Alchemy is the first live DApp that is part of DAOstack’s network of DAOs and DApps. The first DAO on DAOstack, and consequently Alchemy, is Genesis DAO.
The first real world test of the Alchemy network and the DAOstack organization, Genesis DAO is currently used as a way for DAOstack to improve itself through community proposed projects.
By allocating ETH, the GEN token, and Reputation, the DAO can award monetary value, voting power, and ultimately influence to participants on the DAO.
In this article I’m going to explore Genesis, Alchemy, and DAOstack, and show you how to use the Genesis DAO Alpha.
Read an overview of the DAO Stack here
Genesis DAO is a decentralized autonomous organization which runs on the Alchemy DApp. Alchemy has the capability of supporting several different DAOs, such as Genesis, and has the potential of enabling the community to create DAOs within it using a simple, turnkey solution, so that anyone can create a DAO.
The system currently works by using GEN, ETH, and Reputation to function and scale indefinitely. Participants in the Genesis DAO community can submit proposals for a project to receive funding for the execution of the project.
Users are also encouraged to participate in the system by being able to earn more reputation and GEN by promoting valuable proposals. Importantly, if a user does not follow through on their proposal, the DAO can punish that user.
Let’s take a closer look.
ETH serves as the funding for project proposals. Although a proposal can be simply used to request reputation, ETH is currently the only source of funding for proposals.
For any project, a person can request up to the amount of ether on the DAO at the time of the proposal. When a proposal is passed, the ETH requested is automatically transferred to the proposer’s wallet, but if it fails nothing happens.
GEN is the ERC20 token that Alchemy uses for staking, and may potentially use for proposal funding in the future. If you stake GEN on the correct outcome of a proposal, you can receive more GEN, but if you stake incorrectly you lose your staked GEN.
Unlike reputation, GEN has a real financial value, and is purchasable on exchanges such as Ethex.
If enough GEN is staked in favor of a proposal, it is “boosted” meaning that it is easier for the community to see, and takes less effort and time for it to pass/fail.
Importantly, the amount of GEN staked on your proposal doesn’t directly benefit you financially. However, there is real value in your proposal being expedited.
Reputation is the representation of user voting power on Genesis, and without it no proposals can pass. You can request to receive some reputation in a proposal, however, it’s not directly transferable between users.
It can also be acquired through participating in the DAO in other ways. For example, by submitting and passing a proposal, you can receive more reputation. If you vote correctly on the outcome of a non-boosted proposal, you can receive more reputation, and if you vote incorrectly you lose reputation.
Reputation is quantifiable (for example, I have over 150 reputation), but it has no monetary value. However, it does represent how much influence a user has on the system, and that’s why it is integral to the system. By increasing the amount of reputation that you have, you have a greater ability to determine the outcome of proposals.
I attempted to test every aspect of the Alchemy DAO by creating my own proposal and interacting with other proposals. My goal in creating my proposal was to create a proposal which supported the creation of this article. Very meta, I know.
When creating a proposal on Alchemy, it should be related to the respective DAO which you are interacting with. Since I wanted to write an article about the use case of Alchemy (what you’re reading right now), I wrote a proposal to pitch my idea.
You can read my proposal here.
For the time I spent writing the article, and so I could buy some GEN, I requested 0.2 ETH. Additionally, I requested 150 reputation so I could vote on proposals.
An important feature of staking is, if enough GEN is staked in favor or a proposal, becomes boosted. A regular proposal takes 30 days to be decided on if it isn’t voted to pass or fail by a majority of all of the users on the DAO. But, a boosted proposal only takes 72 hours and can be passed or failed by a relative majority of users.
Fortunately, my proposal was quickly boosted, and passed.
After my proposal was passed, the requested funding and reputation for my project was automatically sent to my wallet. However, the reputation I was awarded for successfully passing the proposal (.12%) was not. To receive this, I redeemed the proposal by viewing it on the history tab, and initiating the redeem action.
Now that I had successfully created and passed a proposal, had ETH and reputation, it was time to get some GEN and begin interacting with other proposals.
To start your journey with the Genesis DAO, you need to get the GEN token. I decided to buy some on Ethex, a decentralized exchange. Ethex only lists useful tokens which the team has tested first-hand. GEN is one of the select tokens to be listed.
Ethex is still in its launch period, so there are currently no fees!
I used half of the funding I received from the passing of my proposal to buy some GEN. This was a great way to start my staking fund, and now that I had reputation and GEN, it was time to interact with other users’ proposals.
When interacting with other proposals, I made sure to review them. If their subject was relevant to the purpose of the DAO, and if the proposer seemed legitimate, I would support the proposal.
I read a few different proposals, and chose one to vote on because it suggested a genuinely helpful project. All of my reputation was represented in the vote, and after I voted I immediately saw this reflected on the proposal’s pass/fail display.
There is a real consequence to your own reputation in voting since you can gain or lose reputation by voting. If you want to protect your reputation, you should consider the merit of the proposal before you vote for it.
I staked 20 GEN against this proposal since after reviewing it, I decided it had no real value. After all, there was no proposal document and not even a title to the proposal.
By betting against this proposal, I actually made it more difficult for this proposal to be boosted. The proposal would have to pass the regular boosting threshold plus the 20 GEN that I staked against it.
Executing and Redeeming for Beneficiary
There are two ways to execute the reward or punishment of a user’s proposal. Both the “Execute” action and “Redeem for Beneficiary” action are initiated by other users and send the consequence of a proposal to the proposer. The only difference in redeeming for beneficiary is that the user who initiates this action mus have voted on the proposal, and the proposal must have passed.
This is a way for the DAO to ensure that users get what they deserve, thereby making the system more efficient.
Every decentralized organization needs some kind of governance. Otherwise, the organization can become corrupt, disorganized, and obsolete. Governance systems are fundamentally what determine whether a decentralized organization can survive or not.
Alchemy’s answer to this is Holographic Consensus, which is an attempt to ensure that users are held accountable for their actions. As a sort of meritocratic democracy, users are encouraged to participate regularly and consider their actions before they wager their reputation or GEN.
Much of holographic consensus is this relationship between users, reputation, and GEN we’ve covered already. The bottom line for holographic consensus is that it attempts to allow the DAO to expand without limit while preserving the values of its users.
Theoretically, there could be thousands of open proposals in Genesis DAO, making it difficult to determine which proposals are truly valuable to the system, and which are just noise. This is one of the primary reasons for implementing the boosted proposal feature — so that all users will see the most valuable proposals first. The idea is that if someone is willing to stake real money on the outcome of a proposal, it must have real value, and it should be moved through the system as quickly as possible.
If you want to learn more about holographic consensus, watch this talk with the CEO of DAOstack, Matan Field.
I chatted with Pat, a member of the DAOstack team to discuss how Alchemy and Genesis work, its potential issues, and the future of the system. Notably, we talk about potential governance solutions which protect against abuses of the system, such as never following through on a proposal.
In the future of Genesis, different currencies will be allowed to fund proposals, such as the GEN token. Governance protocol will become more precise, and communication within the community will flow more freely. These developments are coming quickly; even during the writing of this article, a comment feature was created for proposals.
DAOstack will continue to grow, supporting more and more DApps and DAOs. The system has the potential to become one of the first truly decentralized autonomous organizations which can expand by creating more DAOs, and which can survive based on its merit.
Genesis DAO and Alchemy are just the start.