⚖️Futarchy Governance
Future DAO's Governance Model
Why Futarchy? Betting markets often make better decisions than any other form of decision-making.
Futarchy uses market-driven voting to determine the results of governance proposals. In short, when a proposal is submitted, Future DAO members will have an opportunity to “invest” in the outcome they believe will have the best impact on the value of $FUTURE’s token. The outcome, with the most amount of investment (i.e. highest price) will be approved.
The futarchy governance models are actively being worked on - If futarchy interests you, please reach out!
How Futarchy Works
Future DAO will use Meta DAO’s Futarchy smart contracts and an adapted user interface to operate our governance platform. When a governance proposal is submitted, two conditional speculative markets will be created: one for its success and one for its failure. The market that predicts a higher value for $FUTURE will determine the proposal’s outcome, and course of action for the DAO.
To be clear, we will be voting with conditional tokens that represent real crypto-currency. Tokens invested in the successful outcome will be converted to $FUTURE tokens at the price purchased in the speculative voting market, and benefit from any price increase resulting from the proposal's outcome. Tokens invested in the failed outcome will be reverted and refunded in USDC, with no change of value occurring.
Let's Take an Example
Proposal Submission: $FUTURE DAO Member X initiates a proposal to accept an investment into the coin from a leading web3 hedge fund. Community members generally anticipate that this partnership will be beneficial, and could increase the value of $FUTURE.
Conditional Market Creation: With submission of the proposal two conditional markets are created: PASS market, and FAIL market.
Conditional Token Creation: In each market there are two conditional coins created, pUSDC (passUSDC) and pFUTURE (passFUTURE) and fUSDC (failUSDC) and fFUTURE (failFUTURE).
Conditional Market Dynamics: Participants decide to invest based on the outcome of the proposal. Voter A has decided that If the proposal passes, they want to hold more $FUTURE; if it fails, they prefer to keep their USDC. They will vote for passing the proposal, by buying pFUTURE tokens, which will convert to $FUTURE tokens if the proposal passes.
Market Consensus: If the pass market prices $FUTURE higher than the fail market, the proposal is considered passed. For example, if the pass market prices $FUTURE at $15 and the fail market prices it at $10, the proposal passes.
Conditional Market Voting: If Voter A has $1,000 USDC, they will receive $1,000 pUSDC and $1,000 fUSDC. Voter A is in favor of the proposal, and decides to trade their pUSDC for pFUTURE. At the time of voting the price of pFUTURE is $8, so they receive 125 pFUTURE tokens.
Voter B also supports the proposals, which is gaining traction within the community, leading to an increase in pFUTURE price. They exchange their $1,000 USDC for pFUTURE at a price of $10, receiving 100 pFUTURE tokens.
Voter C is amongst the minority of community members opposed to the proposal. Given there is lower demand, fFUTURE tokens (failFUTURE) are priced at $5. They exchange their $1,000 USDC for 200 fFUTURE tokens.
Proposal Outcome: Once a determined condition, e.g. 10% difference in price of pFUTURE to fFUTURE tokens, or a time duration is met, the proposal is resolved. If the proposal passes, the fail market is canceled and fFUTURE tokens are reverted to USDC at their original price such that no value is lost. The pass market is executed, and pFUTURE tokens are converted into FUTURE tokens
Voter A receives 125 FUTURE tokens, Voter B receives 100 FUTURE tokens, and Voter C receives their initial $1,000 USDC. The price of FUTURE might increase in price as a result of the proposal, meaning that Voters A and B purchased FUTURE at a discount by participating in the governance process.
This is how Futarchy uses market dynamics to determine governance policy! Future DAO’s governance platform and process is under development, and updates will be shared in the near future!
Special thanks to Meta DAO for their collaboration and guidance thus far in the development of Future DAO, and for being first movers toward implementing governance systems of the Future!
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