0x DAO AMA on Discord recap


Earlier this month, we introduced the 0x community DAO, the next significant step on the journey 0x has been on in becoming a fully decentralized technology and network. We anticipated that there would be questions about the DAO and hosted an AMA last week on our Discord server. We were fortunate to have Theo Gonella (0x Labs Product Manager), as well as bootstrap delegate members, sha-2048 (BUILD and Metric), gabririgo (RigoBlock), and nikita (0x Community Ambassador) answering questions from the community.

0x DAO key points

  • Initially, the DAO will only control the community treasury and not upgrades to the core protocol.
  • The DAO will manage a community treasury of 2M ZRX via a new on-chain binding governance system that will work in conjunction with the existing ZRX staking system. The treasury’s purpose is not enforced, and ZRX holders will control what to do with treasury funds.
  • A group of bootstrap delegates from projects building on 0x and the community will help guide the DAO.
  • While anyone can share their ideas for DAO treasury use on the 0x forum, at launch, there will be a requirement of 100k ZRX to move a proposal to a public vote.
  • Anyone holding any amount of ZRX will be able to participate in public votes. Since voting will occur on-chain, it will cost approximately 80k gas to cast a vote.
  • For full details, check out the introduction blog post.

Q&A transcript

Q1: We asked the community bootstrap delegate members to briefly introduce themselves…

[gabririgo] hello everyone, my name is Gabriele Rigo. I started in crypto sometime in 2015, seems like eternity has past. I founded RigoBlock, a protocol for decentralized asset management which is live on Ethereum. I have been active on 0x since day 0, first integrating 0x to RigoBlock to the Ethfinex platform (now Deversifi), then running staking pool number 2, which provides liquidity to the 0x ecosystem with RigoBlock assets.

[nikita] Hey everyone! I am a community ambassador and help with answering questions in the discord and doing other things that help educate community members and spread the good word about 0x and what we are trying to build together. I’ve also been doing some other things behind the scenes to engage with other communities and projects, etc. Hoping to add even more value going forward as a 0xDAO delegate!

[sha-2048] Hi everyone, So I’m coming from build finance DAO and is currently working on Metric Exchange which is a DEX app using 0x API. I’ve started as a Web3 Dev not so long ago (Oct 2020) but was following Crypto domain since actively since 2017 and less since Ethereum genesis. I’m a software Engineer with 10+ experience, and I love learning new things everyday, building and dreaming about a better future!

Q2: What is the ideal vision of the 0x DAO?

[theo] All aspects of 0x protocol are managed by ZRX holders. The DAO decides on protocol upgrades and administers independent funds (to sustain the protocol development and or other initiatives) 0x Labs is just another ZRX holder participating in the governance. That’s the shortest answer I could type to express my ideal vision!

Q3: What plans is DAO implementing to make sure 0x is ahead in this L2 race? Are all of the APIs/apps compatible with L2?

[theo] We explored the playbook we are going to follow in this forum post: gov.0x.org/t/0x-beyond-ethereum-check-in/759/12

0x’s offchain liquidity/onchain settlement design allows it be easily pluggable on any new L2 and L1. We were able to spin everything up on Binance Smart Chain (BSC) in a relatively short amount of time, and really there aren’t many technical difference between BSC and Optimism from that point of you.

Optimism, BSC, Avalanche, Polygon (previously Matic Network) are all EVM compatible venues, which means that contracts can be easily deployed there.

The challenge in general is bootstrapping liquidity. The news around UNI moving to Optimism is great because we will be able to aggregate their liquidity and top it up with our RFQ exclusive one when the time comes.

Q4: How do you envision technical influence from “the community” (and by influence I mean more than voting on changing constants in contracts)?
0x is highly technical and my impression is there are very few devs working in the 0x space who are not from the team itself. I know there are some but we’re talking about a protocol moving billions of dollars every month, seems like the technical engagement is low (I’m aware it’s the case everywhere though).

[gabririgo] imo the community, aka the token holders, will eventually be in charge of everything related to protocol upgrades, with formal onchain proposals/voting. As a standard framework for decentralized governance emerges, more of the treasury will be allocated through governance, resulting in a direct impact on the technical evolution of the protocol itself. ZRX-based governance will make the system more resilient, as an attack on the protocol would then become expensive. Further to that, decentralized governance will remove “ownership” from one central entity. therefore, its importance is probably a bit overlooked atm.

[nikita] Your question is a good one and I would answer it by saying that the treasury is an experiment to get us to the point where we are voting directly on contract constants and parameters but that is a ways down the road. I think one of our goals with the DAO will be to expand our community by attracting talented and energetic contributors, including technical contributors.

Q5: Assuming the ZRX in the treasury needs to be sold on the open market to fund an initiative, what’s the process for doing so? (who does it?, where will the tokens be sold?, assuming a DEX > what if the best prices are on a CEX?)

[theo] That’s a good assumption, but I’d say it’s up to the recipient to decide whether to sell ZRX or keep it. Really think about it in this way: proposals can take very different (and arbitrary form). The simplest example is the one that you are mentioning, which is “Does the community want to send X ZRX to address Y to perform action Z?” then it’s up to the recipient to decide whether to hodl ZRX, sell it, or buy a Tesla with it.🙂

Q6: If there are dev teams interested in working on DAO initiative, will token holders be able to vote on the proposals/bids that come in (or just the proposal itself)?

[nikita] Probably not a black and white answer to this. My observation from other projects is that usually the proposal itself is voted on vs. individual bids. That said, it seems many proposals are submitted by the team that will be doing the work, so they are entwined. If it made sense, I could see individual cases where a proposal is accepted/approved and then bids are solicited.

Q7: If there are payment milestones required to fund external development, is there a system that the DAO will use to keep track of timekeeping, invoicing, accounting, etc.?

[nikita] Yes, I think there are some basic operations mechanisms that will need to be put in place early on, including processes and tools to manage funds that are distributed. IMO this is one of the first tasks that we will need to undertake to get off on the right foot with the right foundation.

Q8: Follow-up question: Is this something that you think the bootstrap delegates will propose early on or are you looking at the community to create a proposal?

[nikita] Yes, I expect that the bootstrap delegates will develop a basic framework so that we have some structure in place to make some operational decisions that don’t rise to the level of requiring a vote, but will enable things to start getting done; for example, specifying a process and template to use for submitting proposals, recommending/setting initial priorities, etc.

Questions related to the price of ZRX in context of the DAO’s use of the tokens in the treasury:
• Q9: Since token prices are volatile, should the treasury be converted to a stablecoin at the onset to ensure the value of the treasury does not drop below a certain amount?
• Q10: Assuming the above doesn’t happen and the price of ZRX drops in the future, will 0x Labs add additional seed to “top-off” the treasury?

[theo] The implementation of the treasury contract is such that the DAO can decide to perform arbitrary onchain operations, including trading. Basically, a proposal could be “Trade 1M ZRX with DAI” and that could be performed onchain. Think about the Treasury as a sort of ‘large’ multi-sig where every ZRX holders has a weight. It’s an ‘address’ like any other. 0x Labs is pretty open-minded when it comes to adding funds to the DAO. Another source of self-sustainability in the future could be transferring a portion of protocol fees into the Treasury automatically (that’s up to the DAO again to decide).

I also want to add something related to the question that might not be super obvious at first (technicalities aside), this Treasury really is ‘just like another Ethereum address’. The DAO could decide to put 80% of that on Compound to earn interest + COMP while deciding what to do with the rest of the 20%. Just spitballing…

[nikita] Yes, this (treasury fund management) seems to be a popular topic these days with some of the new yield aggregators. My opinion is that we should be more conservative vs degen with treasury funds but diversification and hedging etc., to protect the treasury and also earn yield will be important things for everyone to consider and make decisions on.

Q11: What are the most important steps to take that are required to take for the protocol to be fully decentralized and to be in the hands of the people in the future?

[nikita] Maybe it will be more obvious in retrospect what the most important steps were vs what we might predict them to be, but I believe we are in the process of one of the most important steps right now, which is to start empowering the community to be more active and accountable for the protocol’s future success. If we are successful at doing that, then many positive things will flow from it.

Q12: Errors in (the DAO treasury contract) code can lead to an internal and external attack. How do you prevent this?

[theo] on the internal side, we have reviewed the code internally and it’s publicly available here: github.com/0xProject/protocol/tree/development/contracts/treasury

We wouldn’t be putting 2M ZRX if we weren’t confident about it but an extra pair of eyes is always helpful and we have a bug bounty program to reward white hats.

On the external side, we would be looking at the proposals one-by-one together (via discussion and voting!), and assess security risks of where the ZRX would be sent to.

Q13: Question for bootstrap delegates — Do you envision yourselves reaching consensus on every proposal and voting together (like a jury does) or do you plan to vote independently on things?

[gabririgo] as onchain voting costs gas, I expect we’d vote when only we reach consensus and know that the majority of voting power supports the proposal. I believe a proposal should pass with a rule of majority of votes and not 100% support, as otherwise reaching consensus could be too time consuming. As protocol upgrades and treasury allocation are important topics, I think we could have a higher threshold than >50% for a proposal to pass, like 2/3 of votes, or even higher, to allow for resilience and flexibility. Ofc there are tradeoffs between the two.

[nikita] I think it will be a mix and we won’t agree on everything! 😄

[sha-2048] I think we should openly discuss about our position, which naturally will help reaching some consensus, but that may not always be the case and it is a normal thing IMO. To me important point is to have as honest discussions as possible as well as keep an open mind vs new challenging ideas

Q14: Question for bootstrap delegates — Given that you all have busy schedules, what compelled you to agree to be a part of this important group?

[gabririgo] the main reason is the history of the 0x protocol and its track record. 0x was the first protocol to introduce offchain orders with onchain trade settlement, which made DEX possible on ethereum, as previously all orders were onchain, meaning placing and order and then cancelling it without it being settled resulted in 2 transactions which did not really make sense to be stored on the chain. The ability of the team to pivot around Matcha and AMM liquidity aggregation, plus the integrity of the team towards the community/ZRX holders makes the project stand out from the crowd imho, reason I would like to thank again for being part of it.

[nikita] For me it is the opportunity to contribute in a more meaningful and impactful way and to have the time I am commiting be more productive in driving positive results.

[sha-2048] As a user app of 0x protocol it is vital to be part of the DAO, to have a voice in the protocol future and to help improving based on our users feedback

Q15: What steps could 0x DAO take to unleash ‘reflexivity’ which had been previously discussed on the forum and acknowledged by 0x Labs? To provide more details… the connection between the community and protocol through the token is something that 0x Labs, bootstrap delegates and community could improve so everyone feels more aligned to achieve the 0x vision.

[theo] the design space is definitely large, but a couple of things along those lines grabbed my attention. For example, the DAO could decide to refund gas cost used for voting. Also, I had a super interesting chat with 0x Labs Designer, Ben Burns, this morning and he was thinking that the DAO could be issuing NFT for voters, that could be used in a special contract to ‘yield farm ZRX’ with those tokens. Feels like it could be spinning up the flywheel to get people to vote and participate more.

[nikita] I think the establishment of the DAO is an opportunity to be the catalyst for a new narrative for 0x that builds on the great work that has already been done and takes it to the next level. Ideally, this will attract new energy and talent to the project and empower them, together with the existing community, to drive the activity that results in reflexivity.

Q16: When will the DAO officially launch?

[theo] At this point the only outstanding items are: assign voting power to bootstrap delegates, transfer the 2m ZRX to the Treasury Contract, and deploy the last changes to ZRX Portal. We are targeting the first week of April for the official launch!


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