Detailed Plan

<u>Goals</u>

1. To facilitate the funding of proposals by a more rapid and transparent mechanism that incentivizes more meaningful participation by members, funders and proposers.
2. To provide a source of funds that can be used to fund DAO operations.

<u>Cardano Ecosystem Value</u>

The Cardano ecosystem will gain an alternative funding mechanism that is self sustainable and optimized for the funding of proposals of less than $10,000 USD in under 7 days. This rapid funding mechanism complements the longer 3 month Project Catalyst for larger proposals. Both funding mechanisms can co-exist without detracting from one another and there are plenty of collaboration opportunities.

<u>Action Plan Details</u>

Membership in the CryptoFusion Funder DAO is open to every living human being who can prove that they are alive and unique (see the Sybil Defense DAO proposal in the DAOs ❤️ Cardano challenge for details). For babies, invalids or others who are alive and unique but unable to vote for themselves, their votes may be delegated to a delegatee (or divided between more than one delegatee using the vote division process).

A time stamp of the initial registration, through the Sybil Defense DAO process, of a new DAO member begins the voting token accumulation process. Voting tokens are called Moments, with each Moment being the equivalent of being a CryptoFusion Funder DAO member for 1 day.

Each time a member goes through the authentication process a new timestamp is generated and the difference between the current timestamp and the previous timestamp is calculated to award Moments tokens. Fractional awards for partial days are awarded to a precision of 6 decimal places.

Anyone may submit proposals for funding, similar to the Project Catalyst funding process although there are no timelines or challenge categories for proposals. Proposals may be for anything although proposals that benefit the entire community are more likely to be funded. Proposals are to be under $10,000 USD equivalence although larger projects can be divided into a series of short development sprints of specific deliverables. All funding requests are in Ada instead of a fiat currency. Other cryptocurrency funding requests may be added in the future as the community grows.

Each DAO member can assign all or a portion of their Moments tokens to 1 or more proposals. A ratio of budget requested to cumulative Moments tokens is calculated in real time and displayed in a market place. For instance if Project A budget request is 200 Ada and 50 Moments tokens have been assigned to the project then the ratio would be 4 Ada per Moments token.

Funders, more accurately described as Token Buyers, review projects and the price per token ratios. Token Buyers place bids in smart contract escrow accounts for a certain number of tokens, at a specific price point for a specific period of time. If sufficient Token Buyer bids are in place at the current token price ratio that the project can be fully funded then the smart contract executes. If the bid expires without the smart contract executing then the funds are returned to the Token Buyers.

When the smart contract executes the following activities occur:

1. the Token Buyers Ada funds are transferred to the Proposal wallet address
2. The Moments tokens are burned and for each Moment token burnt 4 DAO tokens are minted (this is the only way that DAO tokens can be minted and there are no initial tokens that will be minted outside of this process)
3. The 4 minted DAO tokens per Moment token are divided as follows:

• 1 DAO token is given to the member who assigned the Moments token
• 1 DAO token is put into the DAO Net Treasury
• 1 DAO token is put into the DAO Net Tax Pool
• 1 DAO token is divided among the Token Buyers proportional to their contribution towards the total Ada price

<u>Scalability</u>

Using a real time free market mechanism combined with a cumulative voting method for proposal funding the solution can scale to funding thousands of proposals per day with no onerous burdens on voters, proposers or funders. In practical terms, the solution is limited by the performance of the blockchain on which it resides. The smart contract requirements are complex therefore the solution is likely to be resource intensive initially. Smart contract optimization and an eventual dedicated sidechain(s) are likely required to achieve massive scalability.

<u>Market</u>

Given that members can each earn the equivalent of up to half an ADA per day for participation and that friends and family members can be onboarded with voting delegation, it is expected that this could be a desirable source of income for potentially billions of people in developing countries. Decentralization advocates, token speculators, and entrepreneurs are the target market in developed countries.

<u>Acquisition Plan</u>

• Target the 44,000 Project Catalyst voters in Fund 6 as early adopters to demonstrate the potential income to the broader Cardano community
• Target the existing Cardano Community Hubs as early adopters to demonstrate the potential income to diverse communities
• Encourage early adopters to onboard friends and family for additional income

<u>Skills Required</u>

Product Manager

• have a holistic understanding of the DAO-NET suite of proposals
• experienced in managing multidisciplinary teams in up to a dozen projects simultaneously
• ability to articulate and fluently translate between business and technical requirements
• able to manage large complex budgets
• experienced in hiring consultants and third party contract negotiations

Lead Developer

• Full stack developer experience
• Plutus development, especially algorithmic DAO smart contract primitive
• Define technical requirements
• Integrate multiple software components into a larger solution

Plutus Developer

• Full stack developer experience
• Plutus development of smart contracts, Plutus Pioneer preferred

<u>Team</u>

Product Manager: Dwayne Collard - 20 years+ IT Consultant, Solutions Analyst, IT Manager, Community Advisor <https://www.linkedin.com/in/dwayne-collard/>

Lead Developer: Jude Ben - 9 years+ Software Development , Plutus Smart Contract Development , Cloud and Infrastructure Engineer <https://www.linkedin.com/in/judeebene/>

Plutus Developer 1: Contractor to be determined

Plutus Developer 2: Contractor to be determined

<u>Roadmap</u>

February 2022

• Prototype algorithmic DAO smart contract (only required if DAO Deployment Platform proposal not funded in which case cost is shared among funded DAO-NET proposals)
• Prototype proposal submission process
• Prototype Moments token minting, voting process

March 2022

• Prototype Backend API
• Prototype free market proposal funding process

April 2022

• Web interface for voting development (only required if DAO Deployment Platform and Voting DApp proposals are not funded in which case cost is shared among funded DAO-NET proposals)
• Prototype Moments burning/DAO token minting process

May 2022

• Third Party Smart Contract Audits

June 2022

• Test algorithmic DAO smart contract on Testnet
• Test CryptoFusion Funder process on Testnet

July 2022

• Launch Experimental Funding Mechanisms DAO (an instance of the algorithmic DAO smart contract) on Mainnet
• Launch CryptoFusion Funder on Mainnet

<u>Key Performance Indicators</u>

• Total number of proposals
• Total ADA budget requested
• Total number of proposals successfully funded
• Total ADA budget funded
• Average number of days until funding received for successful proposals
• Average ADA funded per day
• Number of members
• Total member incentives awarded in DAO tokens
• Total DAO-NET Treasury awarded in DAO tokens
• Average ADA price per DAO token minted

<u>Success Definition</u>

3 months

• Prototype algorithmic DAO smart contract with voting interface created
• Prototype of complete CryptoFusion Funder market created

6 months

• Experimental Funding Mechanisms DAO launched
• CryptoFusion Funder launched
• At least 20 proposals submitted with ADA budgets under $10,000 USD equivalence each
• At least 1,000 DAO members active in the CryptoFusion Funder market

12 months

• At least 40,000 ADA in proposal budgets funded
• At least 320,000 in DAO tokens awards to members/DAO-NET Treasury
• At least 50,000 DAO members active in the CryptoFusion Funder market
• Average days for successful proposal funding under 7 days

<u>Budget</u>

Plutus Developers ($4000/month x2):$48,000

Smart Contract Audits: $10,000

Product Manager ($2,000/month): $12,000

Algorithmic DAO Smart Contract*: $10,000

Total: $80,000

* Algorithmic DAO Smart Contract budget is for a very scaled down unaudited DAO solution, including hosting services, which is required to make this proposal deliverable in a stand-alone funding scenario however if the DAO Deployment Platform proposal is funded then this budget will be used to cover additional contractor expenses if required including for smart contract audits otherwise it will be added to the DAO Token / ADA reserve pool mentioned in the DAO Token Market proposal. If the DAO Deployment Platform is not funded however 4 other DAO-NET proposals are funded then the DAO Deployment Platform will be fully implemented with the combined funds of the 4 DAO-NET proposals.

<u>Future Funding</u>

Subject to legal review, DAO-NET intends to have a Bootstrap Funding contingency as further incentives to contractors, in which a small percentage of the DAO-NET Treasury can be set aside in a smart contract to retroactively fund contractors.

Proposals for additional enhancements to the DAO-NET ecosystem and new DAOs will be submitted in future Project Catalyst funding rounds.

If the CryptoFusion Funder proposal is funded then DAO-NET is expected to be self-funding when launched on the mainnet including the ability to fund other DAO proposals.

<u>IP</u>

All intellectual property is intended to be freely shared with the world so that any insights can be duplicated in other experiments to rapidly advance decentralized governance therefore:

All software developed as part of this proposal will be Open Source under Apache License, version 2.0

All documentation will be licensed under the Creative Commons Attribution 4.0 International Public License

<u>Challenges/Risks</u>

1 ) Likely regulations hostile to DAOs and decentralized blockchain applications

• Factions within the global elite publicly seek to thwart decentralization, as seen in recent and proposed legislation that is overtly hostile to decentralized blockchain ecosystems
• Most likely lawfare attacks against DAOs will be tax evasion and know your client requirements to comply with anti-money laundering and anti-terrorist financing regulations
• Typical member managed DAOs use a herd defense strategy in which there are so many anonymous members that individuals feel safe that they will not be identified and targeted however these DAOs normally have identifiable influential members managing some aspects of the DAO
• Traditional law enforcement strategy against herd defenses is to identify the prominent members of an organization and make an example of them through prosecution to deter the rest
• The dominant legal position is that DAOs are considered general partnerships, exposing members to personal liability for any of the DAO's actions and obligations
• Therefore there is a significant risk that prominent members of many successful DAOs will be subject to legal prosecution in the foreseeable future

Risk Mitigations

• DAO-NET to attain DAO Limited Liability Company status under Wyoming law. If funding for the DAO-NET proposal is not approved then contingent funding strategies are available including reapplying under Project Catalyst Fund 8, using standalone DAO smart contract funds in the event multiple proposals are funded and offsetting labor costs using a retroactive payment plan from the DAO-NET Treasury to free sufficient capital to complete DAO LLC filing.
• DAO-NET to use a totally algorithmic solution to reduce the number of identifiable influential members as much as possible
• All DAO-NET software developed will be open source allowing others to replicate and expand upon the decentralized solution in the wort case scenario of DAO-NET being legally disbanded

2 ) Bias by some Community Advisors and Voters against large solutions being divided into multiple proposals

• Current Project Catalyst funding process has a known limitation in which large proposals are unlikely to be funded unless the proposal is ranked number 1 in voting
• A solution to this limitation is to break a large proposal into smaller proposals funded under multiple challenges however some members view this as gaming the system or argue that large proposals should be funded by incremental funding in multiple funding rounds so that funding can be based upon achieving milestones
• This negative view of parallel funding is slowing innovation and making it more likely that projects are not completed due to lack of later funding regardless of success in achieving milestones up to that point
• Project Catalyst process already has auditing requirements for achieving milestones before funds are released which would apply to each proposal individually so that line of argument is not really valid
• Another known limitation of the Project Catalyst funding process is that there are insufficient funds to pay competitive living wages for labor costs in developed countries which results in jobs being shipped overseas to developing countries or requires workers to take on multiple gigs simultaneously however this wage gap can be addressed using the multiple proposal approach

Risk Mitigations

• This proposal seeks to change the discussion from whether or not multiple proposal solutions are a valid approach, to what are the proposal elements and challenges that need to be addressed in multiple proposal solutions
• As an experienced Community Advisor, with industry experience in the writing and assessing of proposals, this proposer has included all the elements required in the CA guide plus contingencies for the various funding scenarios like a single proposal being funded up to all the proposals being funded with the intention that CAs objecting to the idea of multiple proposals will provide feedback on what elements or concerns are not being addressed from their perspective so that future solutions will be more complete
• With the exception of the Product Manager and Lead Developer, who are required to participate in every proposal for integration purposes and have manageable workloads, no contractor will be involved in multiple proposals to prevent resource contention as being a reason to doubt feasibility of the solution overall

3 ) Recruitment of contractors required

• While the core integration team is filled, several specific proposal roles remain to be filled

Risk Mitigations

• Skill requirements have been clearly defined
• Labor budgets in the proposal are competitive with similar Project Catalyst proposals, with contingencies for higher wages if required including using standalone DAO smart contract funds in the event multiple proposals are funded or offsetting labor costs using a retroactive payment plan from the DAO-NET Treasury
• A number of Cardano experienced consulting firms have been identified that offer development services

<u>Related Links</u>

CryptoFusion Funder Slide Deck: https://docs.google.com/presentation/d/1UFDynL3oJDdL89V71lnG2AV4ZaceGRc_fFrvOWO4n5w/edit?usp=sharing
DAO Net Proposal: <https://cardano.ideascale.com/a/dtd/DAO-Net/380999-48088>