Inspired by @meow tweet: “The core J.U.P growth strategy is to have an ecosystem of founders.”
Intro
Jupiter DAO is an interesting case study in DAO governance because it is one of a few examples of a new generation of a large-scale DAO’s that rivals the Ethereum Blue Chip Defi DAO’s in market cap and industry significance while benefiting from the opportunity to learn best practices and pitfalls from earlier pioneers. We have a unique focus on growing the ecosystem by onboarding retail crypto users to our products and also to DAO governance compared to other large DAO’s whose success hinges less on a direct relationship with retail users. This creates opportunities for DAO governance innovations where we are the pioneers!
From a DAO efficacy perspective, the evolution of Jupiter Working Groups is where the rubber will meet the road. In other DAO’s, the ideal of openness to any bright and industrious contributor from anywhere in the world is often neglected for the expedience of anointing well-networked and pedigreed OG’s to positions of influence. Jupiter seems committed to creating a well-defined path with an accessible ‘top of funnel’ through the Micro Grants > Trial Working Group > Working Group process. And even outside that process, there are commendable efforts of low cost ‘top of funnel’ community engagement as seen with bounties administered by Superteam where contributors can prove their merits. If Jupiter’s progressive decentralization journey is successful, we should see a growing number of productive Working Groups that not only take over some existing Team responsibilities but that also invent new creative initiatives to grow the ecosystem.
Challenges to Overcome
The existing Working Group funding model will be useful and necessary for some Working Groups (CWG is an obvious example) but we should avoid a future where we limit our design space to all working groups becoming ongoing cost centers for the DAO.
It is probably safe to assume that in the long-term, DAO’s will face some of the same challenges that most large political, NGO, and corporate organizations face where it is easier to fund new and existing initiatives than it is to taper or eliminate funding for initiatives that are not contributing to the DAO. Inertia is a force to be reckoned with! Measuring ROI can be difficult for any organization and accountability/management is particularly challenging in a decentralized context.
In contrast, we should also remain as open as possible to supporting the weird ideas that will bubble up from a decentralized community. Innovative ideas, by definition, are never consensus and we should expect a high failure rate of new Working Group initiatives. If our filter becomes too fine because we are worried about ongoing costs, we will inevitably prevent a game changing initiative from ever seeing the light of day.
There is another fundamental problem in how Working Groups (and most ecosystem development initiatives in crypto for that matter) are funded which comes down to liquidity. Token based compensation is useful in aligning incentives but The DAO should be interested in avoiding short-term sell pressure on the token for the sake of existing holders but also because this effectively devalues our budget for subsequent initiatives. Offering locked tokens better aligns incentives, but does not solve the fundamental problem that a new working group will have immediate cash needs. If we only offer locked tokens, we will exclude everyone but the already crypto rich who are fine with illiquid compensation.
Proposal
So my proposal is to explore the creation of a Working Group funding model targeting WG ideas that support our ecosystem goals in the short term and also have a pathway to become self-sustaining over time (not requiring ongoing funding from JUP DAO).
Imagine something like our existing process with LFG Launchpad where new working group concept plans can be submitted for community review and to attract other interested contributors. The idea and benefit to JUP DAO is explained, as well as the pathway to self sufficiency. There is no rule that efforts to promote Jupiter cannot also earn revenue plus if a WG’s service is useful to JUP DAO, it is likely useful to other DAO’s or even non-crypto companies as well.
The community or a committee would then vote on the best application to win seed funding in the form of long-term locked tokens from the DAO. However, all of these locked tokens wouldn’t be allocated to the WG team members because that does not solve the liquidity problem we discussed above. Instead, the locked tokens are awarded to investors who provide USDC in exchange for tokens from the new Working Group initiative. For example, a WG proposal could receive 100K locked JUP from the DAO which attracts $250K USDC from investors in exchange for 25% New Work Group Token. So JUP DAO has effectively de-risked an investment in the Working Group because JUP DAO will benefit if this initiative comes to life while the new WG team receives more cash funding than they would otherwise to bridge them to their planned revenue generation and self-sufficiency. Importantly, the WG team’s interests are fully aligned with making their project successful rather than hoping JUP token does well. JUP tokens ultimately end up in the hands of long-term investors who were willing to risk their USDC on the new WG.
Example
Imagine I have an idea for a Working Group focused on onboarding new users by providing educational workshops at universities around the world.
I’ve designed a curriculum that I can outline in my application/pitch deck and share my background/experience in campus based marketing/promotions. I outline my go-to-market strategy with a list of universities I will be targeting first and some helpful relationships I have at the blockchain club at those schools. I also list other protocols/DAO’s/companies who could benefit from a service offering boots on the ground educational workshops like Phantom, Circle (USDC), Helium, Hivemapper, Kamino, Superteam etc. I also list some longer term plans for potential revenue like hosting quarterly hackathons once my sites are established around the world. With other community members reading my application, I’ve received a few messages from community members who can help set up a branch at their university in a city that I hadn’t listed in my application and they join the WG. For the first 6-months, we execute onboarding workshops for Jupiter and then use that case study to sell our services to other entities and expand our offerings.