#Introduction (Looking to Start a Discussion)
@MrAnderson and I had some discussions about the topic below. I’ve summarized the discussion and tried my best to layout our thinking the best I can. Please take a look and let’s discuss.
#Investing in the entire Network
Safe projects need workers and most workers need liquidatable funds to live on. Investors want to see projects succeed. The projects can’t succeed without developers and other key people filling key positions within the project.
Current developers with years of experience and life commitments are probably not able to jump ship from their low risk, well paying jobs. Entrepreneurial risk takers might lack the experience but be willing to take the plunge. Some new folks need learning experience. I propose we would be doing well if we are investing in all these types of folks working on these newly hatched, fragile projects.
In order to entice current full-time developers as well as new developers into these more risky endeavors this framework might give them the option of a guaranteed income for a specific amount of time while they work for a group of investors instead of receiving their income from their corporate day jobs or somewhere else.
This document lays out an ecosystem of how this might be done and how the pieces might work together. This ecosystem is NOT meant to be restrictive. People can choose to change lots of different variables of how they want to run specific things and the framework should still work and perhaps be better because of experimentation. The framework described brings many different interdependent pieces together rather than forcing codependency.
#Definitions of Terms
DAO or Project: Distributed Autonomous Organization or a project that might one day become a Distributed Autonomous Organization.
Funds: Easy liquidatable coins or tokens (ie bitcoin, maidsafecoins, etc).
Tokens (in the context of this doc): Can be used to represent ownership shares (project/DAO tokens) or a proof of a contract (worker tokens).
Worker: Anyone who might contribute to a project for payment. In the context of this doc they would receive DAO tokens for payment of work done.
#Funding Future DAOs (Distributed Autonomous Organizations)
DAO tokens are essentially meant to be ownership shares in the DAO. This is pretty close to the way a publically held company is today except the level of influence is direct. DAO tokens are used to influence the operations of the DAO itself. If the DAO is ever profitable the holders of the DAO tokens could receive dividends. The value of the DAO tokens is up to the market at any given point in time.
The ecosystem starts with a crowd sale by a DAO where it sells a portion (say 10%) of its tokens (ie ownership shares). These initial funds are held in a pool that the DAO owners can use for startup expenses. These funds might be used to hire a full-time manager/developer and if the funds are enough, perhaps more full-time developer(s) for the project. The DAO would be left with the remaining DAO tokens to pay for more development work and other positions of necessity. If the crowdsale happened similarly to the example, the only way to have more ownership in the DAO, beyond the 10% initially sold tokens, is to invest in individual workers (see below) that could potentially work on features for the DAO (through bounties, short term contracts, or as full time hires etc).
#Funding the Workers
Each person has their own value, their own resume of talents and abilities, their own commitment levels. He or she could hire themselves out (crowd sale their own personal tokens for liquidatable tokens) to investors for a specific time period. During that timeframe the developer would earn DAO tokens (ownership shares) for work done on the DAO. x% of those earned project tokens would be passed to their investors for an agreed upon period of time. y% would be kept by the worker to keep them invested in the different projects. After the time is over the worker’s tokens might expire or perhaps a new “contract” could be negotiated (another crowd sale) if they required liquidatable assets to live on and the investors still felt they were receiving a good return.
Each worker could set their own funding goal based on their experience and abilities to commit, the types of projects they would be willing to work on, how much say the community would have on which projects they worked on, the percent the developer would keep for themselves and how much they would pass back to investors. Given all this data, the community could decide if they are worth the risk or not. For example a worker might say “I’m willing to quit my day job and work for you investors if you fund me for a year for $120K”. People would look at his resume and accomplishments and see what project(s) the worker is planning to work on and decide if their potential return (The DAO ownership tokens the worker might earn) would be worth their investment.
We can make it so no one person has to take all the risk or even the majority of risk if we are smart about it. Projects will fail. If they do and we have invested in workers we can have the worker move to another project. If workers fail, we were one of hopefully hundreds of investors so our loss is limited.
Every member of the ecosystem becomes a partial owner of the DAO. Every member’s goals should be similarly aligned to see the project (and many projects) succeed. Workers are not tied to one project either, so the experience they gain for one project is applicable to the next and investors are really investing in the entire Safe Network when they invest in a worker.
As more and more people believe in the projects, the market will exist for the project tokens. This will allow developers to work for only the tokens themselves and liquidate them as needed. There will be a time when they no longer need the investors to help them along the way. Perhaps they like having the upfront funds to live on and the investors still want to continue the relationship. There is nothing stopping any of the parties from continuing their relationships or perhaps renegotiating contracts.
Eventually/Hopefully the DAO would be making income and distributing it to the current owners. Some of those owners are developers and they can live off those payments. The DAO owners might even vote to use that income to pay for new features or distribute and allow each owner to invest individually for more stake. Each DAO would be free to do what they collectively decide to do.
#Project Token Exhaustion
What happens when DAO project tokens run out before income is being produced or the DAO decides to invest for more growth without any tokens remaining?
If development is still needed the DAO might vote to create more tokens. This could be thought of as another round of funding. If growth would cost a lot of capital they actually might vote to sell some more project tokens. New tokens would always mean more dilution of ownership. A good thing about this might be that the dilution is gradual if used to pay contributors. The ownership wouldn’t be diluted until the development is paid for. DAOs could even decide that these new coins wouldn’t pay out dividends in the same way as the original tokens. Again this strategy allows each DAO to decide what is right for itself.