Proposal: [On-chain] Creation of a SubDAO with On-chain Execution for Shutter DAO 0x36 Snapshot space using Kleros/reality.eth and Fractal

Shutter DAO DAO Proposals
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Proposal Title Author(s) Status Type Created
Creation of a SubDAO with On-chain Execution for Shutter DAO 0x36 Snapshot space using Kleros/Reality.eth and Decent @0xAlex (Kleros Labs)
@Jaybuidl (Kleros Labs)
@Tom (Fractal)
@Train (Fractal)		 Proposed On-Chain 15.05.2024

Simple Summary

Currently, ShutterDAO 0x36 utilises two platforms for governance and voting:

  • Fractal for on-chain voting (NB: Fractal is now Decent but in this document both names are used interchangeably)
  • Snapshot for off-chain voting.

This proposal aims to create a SubDAO that will hold 2.5% of the assets of the main DAO around 162k USDC and 13.25M SHU tokens (amounts subject to discussion) using the Fractal Framework. This structure will enable the main ShutterDAO to have clawback functionality over the SubDAO.

The SubDAO will integrate Kleros/reality.eth with ShutterDAO 0x36’s Snapshot space. With this arrangement, any proposal valued under $50k (amounts subject to discussion) will be passed via a Snapshot vote and executed on-chain by this SubDAO.

For context, this proposal builds on the previously passed proposal for integrating Kleros/reality.eth in ShutterDAO. After consultations with various stakeholders, we have prioritised on-chain execution via Snapshot for the Ethereum mainnet due to recent high gas costs. A dedicated Safe with the Kleros/reality.eth module for Keyper Management on the Gnosis Chain will follow shortly.

Process Overview

  • Voting period in Snapshot: 3 days
  • Reality.eth challenge period: 3 days (bond escalation period where Kleros arbitration can be called at any time)
  • On-chain execution by the SubDAO upon completion of the challenge period

Motivation

The aims of this proposal are twofold:

  • Gas-less Voting: The community has noted that high gas fees hinder participation; with recent market conditions, gas prices can remain above 50 gwei for extended periods, making the cost to vote on-chain very expensive.
  • Efficient Proposal Organisation: This SubDAO will manage proposals under $50k (amounts subject to discussion), allowing the main DAO to focus on higher value proposals. This distinction will help prioritise and streamline the governance process. We suggest that every proposal in the forum that needs to be executed by the subDAO include ‘[SubDAO]’ in their title for better organization.

Implementation

SubDAO Safe Setup

  • Establish a dedicated SubDAO Safe linked to the main Shutter DAO 0x36 with the Fractal framework, allowing the main DAO to clawback assets from the SubDAO at any time. This is implemented technically by attaching a Zodiac module to the SubDAO called the ‘Fractal Module’.

Kleros/reality.eth Setup

Design for the SubDAO

There will only be two entities that will have a full unilateral control of the SubDAO: The Reality.eth smart contract with the Kleros contract as arbitrator in case of dispute.

The parent DAO Shutter DAO 0x36 through the Fractal module contract.

In this setup the security will fully rely on the bond escalation game on reality.eth and on the fact that at any time (in case of an economic attack for example) anybody can ask for an arbitration with Kleros.

Kleros Cooperative, the entity responsible for the development of Kleros, will provide monitoring bots for reality.eth smart contract, the 2 ETH bond and cover all the gas fees.

Asks for DAO and the community

General feedbacks and comments on this proposal.

Confirmation of the following parameters:

  • SubDAO will hold 2.5% of the assets of the main DAO 162k USDC and 13.25M SHU tokens (amounts subject to discussion)
  • SubDAO will only deal with proposals valued under $50k (amounts subject to discussion)

NB: Due to a potential conflict of interest related to this proposal which involves the use of our products, both Kleros Labs and Fractal have agreed to vote abstain. This decision will contribute to maintaining neutrality in the governance process while helping to reach the quorum.

Documentation and Support

Links

Voting Platform

Fractal

Transactions

Technical implementation of this proposal drafted by the Fractal team: GitHub - adamgall/custom-fractal-proposal.

Voting Options

  • Yes, implement
  • No, rework the proposal
  • Abstain

Licenses:

Kleros and Fractal: MIT

Zodiac and Reality : GNU v3

Edit two minor changes:

IPFS link for DAO Requirements added Shutter DAO SafeSnap Policy.pdf and “Fractal” replace with “Decent” in the tittle (ex-Fractal)

4 Likes
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Sounds like a good idea. Are there any downsides, risks, costs etc with doing this?

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Hi @d0z3y - this is Tom. Another author of the proposal from the Fractal side and thanks for the question :pray:

Costs:

None. The SHU tokens/USDC would go into the DAO controlled subDAO

Risks:

I would say low from a code fault/asset loss perspective. Fractal’s code has been audited and the rest of our contracts are already in use by the core DAO for onchain voting. Kleros on the other hand is an industry veteran with DAOs the size of 1inch (etc) as users.

Instead, I’d say, we should use this discussion to review the variables proposed (e.g. vote period, modules attached) to mitigate the risk of setting up the script non-optimally. We want to make sure the SubDAO has the right setup to succeed from day 1. If we decide to change something (e.g. a shorter vote period or something else), it won’t risk funds, but it would take another proposal to fix it .

Downsides

I’m biased but I would say very few downsides. Gasless onchain execution via snapshot<>kleros makes good economic sense for smaller transactions. Then Fractal’s ability for the parent DAO to emergency clawback these funds gives a safeguard in case the DAO changes its mind in the future.

We’re super excited for more discussion and eyes on this though :slight_smile: . Happy to be challenged

2 Likes
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Thanks Tom. Sounds good. How does the rebalancing work? Does it require a new vote once the sub-dao’s funds have been depleted?

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hey @d0z3y , I’m not entirely sure what you mean by rebalancing.

In terms of your second sentence, you are correct. Once the subDAO has spent all its funds, a 2nd vote will be required to top up the child treasury. We asked for some member advice on the $162kUSDC/13.25m SHU starter funds. Happy to discuss this further though

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Sorry, by rebalancing i just meant the process of topping up the balance in the subdao, so sounds good.

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Hey @0xAlex, What is the current situation with oSnap? From what I remember, the DAO voted to add reality.eth, for gnosis in February, but now there is an oSnap integration to the Op network. I can’t find any information regarding this integration anywhere in the public.

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Hey Bear,

In February, the DAO voted for the integration of reality.eth/Kleros on the Gnosis chain to manage keypers. We have put this on hold and are focusing on this subDAO proposal, as having the opportunity to do gas-less governance on the mainnet is the priority according to the Shutter community.

At some point, we also discussed the possibility of a use case on Optimism with some community members, but we don’t have a proxy on Optimism for Kleros, so that wasn’t possible. I don’t know much about what has happened with oSnap, except what can be seen on the Snapshot space tbh.

If anybody has any other questions, please let us know

2 Likes
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Hey @Baer_DAOplomats

as Alex mentioned it was not possible to use Kleros on Optimism. Since the DAO has voted to deploy on Optimism there was a solution needed how the DAO could hold the LP tokens. That is probably the reason why oSnap was used as a temporary solution.

Some infromation are written here Proposal to Deploy a DEX Pool On a Low Cost Chain (Part 3)

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I’m in favor of moving forward with this proposal

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Hey @0xAlex, Apologies for not having made a comment on this sooner.

Can you help me understand the benefits of this proposal better? I see the two outcomes of :

  • “Gass-less Voting”
  • “Efficient Proposal Organization”

While it might be temporary, gas prices have been pretty low lately. However, I do understand your motivation statement here is based on the idea that they might not always be low.

The efficient proposal organization is the part I’m not tracking well. The subDAO is still just controlled by the DAO, correct? So, won’t all the same DAO voting be needed? How will this streamline the process, except for the potential gas savings?

Also, the social proposal that passed on this subject had a different intention. It was to manage the Keyper set on Gnosis, correct?

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Hey @5pence,

Thanks for your comment and question, yes, you are right; those are the two main benefits we have highlighted.

Indeed, gas prices are low currently, but in my opinion, it won’t always be the case. We think this setup can bring a lot of value to the DAO by allowing gasless voting, which can be super convenient, especially for small holders. This could improve the participation rate by decreasing frictions.

Regarding the efficient proposal organization, it is more about distinction and categorization. Everything that will be voted on-chain will refer to proposals involving over 50k. So basically if some SHU holders have very limited amount of time they can prioritize the on-chain ones to review for example.

Regarding the keyper management on Gnosis, you are right; it was voted, and the intention was different. We were told by some community members that the priority was more with having a subDAO allowing gasless voting. With limited resources, we had to make some choices; now we should be able to follow up on Keyper management and inform the community.