• Part 1: Sophisticated Voting Systems in DAOs

• Part 2: Fighter Tier System: Theme, Design, and Considerations

• Part 3: Implementation: CAKE 🍰 and Fighter Tiers

Part 3: Implementation: CAKE 🍰 and Fighter Tiers

Tooling Used by Fight Club 🥊

Story Points - Dework

• Agile story points from team conversations to assign relative value to tasks within team workstreams

  • Autonomy at the edges 💪

• Track story points in a PM tool

• Leveraging “task points” in the Dework PM tool

Calculation of CAKE 🍰 - Spreadsheet MVP I

• Give out a “CAKE 🍰 budget” to each working group

  • An equal budget is given to each working group

• Normalize CAKE 🍰 within each working group

  • Each person gets a % of the total from each working group they contribute to

  • Multiply each contributor’s completed task story points by the “CAKE 🍰 budget” for that workstream

• Sum up each contributor’s CAKE 🍰 earned

• anon Q2 2022 CAKE 🍰 data analysis

  • A bespoke spreadsheet made by iSpeakNerd

Soulbound Tokens for Contributor Levels - Mint Kudos

• If a contributor has reached the next contribution tier, grant them a soulbound token commemorating their lifetime contribution

• Mint Kudos allows the creation of soulbound ERC-1155 tokens on Polygon

  • Use ownership of each token tier as a multiplier on their vote weight from their membership NFT

• Token animations sourced from a POAPathon community art contest

  • Winning artist rodimvs created the set of animations tokenized for Fight Club

    • Fighter 1: Lightweight - 25 🍰

    • Fighter 2: Middleweight - 50 🍰

    • Fighter 3: Heavyweight - 125 🍰

    • Fighter 4: Sumo - 250 🍰

Governance Voting - Snapshot

• Bespoke ERC-721 multi-registry strategy on Snapshot, built by MantisClone.eth

Future Ideas 💡

Automation - Orange Protocol

• May be able to automate spreadsheet calculations + soulbound token distribution through Orange 🍊 Protocol

  • Do algorithm math in the orange model and let them handle the distribution

  • Requires Dework board + task points to be exposed by Dework API (add to 721 metadata)

Visibility - Sobol

• Make all the data and calculations visible to the community

• Using sobol.io

• All the game theory for optimizing labor allocation depends on teams knowing what the distribution of contributors is…

  • Thanks for that feedback, Reese!

• Connecting Sobol visualization with a comms tool allows for real-time team assignment visualization based on Dework API

  • Some additional API data exposure from Dework is required (task board, task points…)

    • Or put that info in Dework’s task completion NFT metadata

  • Thank you to Bpetes for talking through this with me

Metropolis pods

• Metropolis pods give NFTs for Gnosis safe ownership

• On-chain data visibility for pod membership

  • Connect using collab.land for discord roles

    • 💥 Dework access is still controlled through Discord roles

Notes

iSpeakNerd is an educator, wordsmith, and DAO techie at Bankless DAO. He is the Content Director of Bankless Academy, and helps with Operations and tooling for multiple DAOs. His background is in physical science and education.

• Part 1: Sophisticated Voting Systems in DAOs

• Part 2: Fighter Tier System: Theme, Design, and Considerations

• Part 3: Implementation: CAKE 🍰 and Fighter Tiers

Part 2: Fighter Tier System: Design, Considerations, and Effects

Cover image by TonyTegz

Theme

Bankless DAO uses an L1/L3/L4 Discord role system to reflect the financial holdings of the BANK token and L2 as a social Proof of Personhood (PoP) system. It’s all very functional and bland. DAOs, especially, benefit from a THEME, so let’s spice it up. Themes help people remember mechanics and goals in these games of DAOing it.

Fight Club Theme

Fight Club fighters get heavier by eating CAKE 🍰 and eventually weigh enough for the next weight class. Flawless video game logic.

More contributions = more weight = higher social standing.

• There are five tiers of contributor experience:

  • Fighter 0: Flyweight - 0 🍰

  • Fighter 1: Lightweight - 25 🍰

  • Fighter 2: Middleweight - 50 🍰

  • Fighter 3: Heavyweight - 125 🍰

  • Fighter 4: Sumo - 250 🍰

Tiered NFT Governance

In the Fight Club project, every NFT has inherent governance power, and holders vote for proposals similarly to other projects. The new addition is that accumulating these soulbound tokens from a history of contribution will earn contributors multipliers on their governance power.

Fight Club uses a bespoke ERC-721 multi-registry strategy on Snapshot, built by BanklessDAO contributor MantisClone.eth.

The Numbers

The exact numbers used for multipliers are still being debated inside Fight Club and will finalize according to community consensus on team recommendations and discussion.

The numbers recommended by the Fight Club 🥊 governance team are here.

Design Considerations

NFT Governance Values - The Senate

• Defines nftGovValue for each NFT

• Define voting blocks to prevent a takeover from new joiners who may lack context in their voting decisions

  1. 40% black glove, 30% red glove, 30% gold glove

• Also defines the difference between black glove and gold glove contribution multipliers will overcome

Multipliers

• Defines cakeMultiplier values for each contributor tier

• A highly active black glove should be able to overcome the voting power of an inactive gold glove holder

  • i.e. sumo black glove = lightweight gold glove

The Result

Resulting numbers:

The Game of Work

So far, we've looked at the utility of CAKE 🍰, but how does one get it?

How Do We Get CAKE?

Project managers (PMs) will love to hear that we are leveraging their frameworks. We use Agile “story points” to assign relative worth to tasks within a workgroup. The group can account for the effort, time, and skill involved in accomplishing those tasks. They are best suited to make those decisions internally due to their proximity to the work.

Ideally, a skilled PM facilitates a discussion so the team can collaboratively determine the ‘worth’ of various tasks relative to each other. Without that conversation CAKE 🍰 points can be assigned instead.

These ‘story points’ are tracked in PM software. Fight Club 🥊 uses the ‘task points’ function in Dework.

Issues with Story Points

Story points are inconsistent. They are deliberately ill-defined to allow for each team to define what they value from that.

These story points are unreliable across organizations; what determines the specific amount of story points between teams?

What happens when marketing gives 10,000 task points and dev only gives 20? Won’t the teams be uneven and governance power will accrue to the biggest inflators?

Yes, there is an issue here. But we can account for it across teams using math.

If we divide each task’s assigned points by the total task points given out by that workgroup (normalization) we get a percentage of the whole for that workgroup. Multiply that percent by a “CAKE 🍰 budget” of governance points given out by that workgroup for the epoch to get a consistent total of governance points given out by the organization, but with local autonomy for how to allocate those points to tasks within their workgroup. Push autonomy to the edges!

Local autonomy for governance allocation with known governance emission schedule for org planning purposes 💪

Story Point Normalization

Normalization creates a standard budget that can be accounted for at the organizational level (we know the governance emissions schedule) but allows for team autonomy for labor incentives with governance.

CAKE 🍰 Budget

We assign a “budget” of CAKE 🍰 that will be distributed according to each workstream team’s local determination of the relative worth + effort involved in each task.

But how much should we allocate? Here, we should default to what thousands of PMs already know: effective teams are small — about five people, to reduce the number of human combinations.

Ideal Team Budgets

We can define an ideal team size of five and build our governance incentives around that team size. To make sure Fight Club 🥊 is accessible -- providing social mobility for new joiners -- a new contributor should be able to earn the lowest tier of social recognition throughout a season. This is the Lightweight Fighter tier at 25 CAKE 🍰.

So a team’s budget should be 5 members * 25 CAKE 🍰 (Lightweight) = 125 CAKE 🍰 each season.

Incentives for Labor

The limited CAKE 🍰 allocation means teams have the incentive to remain the most effective size. If too many join a team, each individual will likely earn less than average, and social agreement to form a new team is encouraged. The percent system also offers an incentive to join understaffed teams to receive a larger than usual CAKE 🍰 allocation.

These labor incentives depend on people understanding the incentives and having the information available to make informed, rational decisions about where to allocate their labor.

i.e. Playing games optimally requires understanding the rules.

Gaming the System

There is a vector for this system to become unbalanced within a team — the Project Manager. PMs have a clear incentive to game the system and inflate their tasks for more CAKE 🍰.

We realign their incentives by making their CAKE allocation role-based, rather than task-based, with a performance incentive at the end of the season. They get role-based $CAKE with a bonus incentive, based on NPS assessment from their team at the end of the season. For example, a PM might earn 12 CAKE for their role, plus another 13 CAKE for scoring 60+ on NPS from their team at the end of the season.

Gamified Work

Variable rewards are more effective motivations for people. Governance rewards for a given epoch are variable because your earned CAKE 🍰 will depend on how much work everyone else in your workstream completed that epoch.

So, no one knows the exact amount until the data is analyzed and published. Humans love the sense of anticipation, so contributors know they’re earning some CAKE 🍰, just not exactly how much.

Summary

Let’s Review:

• Agile story points from team conversations to assign relative value to tasks within team workstreams

  • Autonomy at the edges 💪

• Track story points in a PM tool

• Give out a “CAKE 🍰 budget” to each working group

  • An equal budget is given to each working group

• Normalize CAKE 🍰 within each working group

  • Each person gets a % of the total from each working group they contribute to

  • Multiply each contributor’s completed task story points by the “CAKE 🍰 budget” for that workstream

• Sum up each contributor’s CAKE 🍰 earned

• If a contributor has reached the next contribution tier, grant them a soulbound token commemorating their lifetime contribution

• Make all the data and calculations visible to the community

Part 3

Part 3: Implementation: CAKE 🍰 and Fighter Tiers

Notes

iSpeakNerd is an educator, wordsmith, and DAO techie at Bankless DAO. He is the Content Director of Bankless Academy, and helps with Operations and tooling for multiple DAOs. His background is in physical science and education.

• Part 1: Sophisticated Voting Systems in DAOs

• Part 2: Fighter Tier System: Theme, Design, and Considerations

• Part 3: Implementation: CAKE 🍰 and Fighter Tiers

Part 1: Sophisticated Voting Systems in DAOs

Moving Beyond Naive Token Voting

Anyone who has worked within a DAO in the last year can attest that the DAO governance problem is still unsolved.

Governance through token voting has been criticized as plutocratic; it favors the rich and the few over the poor and the many. These 1-token, 1-vote systems mean whales can decide against the best interests of the organization, and even steal the treasury in some cases. Another option, 1-wallet, 1-vote, is unenforceable because a hostile entity can simply distribute tokens to more wallets and distribute their influence.

For a meritocratic system, we need 1-human, 1-vote. Humans are inherently non-fungible; each person brings their skills, values, and context to organizations. Their unique contributions over time ought to be recognized; that recognition is what provides the meritocracy we need to build DAO ecosystems based on our labor rather than our capital.

DAO Leadership

Decentralized Autonomous Organizations (DAOs) may have large communities but a relatively small number of core contributors. These core teams are the leaders we need to recognize to allow high value-creating individuals to arise.

Passive capital contributors are important for starting any project, but these investors can have an outsized influence on the governance of the organization in token-weighted systems.

We can see the difference between governance token holders and active members (not even core contributors) for the top 10 DAOs by Assets Under Management (AUM).

Uniswap has 300k+ governance token holders, 93k discord members, and only ~9k active members. These unaffiliated token holders could influence governance toward ideas that do not sustain a project long-term. Source: DeepDAO

Maintaining an Agile Organization

People who put in sweat equity to a project should earn recognition beyond simple token holder status, they are the ones doing the work. We want to distribute authority, not just responsibility, to empower contributors to make quick decisions. Contributors should have an equitable portion of governance power to reflect their experience from doing the work.

Project stakeholders are both those financially committed - investors - and those doing the work within an org - contributors. Reputation-staking for project contributors is important to separate them from aligned investors – for both NFT & ERC20 projects. In the wild world of DAOs, we need signals of social and experiential capital in project teams. These signals are representations of a person’s skin in the game; they are staking their social reputation, not just their financial assets. They should be recognized for it.

Context

Early project investors earn rewards through monetary appreciation of their assets, but what can we do to recognize sweat equity contributions over time?

Traditional companies may give stock options to early employees, and fungible token projects (ERC20) can reward contributors with more of their token, but what about NFT groups? It doesn’t make sense to award additional NFTs of the same kind, NFT ownership is inherently a binary – 1/0, on/off, owned or not; there is no in-between.

Some projects may sell derivative NFTs of the original project, but ‘Genesis’ NFTs cannot be extended along a continuum the same way as fungible projects.

We propose graduated tiers of contributors to expand the definition of contributorship beyond the single differentiator of owned/not owned NFTs.

Governance Solution

Contributors can earn not only fungible tokens to sell (such as from the proceeds from investment rounds), but also additional governance tokens as well. Typically, NFT projects do not differentiate between NFTs for governance; every member is equal (1-token=1-vote). But contributors are the heart of a community — as those doing the work of the project — they should earn additional governance rights to reflect their experience in leading the organization.

Experiments with Earned Governance

Tiers of Contributors

Contributor tiers reflect all-time amounts of earned CAKE 🍰 — Proof of Contribution over time.

CAKE 🍰 is a proto-token, non-transferable and non-financialized, strictly for tracking contributions. We want to publicly recognize contributors with experiential capital and help members to remember the experiential hierarchy.

We want to give an open and transparent token that can be then tracked similarly to ERC-721s for voting with Snapshot. However, people should not be able to trade it. Enter Soulbound Tokens.

Summary

DAOs need more sophisticated voting systems. Token weighted governance is plutocratic, and equal voting does not account for the experience and leadership of long-time contributors. Fight Club 🥊 uses contribution-weighted governance by leveraging a non-transferrable (and non-financialized) proto-token CAKE 🍰 that accumulates and allows contributors to mint non-transferrable NFTs to signify their higher status.

Those soulbound NFTs then can be leveraged in voting strategies to give long-time contributors more voting power and allow their long-term alignment to counter possible influence of short-term early investors.

Part 2

Part 2: Fighter Tier System: Theme, Design, and Considerations

Notes

iSpeakNerd is an educator, wordsmith, and DAO techie at Bankless DAO. He is the Content Director of Bankless Academy, and helps with Operations and tooling for multiple DAOs. His background is in physical science and education.

The Bankless Fight Club is a sub-DAO of BanklessDAO that includes a platform of venture DAOs, educational programs for venture analysts of diverse backgrounds, and apprenticeships that help bring financial tools to the unbanked.

Fight Club has begun by starting the “Genesis Fund'', which is a pool of capital set aside to support web3 projects across the crypto ecosystem. Fight Club allows each member to bring investment proposals to the DAO, where investing members will subsequently vote on them. Each member has the right to ragequit at any time.

“Our mission is to shake up the current crypto investing ecosystem. By creating venture DAOs and educational programs, we will bypass the traditional financial analyst framework and enable people from all backgrounds to participate in crypto investing. We invest in social programs that aim to bank the unbanked and flatten social economic inequality.” - Tesa Ho (Fight Club OG, Fight Club Champion)

This is separate from the Fight Club (FC) treasury, which operates as an endowment that co-invests with venture DAOs. The FC treasury supports educational programs that level-up the venture investing skills of web3 communities. Fight Club started this series by teaching BanklessDAO (bDAO) members about web3 venture investing in collaboration with FTW.DAO.

Access to early-stage investments is limited to venture capitalists due to the exclusive nature of VC networks. Our mission at Fight Club is to democratize access to deal flow and give people economic freedom.

"I joined fight club because I could sense the potential of the bdao community and what that could mean in terms of the paradigm shift of venture capital, happening in web3. Fight Club, to me, stands for harnessing the rebel mentality of the community to effect positive change." - fibo (Fight Club OG, Project Manager)

The Origin Story

Fight club began as a project within the bDAO community where members could share ideas and insights about the web3 venture capital ecosystem. Founding members are early crypto investors, tradfi VCs, portfolio managers, and angel investors who wanted to create an inclusive investment DAO. But due to US regulations regarding investment funds, members were not allowed to openly market the fund to the public. Thus the name Fight Club was chosen.

“The first rule of Fight Club is: you do not talk about Fight Club. The second rule of Fight Club is: you DO NOT talk about Fight Club!” -Chuck Palahniuk

Members were only allowed to answer questions about Fight Club when asked, discuss Fight Club amongst other Fight Club members, and invite interested bDAO members to join the weekly call.

But since launch, Fight Club has evolved from its original conception as a single venture DAO to become an umbrella structure with an arm for venture DAOs (aka funds) and other Fight Club projects. The original “Genesis Fund”, alluded to earlier, will include an entity for accredited investors and a non-US entity for non-US Fight Club members.

How does FC work?

Governance

Fight Club is governed via the membership NFTs (The Gloves). Currently, there are three tiers of NFTs that will affect how much weight your vote carries. The membership tiers as of 4/5/2022 are:

Each NFT has a weighted governance vote over the operations and Treasury of Fight Club.  Currently, the governance vote is split 50/50 between FCGG and FCRG holders, but there’s a proposal to determine the governance weight of FCBG holders. Additionally, in pursuit of a more equitable governance mechanism, FC is developing a structure that uses each member’s contribution history to help determine the weight of their governance vote.

Value Flow

FC will operate using an endowment model. The Treasury will initially be funded via an NFT sale which will then be co-invested in the venture DAOs in the Fight Club ecosystem.  Revenue from the venture DAO service provider fees and returns from the Treasury investments will cover FC expenses and educational program costs.

"Web3 is ushering the investing ecosystem into a new era of diversity and equality. Novel technologies give underserved populations access to sophisticated economic tools, bridging the gap between the haves and the have-nots. However, this opportunity comes with additional risk, especially for inexperienced investors, which underscores the importance of pairing our powerful investment platform with in-depth learning sessions and educational tools." -NFThinker (NFT Advisor)

Perks

Owning a Fight Club NFT gives you:

• Access to the FC discord server

• Access to educational programs provided by Fight Club

• Governance votes over FC operations and Treasury

• Access to IRL events

• Eligibility to participate in FC ventureDAOs (subject to ventureDAO accreditation criteria

What has Fight Club accomplished so far?

Fight Club has already completed its OG and bDAO NFT sales, growing the community to 32 FCGG holders and 120 FCRG holders, and the education arm of FC has already launched and graduated its first cohort of venture analysts.

The education program consists of a series of webinars on venture capital processes, due diligence, and investment within the web3 space, broadly. Completion of this series of webinars makes you eligible to participate in FC’s investment research process and become a junior analyst; where analysts can be promoted to managers based on performance on deals and the judgment of their managers.

What is Fight Club’s roadmap?

Fight Club will open its public NFT sale in the beginning of September. This is the “Black Glove” NFT that will give holders governance power over the DAO. Tokenomics and governance processes are still being determined, and look out for analyst and manager onboarding in the future.

How to get involved?

Fight Club Public Mint NFT will be launched September 1st of this year. There will be 1000 NFTs minted on the polygon network for $650 equivalent in MATIC each. More information about the NFT mint can be found here and we have NFT minting support channels (how-to-mint & minting-support-✋) in case you run into any problems.

If you have any questions visit our website and join the FC Discord. If you don’t have an NFT, you can still poke around with a guest pass, and membership can be earned through contribution. In any case, our #public-square channel is open to all—even those without a guest pass—so drop in and say hello! Finally, follow us on Twitter @fight_club_vc to stay updated!

Notes/Resources

[1] Fight Club Notion 

[2] Fight Club Road Map #2

Article by Jake and Stake

Jake and Stake is a writer and editor at BanklessDAO. He is the Writers Guild’s Governance Coordinator, creator of the DeFi Download Newsletter, and leads the State of the DAOs Newsletter. His background is in software engineering and cybersecurity.