VDP-7 Equity/Startup Deals Proposal Raises an interesting question around conflict of interest in our governance framework. Particularly at our early stage where the typical number of participants in Ph1 and Ph2 gov proposals is less than <20 people.
I propose adding a conflict of interest amendment to our governance framework along the lines of:
During the voting in Phase 1 and Phase 2 Governance proposals named persons or entities who stand to benefit materially from the proposal must constitute less than 50% of the total votes on the proposal. If the vote does not reach 10 or more votes in the affirmative consisting of more than 50% indirect beneficiaries then the proposal does not pass.
An example
Proposal
VDP-X proposes that persons one through ten each receive 100 $VITA
Vote Yes to allocate the funds
Vote No to reject the proposal
Voting
Persons one through ten vote Yes on the proposal, another 5 DAO members also vote yes
Outcome is that 15 Votes are cast in the affirmative 10 of which are the named beneficiaries in the proposal.
With this current proposal VDP-X would not pass as 66% of the vote is from members who will receive material benefit. For VDP-X to pass we would need to seek the approval other another 6 DAO members with no material benefit arising from the proposal.
Caveat
I am not familiar with standards in handling conflict of interest in DAO governance and I would welcome general discussion on avoiding conflict of interest, and any best practices identified from other DAOs
Tbh, this is something I haven’t considered so far, for the following three reasons:
The function of Phase 1 and Phase 2 votes is purely to filter out spam and noise, not necessarily to be robust to any kinds of attack vectors and conflicts of interests
A proposal is successful if it passes not only Phase 1 and Phase 2, but also Phase 3
The function of Phase 3, the onchain vote, is to be as decentralised as it is possible for a token-weighted vote
To be clear: Token-weighted voting is far from perfect and prone to whales, but inclusive and transparent so that conflicts of interests are in any case be visible and technically not even “conflicts of interests” since I don’t see a problem if the majority of VITA holders vote in their own interest, which is by definition also the interest of the majority of the DAO?
One could argue that there is some kind of attention bias (any phase 3 votes get more attention than any phase 1/2 vote, just because it is in phase 3) and positivity bias (it is true that phase 3 votes are rarely voted down, neither are phase 1 and 2 votes). On the other hand, I find it hard to come up with a comprehensive, effective solution to preventing conflicts of interests messing with phase 1/2 votes as they could probably be gamed somehow again, when Phase 3 votes are already designed to be robust to that.
So tl;dr, I do share your concern that conflicts of interest may be a problem in Phase 1 and 2, but I wonder if that matters since votes necessarily need to pass phase 3 too.
Though I don’t mean to say that we shouldn’t implement your suggestion - quite the contrary. The updated governance proposal should definitely contain specifics around that. They should be effective though, so I’d be keen to hear your thoughts on the arguments above.
Thank you @theobtl , you’re totally correct the true governance decision is made at Ph3 however my suspicion is that there is some informal delegation that the bulk of the token holders do believing that anything vetted by the attention of the WG members or Core is sufficient.
The right level of detail for a VDP is a difficult thing, for example with a project funding VDP there’s obviously not enough info for a general token holder to make the call and they are informally delegating to the longevity working group, implicitly trusting that we wouldn’t bring a VDP to governance that wasn’t worth them looking at.
Until we see a VDP go to Ph3 and fail we haven’t really seen the decision making/deliberation flex its muscles