[Phase 1] Proposal for Bicameral PoH DAO Governance

[Rusty]

Greetings Humans,

I propose to you a bicameral system for passing PoH DAO governance proposals. This proposal seeks to increase the value of UBI by establishing a governance usecase. In establishing a governance usecase, parties who wish to have an effect on the outcome of proposals are incentivized to buy UBI. In buying UBI to vote in the UBI House, demand is created for UBI therefore helping to increase its value.

The Houses

The first and supreme house is the One Person One Vote House (1p1v). In this house a proposal is approved by whether or not it has garnered the support of a majority of unique humans. Anyone can participate in this house as long as their address is registered on PoH. Through a 2/3 supermajority, the 1p1v House can overturn proposal rejections rendered by the UBI House. This override allows the people to retain an ultimate say in cases of grievous rejections of popular proposals by the UBI House.

The second house is the UBI House (UBIH). Following acceptance of a proposal in the 1p1v, UBI is used in this house to vote in support or opposition to a measure. If the UBIH votes in majority for accepting a proposal, the proposal is passed. If the UBIH rejects a proposal, the proposal returns to 1p1v where a 2/3 supermajority must be attained to override the UBIH rejection.

The System

In the graphic below, the process for passing governance proposals is depicted as well as the relationships between the houses.

Considerations

The method of UBI voting in the UBIH has not been determined yet. I quite like the idea of a token burn through quadratic voting. The more votes you buy in UBIH, the more UBI each vote costs. This would make a whale buying a landslide victory extremely cost prohibitive. The burn would reduce the impact of whales building a position in UBI over time as the tokens they use to vote in UBIH will be burned and not returned to them. Burning UBI would also increase scarcity.

Quadratic voting

There could be potential for nonsensical proposals to be spammed and accepted by the 1p1v to force the UBIH to vote and burn UBI. Perhaps a proposal UBI deposit needs to be considered to discourage abuse.

I invite anyone to comment on these points.

In Closing

This compromise between traditional DAO governance and 1p1v will make the UBI token more valuable by introducing a usecase for it. I believe that this system respects the voice of the people by giving 1p1v the ultimate say, albeit with a higher necessary threshold in cases of conflict between the houses. It is necessary to give the UBIH an advantage in close margin proposals, because there ultimately needs to be a demand to buy UBI tokens to participate in the UBIH. If the UBIH’s decision could be overturned by simple majority in 1p1v, then there would be no point in buying UBI to participate in the UBIH.

If passed, this proposal will introduce a useful and valuable native usecase for the UBI token. While I admire the work put into the Yearn vaults, the community needs to consider complimentary solutions to buoying the price of UBI. Say in governance is a valuable commodity that is currently left untapped by PoH.

Any proposal that increases the value of the UBI drip will benefit those who need it the most. If UBI is made more valuable, there will be greater incentive to register for PoH, growing our community.

The community’s thoughts are highly encouraged.

[0xjean.eth]

I support a move in this direction. I would like to raise some points:

When the project was launched, this article was presented as the source for $UBI tokenomics: Introducing UBI: Universal Basic Income for Humans. It states:

Quadratic voting will dampen “majority rule” issues, prevent polarization and empower the voices of minorities in the Ethereum ecosystem. A specific floor of UBI will need to be burned to be able to submit a new proposal to the DAO.

Where does the value of $UBI come from?
[…] "Additionally, several governance actions in the UBI DAO will require the burning of UBI, which will make sure that the model has a “sink”. "

---

At this moment, 100 days later, we don’t have yet:

• Quadratic voting/funding
• UBI burn mechanism for creating a proposal
• UBI burn mechanism for other governance actions, whichever those might be

At a chat conversation in the main PoH Telegram group, @clesaege expressed that one of the reasons for not implementing the burn mechanism for voting was the prohibitive cost of gas (which can be avoided on an L2). I would like to hear from the other co-founders if that’s the only reason at this moment, or why these strategies were abandoned. It would be nice to hear from PM candidates as well.

I completely understand that the project can change direction or pivot, but still, I believe it would be valuable feedback on why we shouldn’t pursue this.

I can also understand that 1 person = 1 vote is a beautiful slogan and powerful idea, but I don’t think this proposal would affect that - although it certainly adds complexity.

Actually, if the supermajority of the DAO decides to revert this proposal back at a later date, it will be able to do so, while getting a price pump from whales buying and burning UBI to veto it without success.

Tokenomics

Regarding the tokenomics impact, I would mention that if such a proposal burns 40k USD of UBI a year, it would match the impact of a UBI DAI vault with 2 million dollars.

• Currently the UBI-DAI vault has an APY of 3.68% (variable), of which 50% is used to buy and burn UBI.
• With 2 million dollars, it will buy and burn 36,8k dollars over the course of one year.
• We are at HIP 20, in the middle of the year.
• If we extrapolate and consider we will have 40 HIPs per year, at 1k burn per HIP, we get to 40k dollars worth of UBI being burned.

I would like to add that implementing a governance use case to UBI would attract speculative investors. I believe it played a major part in making the UBI price spike when it was launched. Wouldn’t we like that happening again?

[tisco_fernandez]

Perhaps we can offer the system to organizations that do not have the structure or the resources to create their own token nor do they have the ability to create the necessary structure to decentralize their administration, such as NGOs, non-professional sports clubs, neighborhood associations, etc …

POH can offer a free platform to decentralize its decisions, that works with quadratic voting based on UBI burning (with or without the bicameral system).

This serves three functions. It attracts people to POH, creates demand for UBI and increases scarcity of UBI.

Quizás podemos ofrecer el sistema a organizaciones que no tienen la estructura ni los recursos para crear su propio token ni tienen como crear la estructura necesaria para descentralizar su administración, como ONGs, Clubes deportivos no profesionales, juntas de vecinos, etc…

POH puede ofrecer una plataforma gratuita para descentralizar sus decisiones, que funcione con voto cuadrático en base a quema de UBI (con o sin el sistema bicameral).

Esto cumple tres funciones. Atrae personas a POH, crea demanda de UBI y aumenta escasez de UBI.

[0xjean.eth]

@tisco_fernandez

Perhaps we can offer the system to organizations that do not have the structure or the resources to create their own token nor do they have the ability to create the necessary structure to decentralize their administration, such as NGOs, non-professional sports clubs, neighborhood associations, etc …

I really like this idea.

Our own DAO could be a great way to showcase this mechanism.

[clesaege]

I think having some quadratic vote with money (UBI, in comparison of non transferable credits) to be some interesting governance experiment.
We actually thought about that initially but concluded that on mainnet at current gas environment it would be impractical due to gas prices.
I think a general quadratic vote system (where the same token can be burn on different forms of proposals) would be very interesting. It could also be quite a change as we’d go away from the 1 person → 1 vote which is classic and easy to grasp.
I’m not really afraid of “rich people controlling the system”:

• The token distribution is very fair.
• The quadratic effect makes whales less powerful (to get 10 times more weight, you need to spend 100 times more tokens, so in a society of 11 individuals where 1 individual gets half the wealth and the 10 others owing the other half equally, the 10 other individuals still outvote him by a factor of 3.17).
• In practice, buying vote is always more efficient for a malicious actor than buying tokens (as buying votes in a 1P1V system has a linear cost, buying votes through buying tokens has a quadratic cost).

On the negative side, it could harm the 1 person 1 vote narrative.

Maybe it could be separate DAOs.

The huge benefit of such a system is that it allows to weigh in the intensity of preference.
Let’s imagine a system where we have 3 individuals, A, B and C and there is a proposal which would create +10 value for A but -1 value for B and C.
In a general 1P1V system, this proposal wouldn’t pass, as the majority has an interest for it not to pass.
However in a quadratic voting system, the square root of the amount of tokens burnt by A is likely to be higher than the sum of the square root of tokens burnt by B and C (as A has way more to win if the proposal pass than B and C to lose).

[santisiri]

I find myself in agreement with @clesaege and @Rusty on this matter. I’d support splitting governance in two and having a Snapshot page for Proof of Humanity and another Snapshot page for UBI.

While PoH keeps the 1p1v democratic game, the UBI DAO can focus on quadratic funding and quadratic voting which can boost the utility of the UBI token in multiple ways.

The PoH DAO should only govern the PoH smart contract and the UBI DAO shall rule over the UBI smart contract.

Last but not least, the largest holder of UBI today is the PoH DAO itself, so in many decisions the PoH DAO can influence the UBI DAO with its stake and use a democratic vote to decide how to use it, effectively creating an emergent bicameral rule.

Bottom line I think this can drive up demand for UBI and it will be beneficial for every single holder in the long run.

As @clesaege mentioned, since the distribution of UBI is fair, I don’t think this will lead to whale influence since we can benefit small holders due to the dynamics of how QF works.

[Mads]

If the first step is splitting the governance, then I think we should just do this to avoid the discussion getting too complicated. I support splitting because it will make it clearer how PoH will interact with DAOs built on top of it.
@Rusty do you agree that this would be the first step or do you see it differently?

[Rusty]

I am in favor of subordinating the UBI contract under the control of the PoH DAO as I very much believe their fates are intertwined. The PoH DAO would govern both contracts under the bicameral system proposed. PoH secures the fair issuance of UBI and UBI incentivizes registrants to PoH. I understand that @santisiri and @clesaege may have different opinions as expressed in their replies here.

I think ANY opportunity where UBI has a usecase in governance will help sustain its value and welcome all proposals or suggestions where this can be a reality, bicameral or not.

This proposal was suggested as a compromise between the 1p1v governance faction and the UBI quadratic voting faction.

Think of it as a Connecticut Compromise for PoH DAO.

Connecticut Compromise

[Justin]

This proposal has so many angles to consider. I have been trying to do as much research as possible. Long TG chats have shown its hard to discuss it all at once. I will try my best to stick to one aspect at a time.

---

One of the primary benefits (maybe only) to this proposal is to support UBIs price by monetizing conflict through burning. I attempted some napkin math on what effect this could have.

• @Rusty estimates his proposal could burn [at least] $1k USD of UBI per proposal. And assuming 40 proposals a year that is $40k USD burned (link).
• I bought $50k of UBI in 50 days. Annualized that is like $365k. Even with the low liquidity that didn’t seem to impact the price much.
• So even if we take the estimated $40k of the proposal and increase x10 that is still only $400k

Wouldn’t this have a negligible impact on the price, or am I missing something?

[santisiri]

I will work on a draft proposal that brings together many of the points shared on this thread. Stay tuned.

[federicoast]

This is an excellent proposal @Rusty and it really makes me fell as if we’re taking decisions that are similar to the Federalists in the 18th century.

I think I also see some value in decoupling the governance of PoH and UBI. I think over the past months we have learnt that they seem to require different types of skillsets and are of interest to different communities.

As @Justin mentioned, this is a quite complex issue which might need to be broken in different proposals.