Editing DAO Governance Framework (section)

== System Design ==
The DAO Governance Framework (DGF) project uses blockchain technology to make decentralized business possible. To do this, we provide tools to build [[DAO|DAOs]]. DAOs require IT tools to facilitate their decentralized governance. 

The core tool of decentralized governance is a meaningful and secure reputation token, [[Reputation|REP]]. The core mechanism of REP token design in DGF is: 

# REP is minted and given to the person who brings $ to the DAO. 
# The $ doesn't go to the person who earned it; $ is distributed proportionally to everyone who previously has earned REP.

The pages in this wiki explain the consequences of using this type of REP token design for building DAOs. How it solves the problems with current blockchain initiatives. How DGF makes business and social collaboration more efficient. How REP-focused governance can create a system that promotes human flourishing, materially, socially, and spiritually. And how such lofty and abstract values can persist in a system that is simultaneously built from cold, hard, algorithmic execution of digitally codified business and civil contracts. 

In order to optimize for collaboration and community participation, we will be focusing early on modular, sharable specifications. There are elements of the dynamic framework that are common to a wide variety of specific instantiations of DAOs. This common subset forms what we refer to as Minimum Viable Protocol Requirements (MVPR).

DGF MVPR refers to the specification of an algorithm that implements the governance framework described in<ref>Craig Calcaterra, "On-Chain Governance of Decentralized Autonomous Organizations" (May 24, 2018). Available at SSRN: https://ssrn.com/abstract=3188374 or http://dx.doi.org/10.2139/ssrn.3188374</ref> and <ref>Craig Calcaterra & Wulf Kaal & Vlad Andrei, "Blockchain Infrastructure for Measuring Domain Specific Reputation in Autonomous Decentralized and Anonymous Systems" (February 18, 2018). U of St. Thomas (Minnesota) Legal Studies Research Paper No. 18-11, Available at SSRN: https://ssrn.com/abstract=3125822 or http://dx.doi.org/10.2139/ssrn.3125822</ref>.

We conceptualize an MVPR DAO as the Bench of experts (or members, or workers) who provide some service to the public, together with their Forum. Experts are members of the DAO, determined by ownership of [[Reputation|REP tokens]]. REP tokens are digital representatives of reputation which signifies and valuates a worker's level and history of expertise in doing the work of the DAO. REP tokens serve as the basis of power in the DAO. The Bench is defined as the list of experts. The public (or the customers) are defined as the nonmembers of the DAO, conceived of as potential customers that the experts intend to serve for fees. (We use the symbol $ to represent the fees, which denotes generic cash money in Ether, USD, or other currencies). The [[Forum]] is the evolving history of accepted and rejected actions the experts perform.

In an MVPR DAO, REP tokens confer on each expert the power to do work and governance:

*'''[[Work Smart Contract|Work]]:''' Providing official DAO service to the public for fees. Fees are fungible cash money, typically in the denomination of some stable coin.

*'''[[Governance]]'''
**[[Executive governance|Executive]]: Automated policing of peer work
**[[Legislative governance|Legislative]]: Debating and voting on updates to DAO operating parameters and smart contracts ([[Governance#Hard protocols|hard protocols]]), and cultural norms ([[Governance#Soft protocols|soft protocols]])
**[[Judicial governance|Judicial]]: Reviewing past actions and decisions by revaluing the Forum
Common to all these domains is the power accounting feature of REP ownership. REP is gained by peer validation and staked upon assertions.

=== DGF workflow ===
''[[DGF workflow|Main page: DGF workflow]]''

The DGF system is designed as a feedback loop consisting of three major components: 1. the Forum, 2. the collection of members of the DAO, called the Bench of experts, and 3. the public, consisting of non-member users of the system who pay fees to the DAO for work. 
[[File:DGFsystem.png|none|thumb|602x602px]] 
The basic DGF workflow is as follows: 

# A public customer uses the [[Front-end software|public UI]] to find the most current [[Work Smart Contract|work smart contract]] (WSC), both of which are contained in the [[Forum]].
# Customer encumbers the appropriate $ fee and selects relevant parameters to engage the WSC.
# WSC randomly selects a worker from the DAO from amongst the available experts who have encumbered REP tokens in [[availability smart contract|availability smart contracts]] (ASCs).
# Selected worker completes job offline, then completes the requirements of the WSC. 
# WSC publishes evidence of completed job to a post in the Forum, then engages an instantiation of the [[Validation Pool]].[[File:DGF flow.png|thumb|517x517px]]
#* WSC sends address of post and public customer's $ fee to an instantiation of the [[Validation Pool]] (VP)
#* VP mints new REP in proportion to the $ fee.
#* 1/2 of new REP is staked in worker's name as an upvote. 1/2 staked as a downvote, unassigned.
#* VP broadcasts voting is open to REP staking on betting pool.
#* VP tallies the vote, decides the winner.
#* VP publishes the result & distributes REP tokens from losing side to the winners, weighted according to stakes.
# The $ fee is distributed to all DAO members in proportion to REP holdings ([[Reputation#REP Salary Mechanism|REP salary]]).

=== Smart Contracts ===
*[[Availability Smart Contract|Availability smart contract]] (ASC): Enables DAO participants to declare their availability to produce work by staking REP

*[[Work Smart Contract|Work smart contract]] (WSC): Evolving official protocol for how the DAO provides service to the public. Enables public users to request work products from the DAO. This WSC accepts certain parameters that will function to specify the proposed agreement, including the standards for fees the public pays, the mechanism for selecting the expert from the active ASCs, the standards for acceptable work, the mechanism for recording evidence of work to the Forum, and the code calling for a Validation Pool to verify successful completion of the WSC.

*[[Validation Pool|Validation Pool smart contract]] (VPSC): Mechanism for DAO experts to vote weighted by REP ownership in order to
*#Police experts' execution of the WSC through automated votes  ([[Governance#Executive governance|executive governance]])
*#Register approval of proposed changes to DAO protocols through deliberate votes ([[Governance#Legislative governance|legislative governance]])
*#Review past actions ([[Governance#Judicial governance|judicial governance]])
:The Validation Pool is the heart of DGF as it mints all new REP tokens and performs their initial distribution. Finally the Validation Pool distributes the fee from the WSC to all members of the DAO in proportion to the ownership of REP. This is called the REP salary. 

*[[Forum|Forum smart contract]] (FSC): Records the history of the DAO as a linked list of documented official DAO expert actions. Links are weighted references, positive or negative, that donate or leach REP from the post referred to. Gives the context for discussion on modifications to the DAO.

=== UI Software ===
''Main article: [[Front-end software]]''

A DAO must have software that allows the public and its experts to access its capabilities. UIs therefore have two faces. This software provide a view of the Forum that enables its respective audience to interact for their respective purpose. Primarily, experts use their UI to engage their REP holdings to secure work and to govern the DAO. Secondarily, experts use their UI to search the Forum for pressing issues in governance. The public primarily uses their UI to engage experts by encumbering fees in Work Smart Contracts. Secondarily, the public uses their UI to search the Forum to find the WSC and evaluate whether the DAO's reputation is sufficient to warrant their business. 

Ideally the UI software would be formally governed by each DAO itself. However, pseudonymity and openness makes this impractical to enforce. Individuals can engage a distributed database with any UI they choose. Thus competing UIs are likely to emerge in most DAO instantiations. DGF simply provides recommended defaults on out-of-the-box UI software, and allows each DAO to choose their minimal canonical UIs.

In its purest, ideal form this system would support stateless client applications, serving all operational data reliably from blockchain storage. However, blockchain storage is currently expensive; so in practice, we can only use it in cases where we require the long-term guarantee, such as the REP ownership list.

This means that we must implement a separate, off-chain stateful layer. There are a variety of options for this off-chain data layer such as IPFS. For now we merely specify that such a layer must exist.

There are both formal and informal processes – hard and soft protocols – associated with each of the above outlined areas of power. Hard protocols are specified by code, and enacted by running systems, whether on or off chain. Soft protocols refer to patterns of participant behaviors.