Operating a DAO is no easy feat, yet AAG Ventures have come up with a new form of DAO governance, Proof-of-Participation, and it’s carving a path for a more fair Metaverse.
As the NFT and DeFi communities increase in numbers, the question of how to govern decentralized protocols becomes increasingly important. One of the most obvious issues facing these communities now, and in the coming years, is figuring out governance – the process of managing collective decentralized decision-making to maximize revenues and operations.
Governance has sizable coordination costs, which can be considerably reduced in new types of decentralized organizations where smart contracts enable users to govern collaboratively. These organizations are known as DAOs (decentralized autonomous organizations) - groups of individuals that come together with similar interests and aligned incentives, and there is no one leader or single point of failure.
AAG has specifically structured their Decentralized Autonomous Organization (DAO) to reflect their beliefs, as it is realized in the Proof-of-Participation protocol.
At AAG Ventures, their Proof-of-Participation (PoP) agreement goes a step further when distributing incentives equally.
While staking $AAG tokens gives voting power, participation also counts. The distribution of voting power is determined not just by the amount of tokens held, but by how much you use AAG products.
AAG is a firm believer that until you get your hands dirty, you won't be able to make the right decisions to advance the technology and ecosystem forward.
Whales (the term given to community members with the highest spending power) are typically the smallest segment however they can dominate a DAO ecosystem and highly influence outcomes. This is not good because the larger population within the community gets less of a “say”, especially if the whales drive the product in the wrong direction.
So, for those reasons, AAG has introduced Proof-of-Participation (PoP) NFTs, which are rewarded to community members based on the length and level of their participation, and correlated with their voting power in a DAO.
Project Trident defines this in each of the 3 DAOs:
1. AAG Play-To-Earn Platform DAO
Being both a platform and a guild, one question that often came up is about conflict of interests. For example, in an event that there are multiple features requested by AAG Guild and other guilds, which one has a higher priority?
The DAO process will be based on 3 factors:
- Length of participation (i.e. How long have you been using the AAG Platform)
- Level of participation (e.g. For guilds: number of scholars and features used)
- Amount of $AAG staked
In terms of participants in the platform DAO, this will include all stakeholders. The more relevant they are to the topic on the ballot, the more voting power they receive.
Some of the examples of what can be part of the DAO-based decisions include priority on which product features will be developed, games to integrate with, and platform fees.
So how does the AAG token come into the picture?
The AAG Platform runs on AAG tokens. They can be used for payments on cloud services or fuel for smart contracts. This is one way to measure the length and level of participation.
2. AAG Guild DAO
AAG wants its scholars and country ambassadors to have a say in how AAG Guild operates. Some examples of the decision points include country expansion, changes to commission structure, new games to enable, and tournaments (e.g. game selection, tournament format, etc.).
In this case, the DAO process will be based on whether you are a part of the AAG guild and the amount of $AAG staked.
You may have noticed that this is very different from how other DAOs operate. Although non-guild members will have the opportunity to shape the future of the DAO, the stakeholders who are affected most by decisions should have the strongest voice: the scholars.
3. AAG Foundation DAO
The AAG Foundation is essentially a nonprofit guild, so this DAO will inherit some of the characteristics of the AAG Guild DAO. However, there are unique aspects to support the nonprofit initiatives which can be divided into 2 categories:
- Advisor-led initiatives. AAG have onboarded many advisors who will run a nonprofit project as part of the AAG Foundation or continue to run one they are already working on. As a member of the Foundation DAO, each member can vote to continue to support the effort.
- Community-led initiatives. These types of initiatives will be nominated by DAO members who have reached a certain participation level. Other members can participate in the voting process.
In this case, the DAO process will be based on prior participation in the DAO process, prior participation in real-world situations such as on the Random Acts of Kindness campaign, and the amount of $AAG staked.
The PoP method breaks the relationship between decision authority and resources, resulting in improved decentralization and fairer incentive distributions. AAG offers democracy of the Metaverse through economic freedom, and their souped-up DAO process is giving techniques to equalize any inequitable behavior. Others should follow suit.