The Foundation of CityDAO
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December 20th, 2021

From Scott Fitsimones first tweet to having $7MM in the treasury this has been a wild ride. We are in a great position with an incredible opportunity. We need to assess where we are today, and decide on how to make the best use of this gift. And it truly is a gift. We have a substantial amount of talent from inside and outside crypto, media attention, and more capital than most startups. We are receiving serious interest from investors, other projects, even governments.

The next step needs to be establishing a basic foundation. Today we are missing some key necessities to move forward. Specifically an operating agreement for the Wyoming DAO LLC and our Charter. Without establishing these we will not succeed. Without these, everything we attempt to build will be on top of sand.

CityDAO has a massive responsibility not just to our own vision but also the broader ecosystem of DAOs and web3. We are pioneers in bringing decentralized coordination into the physical world and its organizations. Let’s empower the first CityDAO Council with the clear objective of ratifying the pillars of our foundation.

DAO starts with Decentralization

DAOs are beautiful. Decentralization is the greatest tool humanity has against tyranny. The ability to coordinate in a truly decentralized fashion is world changing. The goal is perfect contracts executing the will of the organization's members. But it is important to remember that DAOs are a concept we are defining through experimentation. In practice we have a long way to go.

All DAOs operate on a spectrum. On one end of the spectrum is what we can call perfect decentralized coordination. On the other end are pseudo DAOs, we can just call them corporations. Perfect decentralized coordination is impossible today. And no matter where you are on the spectrum trust is being relied on somewhere.

Most DAOs today operate somewhere in the middle of the spectrum. They are able to use membership and voting to prove decentralized consensus. And then usually it is up to a smaller group of key holders to execute the consensus. Sometimes this is referred to as signers or devs. This design choice isn’t out of preference but out of a lack of options. The biggest challenges between consensus and execution are human interpretation, lack of tools or services, and interacting with legacy systems.

It might be tempting to make a goal of getting as close to the perfection end of the spectrum as possible. However moving the needle has pros and cons. One of the biggest cons is that decentralized decision making is slow. Especially if it involves complex human interpretation. Voters and contributors get fatigued. You can end up with an endless process and no tangible execution.

A DAO is born and growth can be painful

When a DAO is created it starts with an idea or mission. In this first stage the person (or people) starting it has complete control. They have to put in motion the formation and path towards decentralization. For a DAO to succeed it needs something in place to iterate on. At a minimum it needs an initial Charter (although this goes by many names).

We don’t have this in CityDAO yet. We were just getting started and took off before we could get a firm grasp on how to operate. Today we have 10,051 Citizen NFTs with the assumed consensus that one NFT is one vote. A core team of 10 members. 8 multisig key holders with 4 of 8 required for approvals.

Historically the core team has made decisions on how to proceed. This has worked well enough to get us to where we are today, and was necessary to get the DAO rolling. But increasingly it is becoming a blocker to not know what the governance process or mandate should be. This is leading to some paralysis, a growing unease, and frustration.

CityDAO is being built on sand and needs to take a step back to focus on the foundation.

Playing by the rules while disrupting

While DAOs are an experiment in decentralized coordination, CityDAO brings that experiment into the physical world. This is both more exciting and more complex. Most of the areas the web3 is disrupting are purely digital, allowing them to operate outside the reach of scrutiny. DeFi is a great example; many projects are anonymous or operated from friendly jurisdictions. CityDAO doesn’t have this luxury.

We have to coordinate both as a DAO and with centralized legacy forms of coordination. Dealing with real world assets in the US means interacting with local governments and institutions under their rules and laws. We are discovering how this new concept of a DAO LLC works, and quickly discovered even the lawmakers are still figuring it out (mostly what we have today is good faith on both sides).

Our soul is decentralization, but we have to walk in the land of legacy, at least long enough to disrupt it.

This situation puts unique legal constraints on how the DAO executes. We are giving life to something entirely new. A majority of the Core Team’s effort has gone into navigating this. A tremendous level of context and participation is required to build a foundation that meets the intersection of our vision and legal ability. Forming the CityDAO Council would allow us to embrace representative democracy at least long enough to accomplish this.

Proposing the CityDAO Council

The inaugural Council would have two clear responsibilities, ratify the CityDAO Charter and DAO LLC Operating Agreement. Together these documents will dictate how CityDAO proceeds (including the Council itself).

➡️ Proposal Details and Discussion ⬅️

Credit to Casey for the beautiful cover image “then there was fire”, taken on his visit to Parcel 0.

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