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Introduction to Primordium
The business way to DAO.
Decentralized autonomous organizations (DAOs) have seen many exciting innovations in recent years, but one of the most exciting would have to be the creation of the Compound governance framework.
For those unfamiliar, Compound created one of the first community governance protocols that allows DAO members to carry out all operations directly on the Ethereum blockchain without requiring a centralized admin or controller to execute the DAO’s actions. Instead, the DAO’s actions are packaged into on-chain proposals that can only be executed if the DAO’s members vote to do so.
This lays the groundwork for a DAO to be fully decentralized. Members are in full control, without relying on any third parties. This is a truly powerful concept.
In the simplest terms, in the most convenient definitions, Primordium is a for-profit business DAO. At its core, the Primordium framework takes the decentralized governance process introduced by Compound, and adds many business-focused features. Here are a few examples:
Primordium is self-funded. Becoming a founder requires purchasing membership tokens. 100% of the token sales go straight to Primordium’s treasury, which Primordium members control through the governance process.
Primordium is for-profit. Members can introduce proposals to implement profit distributions, where distributions are allocated proportionally to each individual member’s token holdings.
Primordium can maintain a list of trusted contributor addresses, which are wallet addresses authorized to submit on-chain proposals to Primordium (even if they don’t own any membership tokens themselves). This is useful for working with external contractors who need to submit milestone proposals as part of any given project.
Here is a link to the full whitepaper.
Why Build Primordium?
While Compound successfully decentralized the governance process, the DAO’s operations are mostly limited to the governance of an existing on-chain protocol that was built by a centralized company. The DAO lacks the capital resources of its own to meaningfully impact the future development of its own protocol.
In Compound’s case (as well as many of its forks), this serves the purpose the DAO was created for. But there is certainly room for broader applications of this protocol (see Nouns).
We are building a new open-source framework that maintains Compound’s decentralized governance, but enables DAOs to operate as independent for-profit businesses. This framework will serve as a decentralized and trust-less way for communities to collectively apply funds and/or resources towards a shared goal.
Where to Start
The only way to build a successful decentralized business DAO is to align community incentives. Not just in the short-term, but also in the long-term. When incentives aren’t aligned, businesses often fail. Or worse, they become corrupt. This is exponentially true for decentralized communities.
The best way for Primordium to align incentives is to provide the opportunity for community members to receive rewards for their contributions in the form of profits. However, these profit incentives are only productive and sustainable if they are fair for every individual member. Meaning, no special privileges. No self-serving back doors. Everything must be fully and equally open to everyone.
The Primordium framework will encode two important conditions that must be adhered to in order to properly align the incentives of a business DAO:
1) Individual Freedom
Members must have all the power, individually and collectively.
The freedom of the individual is always protected.
Every member has the same equal opportunity to enter the DAO. The only way to join is to buy membership tokens. Nobody is airdropped anything. There is no free lunch. Everyone has an equal opportunity to buy as many tokens as they want (while supplies remain). 100% of the token sales go to the treasury as initial capital contributions.
Importantly, any member can also leave at any time. Withdrawal (sometimes referred to as “rage quit”) means the member forfeits their tokens in exchange for their proportional share of the treasury funds. This empowers the individual to leave if they do not agree with the direction of the DAO, or if bad actors are at play.
Every single member has the same equal rights, including the same freedom to come and go as they please.
The DAO maintains 100% autonomy, meaning that the DAO’s operations are exclusively controlled by the on-chain efforts of its members.
To put it another way: no action can happen unless the members collectively vote, to a majority consensus, that the action should happen.
2) Full Transparency
Everything about the DAO, and everything the DAO does, will be publicly and immutably transparent through its inclusion in the public ledger that is Ethereum.
Every individual member (or prospective member) will always have full access to all information, including a DAO’s finances, and thus will be empowered to make their own informed decisions at all times. Nothing can be hidden, and members will always maintain the freedom to leave in the face of misalignment or corruption.
There are two pillars to a properly functioning free market: (1) freedom of individual choice and (2) freedom of information. When both are present, free markets naturally align the incentives of all parties to create the most positive outcomes for the largest number of individuals. However, when either is hindered or not present, self-serving interests often prevail, and many individuals are negatively impacted or taken advantage of.
The Primordium framework will uphold both pillars through immutable smart contracts that are protected by decentralized cryptography. This will enable Primordium to operate as a fully decentralized business that empowers its community members through individual autonomy and fairly aligned incentives.
This one of the most compelling reasons why DAOs need the ability to operate as actual businesses. It expands the realm of a DAO’s autonomy to include truly anything it wants to do. It enables DAOs to solve new problems. It supercharges the creation of new technologies, new products, and new services, which is traditionally limited to centralized groups or startups.
But on top of that, it helps the DAO businesses stay aligned and maintain relevancy into the future, where traditional centralized companies often decay into complex bureaucratic messes.
What is Primordium’s Mission? (i.e. How it Will Operate as a Business)
The Primordium framework will be open-source, free for anyone to build on or modify in any way they see fit. However, Primordium’s mission as a business DAO will be to build the Primordium Network: a no-code web platform where anyone can easily create or join their own business DAO.
The DAOs on the platform will be governed by the same smart contract framework that Primordium itself uses. There will be hosted governance interfaces for every one of the DAOs deployed on the Primordium Network. Each DAO will also pay a small service fee to Primordium for the provided no-code hosting services (all paid directly on-chain from the DAO’s treasury to Primordium’s treasury). This will serve as the first main revenue stream for Primordium.
Primordium, as its own for-profit business DAO, will maintain 100% ownership and control of the Primordium Network.
Why Build the Primordium Network?
The Primordium Network will democratize access to the business DAO framework that Primordium itself is built on. It will allow coders and non-coders alike to benefit from the opportunities that business DAOs have to offer.
Even more importantly, Primordium’s ownership of the Primordium Network decentralizes the ownership of a (traditionally) centralized platform.
As a centralized entity, the Primordium Network would pose the same risks as any other centralized business. When the incentives of the company outweigh the incentives of the users, companies become susceptible to corruption, staleness, and self-serving interests. At which point there is little chance of proper reforms taking place.
As a centralized platform owned by a decentralized business, the Primordium Network never becomes stale, and never stops properly serving both its user-base and its decentralized owners. It resists corruption through the individual and collective power of the members. Anyone who wants to make changes to the platform can join Primordium and take meaningful action to do so.
Under Primordium’s stewardship, the Primordium Network will embody the same principles of individual freedom and full transparency that Primordium itself adheres to. Incentives will be properly aligned for the Primordium Network to thrive.
This will set the stage for any other business DAO to do the same.
Primordium is currently in development. For progress updates, please subscribe to this Substack.
For a deeper dive, you can access the Primordium website here.