How to Write your DAO Constitution and Become a Founding Father

How to Write your DAO Constitution and Become a Founding Father

Why does a DAO need a constitution? For the same reason a state does.

To establish its governance system and fundamental rules, to set up a common vision, to guarantee basic rights and protections for its participants, to protect it from internal takeovers and external attacks.

It enables a faster and more efficient way of governing through optimistic governance and protects from tyranny and bugs thanks to separation of powers.

Now that you know what a constitution can do for your DAO once it is integrated in your governance process, here comes the hard part: actually writing it.

"A Case for Separation of Powers in DAOs", my talk at the ETHCC 2021 conference.

What is the Recipe for a Good DAO Constitution?

I have some good news and some bad news.

The bad news is that there are no instructions manuals to build a perfect rulebook for your autonomous web3 organization. We are in uncharted territory here. The Founding Fathers did not have a guide but they had some references and best practices sourced from previous attempts at building democracies. You are still in luck because we also have some valuable experience in the quickly-moving DAO space.

This is what discussing your DAO Constitution draft on Discord looks like from the outside.

The good news is that you are not artificially bonded by any strict requirement. It is up to you to get creative and design a set of rules fit for your community and aligned with your vision. Sure, you can poach some ideas here and there but your DAO is not a copycat and should have its own flavor.

  • DAO’s Vision (Recommended)

A succinct, digestible text exposing the shared beliefs of your DAO community, the goal the organization is trying to reach and the values you intend to uphold.

This will give context to the rules that will be specified further along in the document and allow for better interpretation in case of controversial disputes

You can call it a manifesto, a charter, a mission statement, or a vision.

  • DAO’s Governance Proposal Process (Mandatory)

A detailed description of the actors and processes involved in the governance of the DAO, detailing thoroughly the steps, responsibilities, and requirements linked to a proposal from its inception to its enforcement.

It should be detailed enough to ensure all proposals getting to the voting phase are of sufficient quality and have been discussed properly, but still simple enough to follow so proposals are not rejected on technicalities.

  • DAO’s Community Guidelines (Optional)

A set of guidelines describing the behavior expected from community participants and the type of violations to be prevented.

It should list the social channels in scope, the type of violations to be identified, the way these violations should be judged, and their associated sanctions.

The structure and content of a DAO Constitution are not monolithic requirements. It is possible to host the whole Constitution in a single document for easier access or divide it into several files for simpler versioning. Once a DAO grows enough to be composed of several sub-working groups, it is conceivable to rework the overarching DAO constitution to only host the general rules and to develop a set of sub-DAO policies taking into account the specificities of each group.

As the DAO’s vision is very subjective and the community management best practices are a topic that has already been explored by web2 communities, I will only elaborate on my recommendations about governance proposal process rules.

How to Write Relevant Governance Proposal Process Rules?

You want to provide a tailored, comprehensive, and structured process to your DAO participants so that they can easily understand how to get involved in the governance of your DAO, all the while making it solid enough to protect the DAO from poorly designed changes, malicious governance attacks, and hostile takeovers. This is what you should have in mind for your design choices.

Think like the enemy

It is a harsh world out there. Your DAO will be managing money (a lot of it if you are successful). Your DAO will have competitors. They are not friendly. Our ecosystem is even known to host some malicious actors that like to destroy things for the sake of chaos. Put yourself in their shoes and brainstorm about all the ways they could mess with your governance, treasury, and community. Then, write rules to prevent this.

Questions to ponder:

  • Will you allow freshly borrowed governance tokens to turn the tide of a proposal vote?
  • What if someone snipes the last block before a proposal end time to massively vote on one outcome without giving the supporters of the other side any ability to react?
  • What should happen if the voting tool was somehow incapacitated during the proposal voting period?
  • What are the consequences if it can be proven that governance tokens that were just stolen were used in a vote?

Have it reviewed

The DAO vision should of course be heavily crowdsourced from the community’s input. A few pairs of internal and external expert eyes should help you complete the Constitution with what is missing from it and allow you to detect the vector of griefing attacks hidden in your first draft of rules.

Keep it updated

Learn from recent governance attacks on other DAOs to implement new rules defending against them.

Define your vocabulary

You do not want one of your failsafes to be overridden in court for a technicality due to a badly defined term. If you talk about roles and responsibilities, define properly who is to be considered assigned to a role. If you are talking about specific contracts, add their deployment addresses. You get the gist.

Learn from your peers

The perfect DAO constitution does not exist yet but you can draw some inspiration from examples here and there that get some parts of it quite right:

When is the Best time to Work on a DAO Constitution?

Speed is key for the first steps of your DAO. Thus, the DAO Constitution should in no way constitute a blocker for the core team to start their executive work and for the governance process to start chugging out their first changes.

Moreover, a DAO Constitution is almost worthless if you have not set up the mechanisms to enforce it in a decentralized manner in your governance process. This taken into consideration, you should initiate the brainstorming about the DAO’s vision as soon as a handful of motivated DAO community members start being involved actively in day to day operations.

You might now want to slow down the first executive proposals of the DAO by waiting for a clear Constitution to be written and approved. However, as soon as the DAO treasury becomes a sizable target for malicious actors, empowering the DAO with the means to uphold it and then voting on a Constitution should be among your top priorities.

James K.Polk knows one or two things about protecting your DAO

Other considerations

  • How will you host the DAO Constitution?

You might require the document to be hosted in a decentralized, timestamped, and immutable manner to ensure that it cannot be gamed by entities with powers to modify it centrally. Moreover, you still want it to be easily accessible. That is why the current standard recommendation is to host it on IPFS and link it in the text record of an ENS domain owned by your DAO.

  • How will you enforce the Constitution?

Choose your tooling wisely. You need either a modular DAO framework allowing you to handle the execution (send transactions), the legislative issues (submitting and voting proposals), and the judiciary matters (ensuring the proposals enforced are what has been voted and that they are compliant with the Constitution) or a comprehensive one providing these features.

I am biased on this matter and will recommend using Gnosis Safe Zodiac DAO framework and the Reality Module with Kleros arbitration to enforce your Constitution but you can achieve a relatively similar capability using Aragon Govern, 1hive Gardens, or Colony.

  • How will you revise the DAO Constitution?

The DAO Constitution can be updated by a governance proposal going through the process described in that same Constitution.

Sharpen your pencils... And go! The future of DAOs is bright. Go forth, write the governance rules required to protect them, share them with the world, and grow the body of knowledge for future DAOs.

Contact us to learn how Kleros can help you with your DAO governance!