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LeapDAO’s Friendly Frankenstein: DAO Meets Holacracy Edition




Ideally, governance involves both public and private spheres to maintain adaptability and transparency. DAOs are great for transparency, but not so much for adaptability. Holacracy is great for adaptability, but not so much for transparency. LeapDAO thinks a combination of the two might be the answer.

The DAO in LeapDAO (formerly PARSEC Labs) doesn't stand for decentralized autonomous organization; it stands for decentralized adaptive organization, an experimental new organizational structure that seeks to fuse holacracy with decentralized, on-chain governance to maximize the benefits and minimize the drawbacks of each.

In early 2018, PARSEC Labs began operating as a holacracy, a non-hierarchical organizational structure attempting to foster self-management and adaptability. For the time being, LeapDAO is still a holacracy with no substantial integration of on-chain governance; the name change from PARSEC Labs seems to be more reflective of purpose than product at this point. "The change in self-governance has made us aware that we have a responsibility to govern the Plasma chain that we are creating," wrote LeapDAO's Johann Barbie in a recent blog post.

ETHNews recently got the opportunity to sit down with Barbie, who first proposed the decentralized adaptive organization. In our conversation, he described the concept in terms of how existing government structures balance the need for adaptability and agile decision-making with the need for those decisions to reflect public interests. He said:

"If you look at governments, right, they often have two organs. They have a private, synchronous sphere where representatives have meetings, they negotiate, they make decisions. And then there's also this public sphere [where when people are unhappy,] they can take to the streets, protest, throw stones at the windows, storm the parliament and say, 'You're out.' And if you remove that second part, it's really dangerous because then the first part [becomes a repressive dictatorship]. So you always need that second part for the first part to work.
"I kind of see the DAO as the public sphere and holacracy as the private sphere. We need a synchronous space where we can act fast and, you know, be agile like a startup. And we need an outer atmosphere where we can get the opinion of everyone, take it into account, and make sure that we don't separate from the views of the general public and still deliver value to them."

Why On-Chain Governance Alone Won't Cut It

Blockchain-based decentralized organizations are a great idea, in theory. They propose a solution, or at least a workaround, to some serious challenges many people attempting to run businesses face: cross-border payments, bureaucracy, government overreach and oppression, and inadequate and corrupt banking systems.

In terms of LeapDAO, a decentralized organization fits with the ethos Barbie outlined in his blog post:

"We believe the public good we are creating can only be sustained with a large number of diverse stakeholders. Everyone should be able to participate to keep the Plasma chain as open as the Ethereum network itself and as aligned with the purpose of Ethereum as possible."

Barbie says that the opportunity for public participation is important to LeapDAO because it sees its scaling solutions as a public good. If what the LeapDAO team builds is to be widely used by and beneficial to the public, it's in their interest to be transparent about their decision-making and consider user demands.

But DAOs have some issues.

In a well-known blog post by Vlad Zamfir published last year through Medium, Zamfir laid out his skepticism of on-chain governance, saying, "Blockchain governance is not a design problem." Instead, he sees it as a process that requires significant coordination, information sharing, negotiating, and politicking. These things are best done through forums and synchronous meetings where real communication can take place.

LeapDAO agrees. Its proposal for a decentralized adaptive organization also cites the shortcomings of strictly on-chain governance:

"The rules that we can encode on blockchains are limited, they can not interpret the purpose of the organization or translate it into actions or strategies. Much less they can make judgments about values or integrity. For effective execution, human leadership and teamwork is required."

Holacracy as Means for Non-Hierarchical Agility and Leadership

Implicit in LeapDAO's proposal for the integration of holacracy in blockchain-based governance is the belief that human leadership and synchronous coordination might be helpful, or even necessary, for agile development, but that doesn't have to mean a compromise to the idealism that drives so many to "buidl" Dapps and organizations on Ethereum. Maintaining focus on decentralization, inclusivity, and egalitarianism in human-run governance just takes a little imagination and an openness to failure.

Holacracy addresses this by offering two important features: forums for discussion about organizational purpose and how to move forward, as well as the empowerment of individuals to quickly adapt and problem-solve.

Whereas in a traditional organizational structure everyone answers to their boss, in a holacratic organization, there are no "bosses" and people are responsible for answering to their self-assigned roles and the clearly defined purpose of the organization. They are responsible for being experts in their roles, for recognizing when change is needed and what should be done to address the issue, and for executing whatever actions they've deemed necessary.

The idea is that if everyone is responsible for their roles and can problem-solve in their area of expertise without the need for constant check-ins and permissions, then the organization can more quickly evolve to market needs. Additionally, in a non-hierarchical structure, there's hypothetically less room for coercion or favoritism.

Further, holacracy specifies clearly defined relationships between roles and forums for coordination and consensus-building around purpose and strategy. There's room for everyone working on their own, and there is also space where everyone comes together (outside of their roles, just as humans working toward a common organizational purpose) to hash things out. It is all very clearly and explicitly baked into the organizational structure.

The Framework of a Decentralized Adaptable Organization

So how does one go about fusing on-chain governance with off-chain holacracy? To be clear, LeapDAO's explanation of its model uses holacracy-specific jargon to describe the vision, but the particulars aren't necessary to understand the idea and import of what LeapDAO is doing. (If you're really compelled by the idea of a decentralized adaptive organization, then I'd encourage a deeper dive into the holacratic model.)

Value-Generating EDCC with a Native Token

LeapDAO's model for a decentralized adaptive organization is, as you'd hope, flexible. Though the team is building this framework for its Plasma chain, it could be repurposed for any number of Dapps and organizations. However, the model does require the existence of an EDCC (aka smart contract) that creates value through user interaction and has a native token. This could be any number of Dapps. The specifics don't matter too much; it's just important that users have skin in the game and tokens to vote with.

The framework around that core contract involves a multisig wallet controlled by the holacratic organization, a contract library where the development team uploads the proposed upgrades, and one or more voting-enabled EDCCs. Again, the specifics would vary between applications, but these are the basic components of the decentralized adaptive organizational model.

Protocol Changes Are Voted On

First, developers submit contract updates to the contract library. These updates are not made to the value-generating EDCC, only held in the library to be enacted later (or not).

At that point, a proposal to enact the contract upgrades held in the library is submitted using the multisig wallet, to which various LeapDAO team members hold a key. A holacratic organization contains a number of semi-autonomous groups responsible for different aspects of the organization's purpose, so requiring someone from each of these groups to sign off on a given proposal is an interorganizational system to ensure and prove consensus between groups. The multisig model also acts to maintain a system of checks and balances within the holacratic organization

Once a proposal has been submitted, token holders use the voting-enabled EDCC to vote whether the changes should go into effect. In LeapDAO's imagining, the voting-enabled contract is coded so that unless a given percentage of votes says otherwise, the proposed changes will automatically go into effect.

More Than Just Code Updates

Code updates are only one small piece of the decentralized adaptive organization pie. LeapDAO also proposes that voting-enabled EDCCs be used to determine the organization's purpose. In a holacracy, organizational purpose is not some amorphous aspiration but is truly the central point around which everyone's roles and responsibilities are determined. This means that token holders have a real say in what gets built. It's notable, though, that in a holacracy, there is a pre-determined process if a situation arises where there is significant tension between a decision-maker's choice and everyone else's preferences.

In a decentralized adaptive organization, EDCCs could also be used to curate what issues are discussed in the off-chain governance meetings dictated by the holacratic organizational structure.

Finally, and perhaps most importantly, voters would have the power to oust LeapDAO from power if they found it necessary. In case the key holders of the multisig wallet fail to submit adequate proposals, the on-chain governance contracts could also be used to endow a new address with that responsibility.

Making It Happen

The official move from PARSEC Labs to LeapDAO only happened about two weeks ago, so the team hasn't had much of an opportunity yet to realize its purpose. At this stage, the team is still working on the particulars of how to upgrade its Plasma contract using the contract library. However, their track record proves agility and dedication to non-hierarchical governance. Since the team's formation about a year and a half ago, they've shifted focus from gaming to scalability, received an Ethereum Foundation scaling grant, made notable progress in buidling, and transitioned from a loosely organized flat organization to a holacratic one.

Barbie admitted that the shift to holacracy presented something of a steep learning curve for PARSEC Labs and that they're still learning, but overall, the structure has encouraged PARSEC's developers to take more initiative and be more communicative and collaborative in the development process. Now we'll just have to wait to see how the vision continues to evolve and what they build.

Alison Berreman

Alison has a master’s in English from the University of Wyoming. She lives with her pooch in Reno. Her favorite things to do include binge listening to podcasts, getting her chuckles via dog memes, and spending as much time outside as possible.

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