I think this research is interesting and worth pursuing. I would like to add, if possible, a condition that the DAO decides about the M2/M3 route or not as, even if the outcome from the research is that this is feasible, maybe the DAO’s priority shifted in the next 6 months.
So it would be nice to have the possibility to re-evaluate the continuity after the first research phase.
EDIT: we could use the relevant council to evaluate that instead of going to a new DAO vote, as an alternative.
This could make sense for the Governance Iterations Council (assuming it gets approved of course).
From today’s discussion, there was the point brought up to get more information / public reporting on the first two Negation Game grants and what is the usage and how that has been changing.
The element of what does this mean for the future of NG is also still open. If the research with Dr. Brown goes well, does that mean NG is solely focusing on Carrol Mechanism related things in the future? Some more clarity on how you see this adding to what is being done vs adding new things would be helpful.
A few folks are bringing up q’s relating to the $145k as 1.2% equity and how the lower valuation of $12m relative to the higher one you had received from BlueYard was calculated. Is there any reasonable justification for the % to be higher given the support provided already / overall support from the ecosystem in adopting Negation Game.
In terms of UX and funding, most of the work seems to be going to the research and technical development. How are you going to fund the UX/design portions?
Related to that, can you share more thoughts / plans on fundraising beyond this? What about for adoption - are there plans in place to pitch other ecosystems? Has that started yet and if no, when will it start?
Finally, to @benedictvs’s point, what happens if after M1 you fundamentally pivot? Will there still be the proportionate equity % if y’all pivot in a different direction and secure funding for other work?
Again, the gov team is ok with this going to formal vote though we do agree this feels a bit rushed with everything else going on. Regardless, we are ok with it going to vote if some of these other q’s are addressed and more info is shared.
Thank you for the comments everyone.
$145 an hour is actually a very good deal for this level of expertise. We should be comparing against the consulting rate ($500 - 1500 / hour), since that’s much more similar to what this is. Dr. Brown is willing to do this because he finds this kind of work interesting and important and we have a personal relationship with him. It’s not right to compare this against the academic rate because we don’t provide all the amenities that an academic institution does (office, health and dental insurance, job security and possibility of tenure, etc.) So this is a very good deal given his stature and skill.
yeah that seems right, this is why I tried to socialize the draft as best as I could and get one on one feedback and modification to the proposal before posting.
Good question. It will be held by the Foundation on behalf of the DAO.
Sure there is! Especially because Scroll DAO is such a valuable design partner. We tried to pick a number that seemed reasonable. This one seems reasonable because:
Re fundraising and adoption: we believe that it makes more sense to deeply integrate in one place rather than try to spread ourselves broadly, at least until we have a capital allocation mechanism we can give to them and Scroll has gotten to benefit from it first.
In terms of UX, M3 covers both UX/design as well as technical implementation of the protocol.
This is a great question. We intended to pursue Carroll Mechanisms since the beginning, and that’s what directed the product design up until now — that’s why the negation game works as it does.
Honestly, Carroll Mechanisms are the reason that we built Negation Game. We (me, Kaden) are very confident that they have beautiful properties, but we wanted to reduce the perceived sense of risk for the DAO, so we created a funding milestone for it.
I don’t expect that we find out that they aren’t a promising direction. We might find that they present a difficult user experience but I think that’s ok that’s a problem we can overcome.
and addressing you @benedictvs directly:
I think this is a risk with any investment. But at least in this case it’s not the full 145k that’s been invested, only the 45k. And in fact that’s exactly why we added this milestone is to protect the DAO and provide oversight.
Re usage, so far we have engaged 51 Scroll delegates in the publication of over 80 rationales, comprising 338 points and prompting the endorsement of over a total of 4309 cred. Broadly, the Negation Game has proven to be a valuable tool for improving both the rigor and accountability of delegate decision making, we have a handful of anecdotal success stories, for a sense of the utility of this tool check out this or this recording
Eren this is a great question. There are four ways that adoption can be made easier:
Yes, equity will be proportionate to the amount invested. So 45k at the agreed valuation if it’s just M1.
Thank you! Yess! This is exactly the problem we set out to solve with futarchy / prediction markets when we started working on this 5 years ago! It’s amazing to see that we’ve reached a level of market maturity that there’s now a need for this.
And it’s worth mentioning that this is in some sense even more promising than that, because it can be used to answer not just ambiguous observable questions (like, “Will Zelensky wear a suit?”) but it can also be used for more contentious, ill defined, and ambiguous questions like, “What should our policy be on XYZ?” because the mechanism can explore possibilities, and it can dynamically weight input.
Thank you @kaereste! And agreed, we’re invested in doing everything we can to position this for the rest of the industry and the world about the work that we’ve done.
Anecdotally, what seems to have caused credibility to rise for other mechanisms (e.g. futarchy at MetaDAO) was an adversarial attack on the governance system which the mechanism successfully fended off; also why it’s important to invest in mechanism confidence at this early stage.
Edit: updated the proposal to specify that the Governance Iterations Council will approve the M1 results with a majority vote (is that the right way to do it @Eugene or are you trying to transition to a veto model? In which case the language would say, “Council will vote to veto (majority) the M2 & M3 funding”), and if the council is not established it falls back to the foundation to approve.
Edit: we’re also voluntarily lowering the valuation from 12m to 10m. Although I haven’t received any messages from delegates about the valuation yet, but I’d like to lower it to 10m as an expression of our appreciation of the Scroll ecosystem and the role you have played in our development. In the case that we are subsequently funded at a valuation at or above 10m, this increases Scroll DAO’s ownership from 1.2% to 1.45%. I’m looking forward to creating this alongside you all.
Some context on this as I gave them feedback. Connor originally suggested a higher valuation and I think that’s VERY defensible given the 24mn previous valuation by a reputable investor who carried deep due diligence and was ready to commit over $1mn in cash upfront.
I suggested going lower because valuations set you on a specific growth curve i.e. an investor needs you to hit a multiple of the investment for the risk to be worth it. If the valuation is high, you need hypergrowth which is hard to archieve. If you don’t get hypergrowth, you become uninvestable and the project dies. This happens to A LOT of startups. Alignign with Connor’s desire to build solid foundations instead of rushing to grow adoption at all costs, I suggested a lower valuation will actually reduce the risk of the project in the long term. That lower valuation comes at the cost of reducing Connor’s ownership but we still believe it’s a worthwhile trade-off and he agreed.
Note that a SAFE has no valuation. It only has a “valuation cap”, meaning that if the next round was priced at e.g. 6mn instead of 12mn, Scroll’s ownerhsip would get calculated on invested amount / next round valuation so 145k/6mn. and not 145k/12mn.
It’s only if the next round valuation goes above the cap that then the cap comes into effect and essentially ensures a better deal for early investors.
From that, I believe this is a great deal for Scroll. Even too good, so I disagree with Connor’s decision to lower the valuation to 10mn. 12mn was already really good for Scroll.
From Ethereum Argentina, we value the significant effort behind this proposal to drive substantive improvements in DAO governance. In particular, we appreciate the adoption of an investment structure (SAFE + Token Warrant) instead of a traditional grant. We believe this approach can better align incentives between the proposing team and the Scroll community, fostering shared interests and potential upside in the event of future success.
However, we’d appreciate greater clarity from the Scroll Foundation regarding the inherent risks to Scroll, as well as the financial and legal advantages or disadvantages for team members in choosing this type of funding. The legal terms of a SAFE + Token Warrant require a clear explanation to avoid confusion or potential conflicts between the Scroll Foundation (providing the funds) and the DAO community (making decisions).
Until this transparency is provided, and until those leading the research openly share their ideas and intentions with the community, we maintain reservations about the upfront allocation of substantial resources for a study whose outcomes remain uncertain.
Furthermore, while the proposal relies in part on user adoption and validation of the new system via the Negation Game (The gov team has given 2 grants to the Negation Game team), it lacks sufficient detail on how risks related to low adoption or resistance will be mitigated, or how integration with existing governance tools will be coordinated. We’d like to see a more developed plan on how these points will be addressed to ensure the six months of work are applied efficiently and with robust oversight, maximizing the potential of this investment.
In summary, while we support the intent to improve governance and appreciate the rigor of this research, our endorsement comes with these key considerations that we hope will be addressed to ensure the project’s success and transparency.
Hello @ethargentina thank you so much for your endorsement and thoughtful comments.
I believe we will be receiving this information about the exact details of the investment contract next week from the foundation legal team, but in the meantime perhaps @danielo you can speak to the approach you used with Arbitrum
Your concerns about adoption are valid. Go to market is always the most important and the most challenging part of any product.
Referencing previous reply:
What I didn’t unpack there is that one of the biggest challenges for DAOs is rewarding participation in proportion to quality of contribution, and this offers a novel approach for doing that, since governance is work, rewarding participation is really important for the future of DAOs and will likely also make quite a difference in terms of usage. I like to say that no one does accounting for free, you’re paid for that job, so should you be for governance.
@bitblondy @ethargentina and others. Let me provide some more clarity on the legal structure as I was the one who suggested it.
Why SAFE + Token Warrant?
So for all the above, I see the foundation leading the deal with a SAFE+Token Warrant as a basic deal structure as an ideal approach for a DAO like Scroll to do this. And I expect many ecosystems will follow in these footsteps which is a REALLY good thing to make Web3 sustainable.
Happy to provide any extra clarity or answer any questions. Ultimately, the vote ends up being a vote of confidence in the foundation to handle this well, which is a very reasonable trust assumption.
The following reflects the views of L2BEAT’s governance team, composed of @kaereste, @Sinkas, and @Manugotsuka, and it’s based on their combined research, fact-checking, and ideation.
We are voting FOR the proposal.
From our perspective, the general delegate system is stuck in low-effort voting, quick copy-paste comments, and subjective incentive programs. The Carroll Mechanism offers a practical way to experiment with changing that. Phase 1 serves as a reality check — if the math fails, the rest of the budget remains in the treasury; if it passes, the design is integrated into the Negation Game, allowing Scroll to run it with the same team, who can then fine-tune the parameters.
Given this context, experiments like this are helpful, especially if they aim to improve the delegated governance experience. In this case, the Carroll Mechanism should have the opportunity to prove itself: costs appear reasonable, and if it works, it could set a good precedent for future implementations. That said, the success also comes with extra responsibilities; we expect all parties involved — especially the SF — to take this as an opportunity to promote Scroll and attract more investment into the governance space.
Lastly and most importantly, the structure of this grant request in the form of an investment sets a strong precedent that we believe should be more widely used where appropriate.
We ABSTAINED on this proposal
The idea of developing more efficient governance mechanisms and including Scroll as an investor in this project is superior to simply giving grants for research. We agree with this part of the proposal. However, we are not comfortable with the high cost of the proposal—in relation to the DAO treasury—and the difficulty in assessing the valuation given to the project.
We believe it is a high risk to take (for the DAO). The DAO’s money should be used to encourage new ideas, but it needs to be preserved, especially for the coming years—when $SCR may fall more than 50% from its current value.
I will be voting FOR this proposal for the following reasons:
$145k USD is not an absurd amount of capital for research and implementation on innovative mechanisms, I remember DAOs that have spend 5x this amount solely on research that did not amount to anything
this is a long term investment and not a grant
Scroll in many ways leads the way in governance design across web3 and this proposal would be a crucial step of furthering developing the governance systems here. The potential to transform a ~$1 trillion dollar marketplace to impact nation states, web3 and network states alike should be another reason for delegates voting yes.
It’s milestone structure ensure execution
That being said as a delegate I will follow along with the developments of the proposal and the impact it will deliver and voice any future praises/concerns on the forum.