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Wetonomy App #70
Request for Nest membership and funding (#61)
Team name: Wetonomy
Proof of concept / research whitepaper:
Burn rate: ~ $18k/month for 8 months
Legal structure A project within the Comrade Cooperative.
Wetonomy is an opinionated set of applications and templates built on top of AragonOS that streamlines the creation of DAOs, allowing teams, companies, and organizations to collaborate, share profits, finance ideas and award contributions.
Wetonomy implements an innovative solution called High-Risk Automated Debt that allows all the contributors to a DAO to benefit from its future success. All contributors receive debt tokens for their contribution, which are then automatically bought back with the earnings of the DAO.
Implementation in cooperatives
If you are wondering how a DAO translates to a legal entity, it’s a cooperative. The cooperative entities are literally decentralized autonomous organizations in legal terms. Thus, the Wetonomy toolkit is most naturally applied in cooperatives which seek to be even more decentralized and autonomous, by applying a blockchain governance model.
Implementation in companies
Wetonomy can be also applied as an add-on to already established and running classical companies, even without going through any major refactorings of their structure. In practice, Wetonomy can be used as a blockchain based employee engagement and bonus system for SMEs. It can also streamline the fundraising for a business by serving as a loan investment tracking tool.
Wetonomy is built on top of AragonOS and will give teams, companies, and organizations the ability to collaborate, share profits, finance ideas and award contributions, all governed by smart contracts on the blockchain.
It comprises of the following Aragon apps that can be used either together for a fully functional Wetonomy or separately as single apps - Tasks, Time Tracking, Members, Token Manager App.
After having a chance to review the Wetonomy whitepaper I'm trying to refine my mental model of "high risk automated debt", how it works, and how it compares to other organizational models.
If I'm understanding correctly the basic/simplified flow is represented above. It seems like it can be more complex if there are different pools of debt with different terms, but hopefully this is an accurate representation of a single debt pool. Members track the effort they put in, which triggers inflation/increased issuance of debt tokens. This issuances is directed proportional to existing reputation in the form of a reward allowance, which is then individually dispersed by those members to other members. If a member fails to disburse rewards those rewards get burned over time, and there are some undefined restrictions to prevent members from only rewarding one other member.
Thanks for the summary, @lkngtn! Your representation of how the High-Risk Automated Debt works is accurate. Here are comments and answers to your other questions:
A: We are currently imagining a simple solution - you cannot allocate more than 20% of your token allowance to tasks assigned to a single other member. It's still not final as implementation problems might appear, but that's the intention. In general, malicious participants with high reputation are not very likely to appear as they are the ones with most investment in the DAO. Also, each member can be "deactivated" based on voting, specific for each Wetonomy implementation case. When deactivated, a member keeps his tokens but is not assigned new allowance.
A: The excess goes to the Vault. In the case of a company-like DAO, it can also go to a Split that behaves like an equity share, but that is not expected to be the main use case.
A: Reputation is basically how muck reward tokens you have earned in a certain period of time (or in total). The period itself can be configurable (as several other DAO parameters) through delegated PoS voting between token holders. This is something we hope to get by using Aragon and probably some of the voting applications being developed.
A: Our second milestone is the bay-back mechanism, which currently is just envisioned in principle but we need to work towards more implementation specifics. In general, the main parameters are about the rate of inflation in certain debt class and changing this rate is not expected to be a common case. If needed it can be achieved through a weighted average (of a numerical value) voting among the token holders of the given token class.
A: When income goes to a certain buy-back pool, it is distributed to all token holders of this token class, proportionately to their token balances of the given class. The expectation is that this income will arrive in multiple chunks, say each month, and will always be less than the total debt of this class until one day it's all bought back.
Each Wetonomy has an income source which is 100% available in the beginning. If no buy-back is defined, all the income goes to the Vault. When a token buy-back is defined it consumes a certain percentage of the total income throughput. New buy-backs can be defined freely as long as there is an available percentage left. This is performed by the company managers when a Wetonomy is implemented in a company or by the coop board when it's inside a coop (yes, coops are actual legal entities - see below). It's important to note that buy-back pools can form a graph where money flows into the next pool after the first pool is liquidated, thus enabling even more flexibility in defining new ones. Still, regardless of this flexibility, we don't see the creation of new token classes as a common case after the DAO is established. Most likely the pipeline will be defined in the beginning and will never change.
A: Cooperatives are recognized legal entities in all jurisdictions we know about (https://en.wikipedia.org/wiki/Cooperative). They are almost like a company with the only difference that the ownership is shared among the members. The coop is legally responsible for all of its activities and it pays taxes. The Comrade Coop is a registered entity under the Bulgarian law and we are also working to provide reusable incorporation documents and contributor contracts that can be utilized by other Wetonomy DAOs (hopefully flexible enough for different jurisdictions).
Regarding the milestones and deliverables, if I understand correctly we will have a set of Aragon apps (for this youwill be using aragonOS, aragon UI and aragon.js and the APM) that can be used separately as single apps or together for a fully functional Wetonomy DAO. In this last case, you say we will have contract templates for establishing a Wetonomy DAO as a cooperative entity or as a “bonus scheme” inside a company . Does this mean that people will be able to use those contracts and set up a cooperative according to the Bulgarian law? I imagine people would have to still do the legal paper work. I don't think the Bulgarian law allows for electronic incorporation of legal entities such as a cooperative, or does it?
Regarding the duration of the project, the roadmap goes up until April 2019. We would have to update the roadmap in case the application is approved?
Also, can you provide us with with an explanation on how the funds would be used?
Below are answers and comments on your questions:
Q: Does this mean that people will be able to use those contracts and set up a cooperative according to the Bulgarian law?
A: Yes, we will provide template legal documents for cooperative Articles of Association, Contributor Agreement and Loan Terms Agreement. The last two could be used also in the context of Wetonomy as a corporate bonus scheme, in which case we will provide also Common Terms sheet that will define the DAO within the organization.
Q: I imagine people would have to still do the legal paper work. I don't think the Bulgarian law allows for electronic incorporation of legal entities such as a cooperative, or does it?
A: Yes, of course. People will need to file their organizations with their local Trade Registry.
Q: Regarding the duration of the project, the roadmap goes up until April 2019. We would have to update the roadmap in case the application is approved?
А: We have already planned for this delay and if we get an approval within this month, we will not need to change the timeline.
Q: Also, can you provide us with with an explanation on how the funds would be used?
A: The funds will be used for the following:
@todorkolev regarding the first question and answer, I was referring to the automation of the incorporation of a cooperative via smart contracts but I imagine the Bulgarian regulator is not there yet ;) In any case the legal templates are important as well.
Hi @todorkolev and team,
After reviewing the application and taking into account all your answers and additional information, we have decided to approve this request for funding. We think that the suite of apps and DAO kit that you will be working on are very useful for the Aragon ecosystem.
Next steps: Let's schedule a call to go over some minor details to close the application phase and and discuss the onboarding process of the program.
Welcome to Nest! :)
A big 'thanks' to the team for welcoming us to Nest! It's so great to be a part of the amazing community of Aragon and participate in creating a 'more fair, efficient world' without borders.
@mariapao I'm in the Aragon chat as 'maya'. Should we schedule a call there ?