Nouns funding hyperstructures

NounsDAO
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TLDR

  • the Ethereum community relies on public goods
  • Venture funding isn’t aligned, we can do better
  • the Nouns model might be a step forward, and Nouns DAO could lead the way
  • What we could do right now: source and fund quality teams to ship valuable “ethereum hyperstructures”
    • Provide $500K-$1M to 1-3 teams, to provide sufficient runway to ship non-trivial software
    • Provide 1-2 months for people to organize and pitch big-enough projects

Aligned Funding

Many existing and future crypto-native projects do not have (or are better without) a revenue stream, e.g. Ethereum, Uniswap, Tornado Cash (:sob:), Gnosis Safe, and many more. Often such projects still raise VC money, when then pressures them into perverse moves like issuing a governance token to their investors, or having fee switches, despite the protocol being perfectly fine (and even better) without all that. Another kind of situation is VCs doing early investments without having any business model in mind, simply applying the web2 thinking of “we’ll invest in this great team and they’ll figure something out that generates ROI for us”; I suspect many of these teams won’t be able to raise their next rounds once their investors wake up and smell the lack of business model.

The Nouns model seems like a worthy experiment in solving this challenge. Anyone who wants to contribute to the creation and sustainability of public goods could leverage a memetic flywheel that (1) funds successful important public goods (2) grows its treasury thanks to its meme growth (3) goto 1. The brilliant Noun 40 recently started a discussion on such a fork.

Nouns DAO should lead

The point I want to stress is that Nouns DAO is the best group of people to run this experiment right now. Its outcomes can educate forks, and potentially strengthen their resolve and product-market fit, if proven successful. Furthermore, we seem to have consensus that Nouns DAO relies heavily on Ethereum thriving, so funding “ethereum hyperstructures” seems fully aligned.

In addition to being aligned, Nouns DAO is best-poised to execute right away, given its treasury size, the amazing set of humans on board, and the strong tools at hand like prop house.

Concrete execution suggestion

The critical ingredient is having exciting team-idea combos to fund. A mandated prop house can attract top talent and ideas, especially with sufficient lead time to organize. The grant size should ideally provide teams with a multi-month runway so they can achieve meaningful outcomes without having to chase additional funds; a range of $500K - $1M per funded team seems a reasonable starting point.

Potential execution steps

  • Create a mandated prop house with 2-3 winners, each receiving $500K - $1M to build an Ethereum hyperstructure
  • Proposal period should be at least a month, maybe with an option to extend another month if we’re lacking great content
  • Activate a pod in the DAO with the purpose of sourcing the best people to propose their ideas (we’re lucky to have truly amazing humans on board with genius friends)
  • Execute the prop house
  • Potentially offer support to these teams in doing “building in public” type communication, to increase transparency for us, as well as proliferate our contribution to the community (eg the Nounish could help out)
  • Possibly offer additional funding (via on-chain proposals) to teams we believe in that need more to get to a successful launch

The Tornado Cash fiasco was a great reminder of how important it is to have unstoppable public goods. Would love for us to double down on our intention to contribute.

Would love to hear more people share their take on Nouns <> public goods!

Thanks for reading :pray:

thanks @krel and @davidbrai for the awesome discussions last few days.

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I’ve really enjoyed reading the conversations in the Nouns Public discord. I’m trying to learn as well, so I’m looking for some clarification. Do you have any ideas of what types of hyperstructures are needed in the space? Are there any that you would consider that Nouns would be uniquely positioned to tackle?

Secondly, you mention Tornado and the need for unstoppable public goods. What were they missing that would have made them unstoppable? It seems that the gov’t can probably get their fingers into anything they want and I’m not sure how that could ever be stopped.

Thanks for all your contributions to the community!

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Thanks for joining the conversation!

Do you have any ideas of what types of hyperstructures are needed in the space?

I don’t think my ideas should matter much here :slight_smile: imagine asking this question in 2017 when Hayden didn’t yet decide to build Uniswap.

My primary claim is that there are very talented people out there who want to build important infra and have their own ideas, and we can activate them or help them fund their project without perverse incentives.

I don’t have very granular ideas since they require domain expertise, but I can share things I wish we had an abundance of but we seem to be wanting still:

  • It should be 10x easier to build and maintain an unstoppable dApp (including a database, some server side code, etc.)
  • We should have a few strong unstoppable stablecoins (DAI got quite centralized, LUSD supposedly has scaling issues, I’m not deep enough in that space right now)
  • We should have unstoppable social infra, something like a Twitter alternative, but also something that lets dApps and their users/owners communicate

Are there any that you would consider that Nouns would be uniquely positioned to tackle?

Anything that can have a significant impact on Ethereum’s resilience and wider adoption has a good fit with Nouns IMO, since the Nouns<>ETH relationship is so deep.

you mention Tornado and the need for unstoppable public goods. What were they missing that would have made them unstoppable?

Again I don’t know enough to speak at high conviction.

  • I believe an unstoppable UI (not hosted in any specific country) could have helped keep the web app alive and functional for all
  • Could make sense for Nouns to fund the legal efforts against OFAC’s TC ban (banning open source code is a very bad thing for Ethereum at large)
  • Very smart people might be able to innovate on TC such that OFAC can’t ban it even if they tried (I don’t know what that might look like)

To summarize, the core claim here is that if we create a big enough carrot, we can see very valuable and inspiring projects come to life. I believe Nouns DAO should be energizing public goods creation in a more active way.

wdyt?

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Very well written and i would be delighted if nounsdao chose to play an active role in the advancement of hyperstructures (and other public goods).

Top of my mind:

  • How do we reasonably prove that this type of funding does proliferate nouns (and effectively bring funds back to the treasury) in the ways we hope and suspect? How do we prove its not just charity?
  • If we can do that, our appetite and ability to reach consensus for funding projects/PHs like this should skyrocket.
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Few things:

  1. If Nouns is going to fund public goods, may as well advocate for the creation of a non-profit pass-through subsidiary to funnel funds from the DAO to related projects to capture related tax benefits.
  2. What is technical grants’ track record? Before pledging more money to things like this, people need to understand what has already come from related efforts.
  3. This should be led by technical grants team and dovetailed with prop house to provide greater visibility.
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i like where your head is at, but not sure a prop house is the right way to go. I think designing and building a durable long lasting hyperstructure is a really tough thing to do, are you confident that we would get enough high quality pitches to hand out multiple payments of $500k to $1MM?

I think it might make more sense to go more of the RFP route if the DAO signaled interest in this sort of thing. we say $500k-$1MM available in funding per team with ideas that the DAO feels compelled to fund. i like this type of approach as i think it’s also possible that we don’t get anything that we have high enough conviction in to fund.

following up on Krel’s question, I’m unsure of dao consensus on funding “ethereum” hyperstructures/public goods without a clear picture of what role nouns would play in the effort beyond providing financials

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Excellent questions. I think we don’t really know how to measure the impact of any bet so far.

This is a hard problem I’d love to brainstorm more together :slight_smile:.

Perhaps if we had a way to interact consistently with new people joining the DAO, with structural inputs we can count and make sense of, perhaps we’ll have a reasonable feedback loop on what works if works means getting new people to join. Another question would be around their decision of how much a Noun is worth on auction; perhaps we can learn some actionable insights there as well.

I am not sure how successful such an attempt would be, but I think it’s worth trying.

Wdyt?

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Agreed it’s valuable to look into tax benefits.

On track record, the closest thing the DAO has funded is Prop House. How do we really measure its success is a hard question I agree we should answer, no silver bullet on that yet but I’m optimistic we can figure it out.

If we consider PH successful, I think funding a successful hyperstructure looks something like that; it’s something that should add value to the Ethereum community at a scale that inspires and generates respect in the hearts of the community.

My claim is we can and should make this bet without precedent, because the upside has high potential.

Wdyt?

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Agreed that RFP could be a better way, would love to discuss further!

Interesting question on the role of Nouns; I’d love to see us back something we’re super excited about, and see what support naturally arises from the DAO, trusting in this very talented group of people to initiate and surprise us :slight_smile:.

Btw for a super strong team with a strong vision, aligned funding is already a huge deal, not having to make up ideas to satisfy VC, they just build the best public good they can produce. So I think even funding with alignment is a great positioning.

Do you have a vision for Nouns’ role in such a grant?

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I love the idea of funding hyperstructures, but I do worry that blindly committing to give away $1mm without knowing what proposals we are going to receive has numerous downsides. Mandate House has been a tremendous success, but I worry there are limits to the size of funding we can blindly commit to. I think Oni is spot on suggesting RFPs. Some problems with doing a $1mm Mandate House round:

  • Poor incentive alignment with a big lump sum payment for long term work (prefer milestone based payments or bonuses)
  • No guarantee we would get a quality proposal
  • Higher risk of grift/fraud when serious money is on the line

At that scale of funding, I think we can look at them case by case with specific proposals. Or, if we have a rough idea of what we want, maybe RFPs like Oni suggested.

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Do you think we can put out a pretty wide call, without a specific idea in mind, just asking for very valuable public goods?

How would you frame the RFP?

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Hmm, that’s a tough question. Ultimately, someone would need to be the point person who goes out and promotes the program and solicits engagement from would-be builders. At this scale it would need to be very targeted because there is a small pool of people/ideas and it may be challenging to find anyone the DAO is excited to fund.

There are people in this DAO who know far more about public goods funding that I do, so I’d defer to them on RFP strategy… my only strong opinion on this is that blindly committing $1mm and hoping that summons a talented builder with an incredible idea is not the right course of scale for something so specialized

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Quick idea: How do you feel about riding on the YC network to get reach for this idea? @verb-e

There are literally hundreds of great founders with exits or failed projects looking for their next big idea. Im sure some of them would love to build public goods/hyperstructures.

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@krel tapping into YC sounds good! would love to follow your lead on that :pray:

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We can also ping techstars and related, as well. honk diddly has conexxx

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Let’s do that @honkdiddly, would love to be your sous chef in cooking this up!

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How does this differ from the protocol guild prop that was passed a bit ago? I know this would be more direct but I’m wondering if that meets part of this need as well.

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It’s similar. What I’m hoping we can achieve here is funding the “next Uniswap” such that it would:

  • be extremely popular, oozing popularity back to Nouns
  • add significant value to the ecosystem, making it more unstoppable and affordable to use

Contributing to Protocol Guild has some of that, but Nouns aren’t perceived as make-or-break contributors to Ethereum development; we could gain more memetic feedback by backing something new.

wdyt?

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I think that’s an important distinction to make.

The Protocol Guild prop is closer to “paying taxes” or a homage to the ecosystem. And while a fine gesture, I don’t think the memetic payoff will be worth it in that particular case.

However, if Nouns ran a program to fund hyperstructures/public goods that otherwise would not happen/not be able to secure funding, I want to believe that would have a much more direct effect on the Nouns flywheel.

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Ok – I see what you mean. Is there something that could be done with a smaller mandated round?