The topic for today is the DAO. Why does Olympus need to be a DAO, who is the DAO actually working for, and how do we put the D firmly into the DAO?
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twitter.com/WartuII/status/1540457596313866240?s=20&t=esSPcG4erHuUguI7LZIoUw
Let's start with the first question. Why does Olympus need a DAO? The answer lies in the very first sentence of our documentation:
''The goal of the Olympus protocol is to create a decentralized, censorship resistant reserve currency for the emerging Web3 ecosystem.''
If Olympus wouldn't be centralized or autonomous, we'd just be creating another Federal Reserve, and it would be the same old copy pasta from tradfi, with some extra bells and whistles.
This is why being a DAO is essential for the Olympus organization, vision, and execution.
A currency should be governed by its stakeholders. Often in the traditional world, the link between the users of the currency and the governance project is very, very thin. The Federal Reserve leadership is not elected, nor are their policies voted upon.
One could argue that this is for the better, since democracy has shown that time and time again that it's far from flawless and can put incompetent people into power.
In the case of DAOs, however, the people who will see the most absolute impact will also have the largest batch of voting power. Some find this unfair, since this gives more power to 'whales' and might give adverse effects for smaller holders.
I'd argue however that this is a key element necessary for an aspiring reserve currency.
Olympus at its core is a very simple project. After ranged stability and a few other initiatives, it should be able to live on its own without much intervention.
Over time, Olympus will be less and less dependent on the contributors of the DAO and will lean more onto its stakeholders. As a reserve currency, the ultimate end goal is that large entities will hold it as a reserve asset, making them 'whales' by the pure merit of the token.
This will result in numerous big holders who will have the responsibility to govern Olympus in the best possible way, since they also will have the most to lose if it fails.
Once more, some would argue this goes against the decentralized ethos of Olympus and crypto in general.
Decentralization, in my view, is not defined by the number of voters nor any other geographical or ideological differences.
Decentralization is centred (pun intended) around no single entity or group being able to dominate and control the system.
Much like the arms race in the past century, if one nation holds nukes, they hold absolute power. If 8 nations hold nukes, they keep each other in check.
So, who is the DAO working for? In the end, it should be the token holders. Much like with a stock exchange listed company, you are not working for the users of your product nor your co-workers.
This might sound controversial, but it's really not.
Token holders buy or hold the token to participate in the potential wealth generation and governance of Olympus. They also therefore control the expenses of the DAO. You as a DAO contributor get paid by assets they govern.
It makes sense that token holders want to maximize their value. Now, value can be many things, monetary, utility maybe even some ideology driven aspects. Yet, they will vote to maximize this, after which you as a DAO member should execute on this vision.
Many DAOs get paralysed by getting this key element wrong. I still remember the first reward rate reduction vote, where a very vocal minority held the debate hostage. When the actual vote closed, it passed with 99% in favour of the reduction.
Decentralization should also be present in the day-to-day organization as well.
We have this as one of our top priorities, as can be seen in this recent RFC:
forum.olympusdao.finance/d/1223-rfc-compensation-plan-with-bonus-structure
On-chain governance will a major piece of this puzzle and has been in the works for several months now. I'm happy to say that we've made significant progress here and have assigned our brightest minds to come up with an anti-fragile system.
Sadly, it's not just a switch you can turn on or off, and it will take some iterations to get it perfect. After all, Olympus is a 300 million + bug bounty.
I hope you enjoyed this thread and look forward to bringing you more next week, enjoy the weekend!