Research Summary
The report discusses the concept of Futarchy, a governance structure that uses prediction markets to determine policy decisions, and its implementation in Meta-DAO, a decentralized autonomous organization. It explores the potential of this new governance model in the crypto space, highlighting its potential to incentivize positive behavior and prevent detrimental decisions.
Key Takeaways
Futarchy: A New Governance Model
- Understanding Futarchy: Futarchy is a governance structure where prediction markets are used to determine policy decisions. Participants in a futarchy can raise proposals for market participants to vote upon through the usage of prediction markets. Decisions are directly influenced by participants betting on the impact a proposal has on the token, and whether it will have a positive/negative impact.
- Meta-DAO’s Futarchy: Meta-DAO is the first DAO to implement a futarchy on the blockchain on Solanaโs Virtual Machine. It uses a smart contract called “autocrat” that allows proposals to be submitted to the DAO, and it creates two separate pass/fail token markets, which then allow market participants to speculate on the proposal, and to predict the effects it will have on Metaโs token price, $META.
Participants in a Futarchy
- Roles within Futarchy: There are three main roles inside a futarchy: analysts/traders who speculate on token prices and market trends, entrepreneurs who wish to build and develop projects in the interest of the futarchy, and cyber-agents, the coders and developers that help the futarchy enact proposals, and build out assets for its benefit.
Types of Proposals in a Futarchy
- Proposal Formats: While anyone can submit proposals to Meta-DAO, itโs recommended to use one of the four formats: Business project, Business direct action, Operations project, and Operations direct action. These proposal templates help consolidate the desires of the proposer to the DAO, and ensure that the proposals are explained in enough detail for the DAO to make a balanced decision on them.
The Potential of Meta-DAOโs Futarchy
- Market Recognition: The price of $META has gone from $25 to $1,000 over the past few months, with a circulating market cap of around 13-14 million as of February 28th 2024, showcasing the market beginning to realize the potential of the project, and what it represents – an evolution of governance structure inside the crypto space that can be used to incentivise a flywheel of positive behaviour for futarchy participants and $META holders.
Actionable Insights
- Exploring Futarchy: Stakeholders in the crypto space should explore the concept of Futarchy and its potential to revolutionize governance structures. Understanding how prediction markets can be used to determine policy decisions could provide valuable insights for future governance models.
- Monitoring Meta-DAO’s Progress: Observing the progress of Meta-DAO’s implementation of Futarchy could provide valuable insights into the practical application of this governance model. This could help identify potential challenges and opportunities in implementing such a model in other contexts.
- Understanding Roles within Futarchy: Gaining a deeper understanding of the roles within a Futarchy, including analysts/traders, entrepreneurs, and cyber-agents, could provide insights into how such a governance model functions and the key players involved.
