xGov Platform Evolution

Governance xGov Proposals
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Hi Everyone,

I’m Alessandro Cappellato Ferrari, Head of Product at the Algorand Foundation.
On behalf of the team behind this effort, which is comprised of @Adri @trekianov @StephaneBarroso and @Loedn (myself), I’m happy to present the working document for the evolution of the xGov platform.

The proposed solution, in its current state, addresses a non-trivial amount of feedback given by the community during the pilot phase of the xGov program. This doesn’t mean that what we’re proposing is set in stone, quite the opposite.
It’s easier to start a community led discussion from something concrete than from 0, so now the fun begins!

Please find the document here | [public] xGov - Google Docs

We are present on all platforms of course and you can reach out to us personally, however we’d prefer for the feedback and discussions around this effort to be available to everyone. So we suggest using this thread, or the aptly named xgov-dev channel on our discord which you can reach by following this invite link | Algorand

I’m also happy to do “office hours” on a weekly / bi-weekly basis live on our discord where you can join the chat and ask questions / give feedback / watch how the platform progresses.

Let’s have some fun and build something cool together

Best,
Alessandro

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Please enable

  1. Requests of funding to be also in fiat currencies (USDc, EURs) … This will lead to better proposal planning and more efficient algorand distribution even for longer duration projects
  2. Delegation - Any account should be able to delegate to any other account. If account does not vote but has delegated their voting power to different account that has voted, consider this account as if it has voted. This will lead to better knowledge based democracy and much more efficient voting.
  3. Non public voting - Manipulation with votes must be prevented and fully open information during the voting session enhances the risks of manipulation. Please allow mixed solution of open voting with encrypted voting.

Please consider creating the Vision for the xgov. If it is only about the grants funding in long term, please state it… If it is suppose to provide any expert type decision making on algorand, such as executive decision, source code management or other please state it as well and direct all development towards this vision.

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One thing that concerned me slightly was the high turnover rate of the council. While I’m sure this was implemented to allow fresh blood to enter and help hinder corruption, it also hinders the effectiveness of the good and honest community members.

Maybe consider doubling the term length?

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Possible solution proposed in a discord chat is to take the approach of a staggered turnover:
Only 50% of the council at a time. This would make terms 6 months long whilst ensuring still preserving knowledge and how-tos between terms and avoiding long onboarding/ramp-up periods.
Period 1 council = A,B
Period 2 election would change only A
Period 3 election would change only B

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The role of Xgov should not be that of a VC - speculatively gambling on future outcomes. It should be to reward those who are ACTIVELY MAKING AN IMPACT already as they are not receiving ANY support. Retroactive funding based on impact completely removes the issue but I guess it’s too radical to fund those who do the most even though the community seemed to be onboard? Who exactly at AF is making this decision that we must stick with this Xgov framework? Do I need a signed petition from every Algorand community member saying we could build a far better less complicated system?

I urge all the Algorand Foundation members to look at what Optimism is doing with retroactive grants / airdrops. They’re truly working to grow the ecosystem and support the people there. They just airdropped 10m OP to their NFT creators ($40m = ~ 220m ALGO). This is the kind of community support we need to be aiming for, recognizing those who make impact and rewarding them meaningfully, not these microscopic improvements to a broken program that will not change anything big picture.

No matter how many safeguards you put up around Xgov, it will still fail to efficiently and effectively distribute funds because no one knows the future, and because that isn’t the goal of the program, the goal is to fund proposals. The goal should be to fund those who actually make an impact / deserve it / will put funds to good use. Instead, we have the same old Xgov, where people who ‘might’ build something throw a proposal in to try and get some money, and if they get some money, then they might build it, and maybe if we’re lucky it will be used by 5 people. The point is - no one can tell the future, and no one can predetermine the impact any project will have, so why the hell are we trying? Not just trying, but being forced to by the AF. Apparently, no other design can be considered like the one I proposed with Impact DAO. It feels like it’s this or nothing and that’s truly disappointing because I keep hearing this is designed by/for the community, but as a community member I don’t feel this at all.

Milestones are a huge red flag. There have been dozens of high profile grant recipients who had milestone based grants, completed all their milestones, got millions of dollars, and the impact they had on mainnet was literally 0. Milestones ‘seem’ like a good idea until you break it down. Who is going to be responsible for judging if these milestones are completed?

Yes that’s right, a rotating group of 17 people that is voted in that changes every 3 months is going to be responsible for going through the potentially 10’s to 100’s of concurrent grants milestones. This sounds super unrealistic to me. For sure it will be an administrative nightmare for those on the council. Many milestones are technical, so for example, how will the council judge if a smart contract is working if they don’t yet have the UI (which comes in a later milestone)? They would need to be highly technical to be able to do this. And how do you get 17 highly technical people to dedicate days - weeks to this without any compensation? The whole thing to me seems highly unrealistic, overly burdensome on the council members, and STILL missing the bigger picture that we should be rewarding impact not promises / hopes / dreams. On top of all that, allowing these key roles to be voted in opens it up to be a popularity contest, meaning these council members will not be the ‘best fit for the job’, they will be ‘the loudest people in the room’. We are sacrificing accuracy for ‘fairness’ which imo is a terrible trade-off.

The fact that KYC is being forced on proposers is ugly. This should be controlled by a smart contract that does not care who the recipient ‘is’, it’s just an Algorand account. This just shows how centralized this whole process is and how unambitious we are in changing it, or anything frankly. This should not be the Algorand Foundation sending people grant money, it should be the AF funding a mechanaism which operates independently and autonomously to determine how the smart contract distributes funds.

A far better approach to funding would be designing the Impact DAO as laid out here: Proposal for the Establishment of the Impact Oracle DAO to Fund Public Goods in the Algorand Ecosystem | by fisherman.algo | Feb, 2024 | Medium

I don’t believe builders should have 0 risk when starting a project. You should not be able to show up with a pitch deck and receive free money from the foundation to build it. Where is the risk for the builder? They don’t even need to care if the project is good or bad, or if it will make a big impact or no impact. If they don’t receive funding then they don’t build it.

Since there was a lot of push back that some proactive grants should still be available in some fashion, this is the best solution I have seen to allow proactive grants to stay in some fashion, thank you Kappa for this great idea.

Make a crowdfunding App / DAO where interested users for a certain dApp to be built set up funding milestones. When the milestones are reached, the funds are given to the builder, then when the product is delivered and on mainnet the Impact DAO can judge the impact of it, and if it is seeing success, then the Crowdfunding DAO gets paid back via the Impact DAO awarding the project RGPF, and the members who funded the project get their money back + a small amount of interest, with any remaining funds going to the project themselves.

This does multiple things -

  1. It puts someone else’s money at risk for speculative projects, not the AF treasury. This is CRUCIAL. The individual members of the DAO would risk their own money, and only get paid back if successful as determined by the Impact DAO.
  2. It allows speculative, not yet built projects to still have a funding source.
  3. It rewards the sharpest investors with yield as they will only make money if the projects they choose to fund are successful.

I feel like coupling a proactive DAO with a retroactive DAO is the best path forward if we’re determined to build a mechanism that can fund both proactively and retroactively. The retroactive DAO is funded via AF, and the proactive DAO is funded via community members / investors, and if successful they get rewarded via the retroactive DAO.

In summary, Algorand is currently a very depressing space for builders. Maybe 2 projects on the entire chain are profitable, meaning every other project needs retroactive funding to be viable in the short-medium term. Until scale is reached, we all need assistance, and substantial assistance. If this does not change more projects will leave the ecosystem, not because they want to, but because they’re forced to. NFTx doesn’t want to close, but there is no possible way to turn it profitable with the ecosystem the size that it is, and without public goods funding. This fact not being realized by the community / AF is deeply troubling, and will lead to more projects leaving the space than entering. We need a system that encourages people to create impact, not a system designed to handout free money with a bunch of stipulations.

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Agreed 100%

When the foundation is the only source of funding, a proper system that does not involve yield farmers deciding your fate is ideal.

The solution you’ve proposed addresses this issue effectively, providing platforms with the opportunity to thrive, fueled by the optimism of the ‘We are early’ proponents.

This new system might very well be the catalyst needed for the ‘Rise of the Phoenix’ prophecy that is often mentioned to finally come to fruition.

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It makes a ton more sense to support projects that have already shown they can do something valuable. I mean, why bet on what might happen when we’ve got solid stuff happening right in front of us? It’s like choosing a rookie with a good speech over a player who’s already scoring goals.

By backing projects that have a proven track record, we’re not just playing it safe. We’re actually making smarter choices. This isn’t about being afraid to take risks; it’s about not wasting resources on what’s essentially a gamble. In the blockchain space, where everyone’s looking to the next big thing, it’s easy to get carried away by a good story. But let’s not forget, actions speak louder than words.

Plus, this approach could change the whole vibe of the blockchain community. Instead of chasing after the next shiny promise, we could foster a culture where real work and real results get the spotlight. Imagine a community that values what you’ve actually done, not just what you say you’ll do. That’s the kind of shift that could make all the difference, steering resources to projects that not only dream big but also deliver.

So, yeah, maybe it’s less glamorous than betting on the underdog with the mesmerizing pitch. But in the long run, supporting projects that have already made a mark seems like the smarter play. It’s about building on what works, learning from tangible successes, and making sure that when we do take a chance, it’s on something that’s already started to prove its worth.

My 2c.
Thanks

Talk is cheap, Algorand delivers - Silvio Micali
Let’s make xGov fit that quote ! :muscle:

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I agree with @fisherman.algo and completely reject the sketch presented. His proposal is a very good template and should be seriously evaluated for its merit. The proposed xGov sketch is lacking for at least the reasons Fisherman mentioned. We could easily find inspiration by looking at the governance processes from other chains, like Fisherman did when he mentioned Optimism, evaluating their merits, learn from them, improve on them, and integrate fitting structures in relation to the possibilities Algorands tech offers - which should be plenty. It strikes me as unambitious and potentially fatal not to do so. We need to take a lot more time to get things right if this proposal is all we got to date. It feels ad hoc, faulty and at least unambitious.

In my view it is urgent for the relevance of the chain to get the network upgrade, AlgoKit and Governance processes right. We have not all too much room for additional faulty decisions draining resources and time. Following Fishermans proposal, I urge to take the necessary time to evaluate and contemplate solutions from the competition to implement a governance structure for Algorand that is exactly as progressive and ambitious as Algorands underlying tech. We should take the necessary time and do it right from the start.

EDIT: We could discuss and work out several options for governance implementations and let the community take a vote on it for direction.

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I can only support the idea of retroactive funding (RPGF), it’s probably the most sustainable way for our ecosystem!

As has already been said, IMHO, it’s much simpler and safer to financially reward a person or company that has already made a tangible contribution to the ecosystem, and whose real impact is easily visible by everyone, rather than the opposite.

From my personal example, I can find lots of interesting xGov proposals, but I encounter two problems/uncertainties:

  1. I have no idea if the person or company behind the proposal is truly capable of delivering what is planned

  2. I have no idea about the future impact of the proposal, was it really worth the money invested?

I really think that the retro funding solution would make our ecosystem more qualitative and that this would encourage more builders to come to Algorand and deliver something with a real impact for the ecosystem.

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i like where this is going.

@fisherman.algo name me few projects that you believe achieved a great value to the ecosystem and weren’t either funded by VCs or given grant from AF. Your retroactive grant is great as supplemental funding channel, but it can’t be THE ONLY one. no serious builder will do stuff for free in ecosystem with 100 users - let’s get real and stop pretend and act like we are top10 chain and can afford to turn devs away…

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This would require me knowing every project which has received a grant and IDK that off the top of my head, but just one example would be D13. D13 has has created a massive impact in the ecosystem and hasn’t received a grant / outside funding. He probably has created more impact than 25% of grant recipients combined.

Another example would be MNGO.

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It’s interesting to note that historically, most of grant recipients in our program ended up leaving or shutting down or even not delivering at all, which really puts things into perspective. This history emphasizes the need for a more sustainable and impact-driven approach to funding.

The idea that developers can begin by bootstrapping their projects to create a small but meaningful impact is something I strongly believe in (web2 dev speaking here). It’s not just about proving their commitment but also about demonstrating the real-world value of their projects without initially relying on heavy funding.

This approach sets a solid foundation for seeking VC support or foundation grants later on. It’s a way to ensure that when projects do seek out funding, they’re already backed by a track record of impact, no matter how modest. This isn’t about leaving devs without support but ensuring we back those who’ve shown they can deliver.

I think it encourages a healthier ecosystem where funding is directed towards projects with proven potential and dedication. It’s about fostering a culture of achievement and sustainability.

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I somewhat disagree that everything should be retroactive. We might be able to get some smaller scaled projects coming, but not attract any bigger, more complicated projects.

Sure it will help fuel the people already here, but working without a a runway is risky in itself.

I am okay with gambling on some rookies in order to help bring new people into the ecosystem and they can be evaluated on a case by case basis.

Grant farming is a big issue across web3, but there have been plenty of existing ecosystem projects that have received grants that are still here and building. I feel like when it comes to this topic we often focus on the bad grants and ignore the good ones.

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I have no problem with major strategic funding from the Foundation to e.g. Hesab Pay & friends. Mostly because of completely different due diligence. When it comes to the proactive governance funding though, I would a priori support @fisherman.algo’s idea of a “crowdfunding DAO” over the one presented. It would be a fitting idea for a game-theoretical, decentralised and permissionless system. It would in my mind at least remedy some of the faults of the current xGov system and still allow for targeted subsidies from the Foundation.

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Read the proposal from AF. Appreciate the draft.

Here are my thoughts:

  • Council Member Terms: The terms for the “council members” are a bit short, even with a staggered council structure–changing 50% of members every 3 months means more time is wasted having to transfer knowledge. I’d increase the membership duration regardless of how you want to add/remove council members.

  • Funding Types: I strongly support retroactive funding because people must have risked to build and have the actual numbers to back it up (i.e., usage of their product or actual impact on the ecosystem).
    I am against proactive funding because it has so far failed for the most part. If proactive funding is something that will still be allowed… it should be only for rare instances and any project coming through for an initial funding request should be applying, by default retroactive funding. The reason proactive funding is terrible is as follows:

    • Proposers have no skin in the game–They are given resources early from AF and waste that away.
    • Proposers’ milestones are poorly established as they are set with the intention of getting funding and not showing true value/impact for the ecosystem.

  • KYC for Proposers: I am slightly against this idea. Unless AF is going to use KYC to go after bad actors (I don’t see that happening), I don’t see much value in it.

  • Alternatives to this Proposal: I think @fisherman.algo 's feedback in this current discussion is worth considering as the new structure for the xGov program, either through integration or replacement. Proactive grants, if necessary, should be funded by the public through individual DAOs/crowdsourcing, and an Impact DAO/AF can always “reimburse” the individual DAOs for successful projects post-launch and upon review.

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Let’s analyze this step by step:

Who exactly at AF is making this decision that we must stick with this Xgov framework?

No one, we’re simply putting forward a proposal to the community on how the platform should evolve, the community can either get onboard and help shape in the direction they want or reject it, fairly simple.

You urge all Foundation members to look at what Optimism is doing, we are! Optimism not only does rpgf, but they also do proactive grants Get a Grant | Optimism Docs just substitute Seed / Partner Fund with xGov treasury and you see we’re actually giving our community a greater responsibility / power to pick what they think is best for the ecosystem they’re a part of.

Optimism just airdropped $40M to their NFT creators

Aren’t those creators already rewarded by primary and secondary sales of their creations?

Apparently, no other design can be considered like the one I proposed with Impact DAO

Let me quote myself from the first post “This doesn’t mean that what we’re proposing is set in stone, quite the opposite.”

On the burden of 100s of milestones verification to a rotating 17 people council:
1 - numbers aren’t fixed we can increase if community feedback suggests so
2 - Isn’t your proposal allowing the DAO to be submerged by having to find, fact check, and evaluate an unlimited amount of candidates every 3 months?

KYC

Things like OFACs, AML, GAAP (Generally Accepted Accounting Principles) or insert country equivalent exist and all legal entities have to abide by them, as noted in the document we can not wait to do away with kyc when DIDs arrive.
additional resources: Gitcoin's KYC - Gitcoin support RetroPGF Round 3 | Optimism Docs

You should not be able to show up with a pitch deck and receive free money from the foundation to build it.

I agree, hence why milestones, and during the discussion phase of the proposal life-cycle xGovs can ask for stricter / more robust milestones, then it’s up to the xGovs to decide if the proposal satisfies the collective risk appetite with the vote.

Now, onto the proactive feedback of your post (Kappa): I agree, it’s interesting, and we should definitely find a way to bake it into the platform

We can also find a way to skew the funding allocation more towards rpgf if that’s what the community wants, we can also enforce milestones based on adoption metrics (though easily gameable), as I said nothing is set in stone, and being proactive at this stage is the best path forward.

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How do we reject it? It seems like all we can do is argue on this post and ‘someone’ will make the ultimate call as to what happens. Specifically, who can make the call to kill the current version of Xgov and go with an Impact DAO? It’s still very unclear.

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Seems like we should be put them up side by side to a full Governance vote. There’s time to develop your idea out while the xGov proposal is tweaked. Let both ideas be developed based on feedback. Then, the Governors can choose.

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I agree with some of the AF proposals and with some of yours. This is healthy. You make some good points and so does the AF. Here are my thoughts.

It’s definitely not too radical. This makes perfect sense. Retroactive funding is the way to go and retroactive funding should be provided by the AF. Proactive funding should come from a blend between 3 parties 1) the Builder themselves (they need to have skin in the game and put up a percentage of their own funds, this can come from their parents, from VCs, from whoever but they need to have skin in the game). 2) From the community, like a DAO. 3) AF (case by case).

We have to accept that it’s impossible to build a prefect system where every single soul is happy. IT’s JUST NOT POSSIBLE. This argument can be turned back to you as well (not saying that you are not making good points, you certainly are an asset to this community) - but what is stopping someone else who disagree with your views to say the same: “do I need to a signed petition from every algorand community…”

Just because NFT’s work on other chains, does not mean it would work on Algorand. Maybe the NFT market is already saturated? Other chains had first mover advantage on NFTs hence most of the volume is there. But overtime, I think many people started to realize that paying thousands of dollars for a stupid JPEG Image is silly. I can just screenshot an image and use it with zero consequence. So why pay 100s of thousands of dollars for an image? I love algorand but I have never ever bought an NFT not on algorand or on any other chain. Not because I don’t support Algorand, but because I think it’s a waste of money. It’s stupidity. Plus NFT market is all gamed and alot of wash trading occurs there.

I would buy an NFT if say someone came up with the idea to tokenize every already well known and popular and famous, art piece from all the popular museums in the world like Van Gogh etc… This would make sense for me to buy an NFT because I am buying something already of value but in a digital form. But for this to work, I think the museum itself needs to be the one to tokenize them as it will hold more value. If any random human were to tokenize it, it won’t work. Just a thought.

100% agreed - retroactive funding by the AF will fix this issue.

That’s why proactive funding needs to come from a blend of 3 parties - The builder themselves need to put up some funds, the community and perhaps the AF (case by case). Building a business is a risk. Building a DAPP is like building a business. If a dev has a good idea of a dapp but is a risk averse human and scared to put up their own funds - they need to get get funding from somewhere and then come propose their idea here.

Not if the builder has put up their own funds too. Milestones work well it’s the best way forward for proactive funding. And in life, best we can do is put in 100% of the effort and what happens after that is beyond our control. For builders to put up 100% of effort, they need to have skin in the game, hence why they need to put up a percentage of their own funds too.

I think having KYC could be a good idea. If you want funding from the AF, they need to know who you are. If the community is also funding a proposal via DAO, I surely want to know who the hell you are. I ain’t funding any company/human blindly - it’s stupidity. KYC will in fact limit bad actors and stop grifters coming for only the money.

Fully agree! That’s why they need to put up a percentage of their own funds.

Good Idea!

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Agreed.

If a dev is risk averse but still has a good idea and wants to minimise those risks. She/he should keep her day job and work on it on the side. That’s how you normally build a business. Validate what you create, try to turn a bit of profit and then choose to get outside funding if you think you can accelarate. Even better would be continue bootstrapping…

There’s no such thing as a free lunch. And I don’t understand why that narrative got lost in web3. Web3 has a lot of good things, but profitable businesses/mindset and funding ain’t one of them at the moment.

Retroactive funding might indeed be the most safest way for xGov to truly make a difference for the ecosystem. Teams can use the retroactive funds to invest in new features and keep a healthy development cycle with clear impact.

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