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Let's create a new world, a world of DAOs, where people work cooperatively, WITH each other, NOT FOR one another. How? With Wetonomy - an opinionated set of applications and templates built on top of AragonOS that streamlines the creation of DAOs, allowing teams, companies, and organizations to collaborate, share profits, finance ideas and award contributions. The first and most important question, when you are building an organization is: How you incentivize the people, contributing to the organization, with its future success and earnings? Wetonomy implements an innovative solution called High-Risk Automated Debt that allows all the contributors to a DAO to benefit from its future success. All contributors receive debt tokens for their contribution, which are then automatically bought back with the earnings of the DAO.
Having the buyback mechanism implemented as programmatic smart contracts, we have the freedom to define a rich and expressive set of rules for different pools and classes of debt. Each of them can be bought back with different cash stream, including dynamic allocations based on certain rules. Thus, the buyback mechanism can be presented as Directed Acyclic Graph (DAG) of pools and their buy-back rules.
Debt issuance should follow predefined rules to ensure that all participants are fairly rewarded. Different debt classes might follow different procedures for issuing and distributing the debt, but also a default schema needs to allow fair remuneration of the contributors. We are suggesting such a mechanism based on peer-to-peer rewards and task bounties. Here is how it works. An automatic inflation mechanism issues new token reward allowance based on the produced Units of Work (e.g. hours) within the DAO. This amount is then distributed among the team members based on their reputation. These are not tokens yet, but allowance to reward tokens. The members of the DAO can use their reward allowance to crowdfund bounties within the network or reward peers for their achievements. To incentivize active participation, in case the reward allowance is not used actively, it starts burning, thus lowering the power of inactive members. Certain constraints also apply to prevent edge cases like someone rewarding only one person and no one else.
Investors can give standard loans to the DAOs which can be accounted on the blockchain using debt tokens. This means that each token will be automatically bought back on a fixed price of let’s say 1 euro. This is automatically triggered when the DAO receives income and certain percentage from it goes through the buy-back pipeline.
If you are wondering how a DAO translates to a legal entity, it’s a cooperative. The cooperative entities are literally decentralized autonomous organizations in legal terms. Thus, the Wetonomy toolkit is most naturally applied in cooperatives which seek to be even more decentralized and autonomous, by applying a blockchain governance model. We are a cooperative too and we need Wetonomy for our own governance and incentivization backbone. We have already adopted the model using spreadsheets and we will continue to utilize any new piece of the software we implement, thus serving as early adopters of the system.
Wetonomy can be also applied as an add-on to already established and running classical companies, even without going through any major refactorings of their structure. In practice, Wetonomy can be used as a blockchain based employee engagement and a bonus system for SMEs. It can also streamline the fundraising for a business by serving as a loan investment tracking tool.
You can find more in-depth info about the idea behind Wetonomy, its ideology and the way it works as a proof of concept in our Comrade Cooperative in those two blog posts — ‘The road to building a working DAO’ — part 1and part 2.