syphon hose to it is through use of the API. Whether it's running bot farms, selling premium services to the community, or marketplaces, if you profit from use of the API, part of it should go to the DAO.
   Now, I'm not a developer so I don't know the ins and outs of this and I'm pretty sure "Splinterlands the company" owns the API so there could be some problems but I think they can be solved.

2. Transaction Fees-
   This one I've heard many people suggest. It makes a lot of sense. Secondary market transaction, including rentals, should have 1% fee that goes to the DAO. It's worth noting that this may be double taxing those who are using the API to build third party market places. That would need to be discussed if it's the case.

3. Land-
   Land is going to be a big part of the game. It's going to provide land owners with NFT based rewards that we can mine to sell in the game for profit. The team has talked about maintenance costs (basically a land tax) and I fully agree it should be a part of land. If you want your land to produce goods, you need to maintain it. My preference would be for land to be very expensive to mine. On top of anything you stake on land to improve it, there should be a daily maintenance fee that adjusts based on the productive value of all land over a given time frame. But rather than get complicated here, let's just say each plot of land pays 100 DEC (about 10 cents) per day in maintenance costs to keep their land producing. 80% of the DEC is burned while 20% is converted to SPS and sent to the DAO. Any future businesses that open in Praetoria should be taxed too. Same as using the API. If 2/3rd of the plots paid up, $8000 per day in DEC would be burned and $2000 per day would go to the DAO.

4. Sales Tax
   If the team really wants a decentralized game, at some point they need to give up the monopoly on pack sales. That means at some point anyone will be able to make cards. Further, that means the DAO will need to police the supply of cards, who can make them, and their stats so no one breaks the game or economy. So while today, main sets are the domain of "Splinterlands the company", at some point permission for splinterlands the company or anyone else to create and sell packs to players will have to become the domain of the DAO. And if any company is going to be allowed to sell packs for tens of millions of dollars into the economy, the DAO needs to approve the structure of the sale and be funded by it. I would like to see 20% fee go to the DAO for any new products or cards that are sold into the economy. No need for minisets anymore.

5. Promotions-
   Today there are tournaments that are set up by outside organizations for promotional purposes. Currently this is very small but over time it could grow. This is especially true if eSports in Splinterlands becomes a big deal. Utilizing the platform to advertise should come at a fee that will be paid to the DAO. This could be a percentage of player winnings, a small fee paid periodically to be whitelisted to create tournaments, or something else. I put this one last because I believe it should be small since the prizes add value to the game already and prize money should one day be the driver of Champion players, not payouts from the DAO.

All of these have a common theme. If you are going to make money from accessing and selling something to the community, some amount should be going to the DAO.

What Does the DAO Fund?

The DAO isn't just going to fund the reward pool. It needs to be able to pay contractors — like the Splinterlands company — to do work for it. If the game is to be decentralized, the DAO needs to keep the game growing and evolving. It may even need its own staff.

Some parts — like outside services — will grow and evolve on their own. As I discussed above, if these for profit services need the API to exist, they should be paying into the DAO. But what about features the community wants built into the game that don't make money for the developer/contractor? For that, the DAO will have to hire developers for one-off jobs.

Getting Back to the PeakMonsters Proposal

Peakmonsters built a free feature that makes all of our lives easier. They chose to make a symbolic ask of only 1 SPS but I think the idea is the precedent that the DAO could pay contractors to build features for the community that matters more than the 1 SPS.

My problem with the Peakmonsters proposal is that Peakmonsters is a for profit business built on the back of Splinterlands. Even though the feature is free to use and very helpful, the idea behind creating a suite of free tools is to make peakmonsters more valuable and (indirectly) provide more revenue for the Peakmonsters company. THe DAO shouldn't be paying any company to do this. Companies making money on Splinterlands, should be paying the DAO.

This isn't to bash Peakmonsters. I love the site and get immense value from using it. It's not a stretch to say the work done by Peakmonsters has made much of Splinterlands growth possible. I just don't think the DAO should be paying them to develop it suddenly. If they want to build features directly into Splinterlands platform that might be a different story but when they own their work and the the revenue it provides them, funds from the DAO is just double payment from the community.

The "Splinterlands the Company" Dilemma

This leaves us in a bit of a predicament though. While I'm not sure about the structure of ownership, it does seem like the platform the game is played on and the IP is most likely owned by the Splinterlands team and not the DAO. And if the Splinterlands team is to become just a contractor like Matt has said before, what they've built becomes its own third party for profit platform. In this way, Splinterlands.com becomes equivalent to peakmonsters.com in many ways.

So, at some point, the IP and the platform will likely need to be sold (or licensed) to the DAO by the team if they really have a vision of a decentralized game. At that point, all revenue the Splinterlands company makes from the game will be just like every other contractor's. They will be able to be contracted to build onto the platform that is owned by the DAO or they will petition the DAO to create products like card packs they can sell to the community. The IP they create should be probably be transferred to the DAO and they should pay into the DAO a percentage of the profits from sale like I mentioned above.

This will likely mean that at some point, the DAO will also need to take on server costs.

I've given this a lot of thought but that's not to say there aren't flaws in my thinking. I do fully believe the economy should fund the DAO and the DAO should fund further development of the game and economy. How exactly it works in practice will be trial and error I'm sure. There will be adjustments made a long the way for sure.

My purpose in writing this was just to start a conversation.

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