MetaCartel 3.0 and beyond (re hybrid for-profit model)

Intro: Just as societies are experimenting with various blends of socialist and capitalist policies, I believe DAOs should do similar experimentations at a much smaller scale, but with scalability in mind. Hence, my proposal for Metacartel DAO-or any DAO that is interested in these hybrid solutions- follows which tries to bridge for-profit and non-profit models into a hybrid for-impact model:


While non-profit and grant oriented DAOs are exciting developments in governance, they suffer from the same shortcomings w.r.t. access to capital as traditional nonprofits. If the assumption is that resources are finite and DAOs can’t print their own magic internet moneyz (MIM), then the funding has to come from somewhere. For now, it seems like the answer is people who got lucky (i.e. were early) and have too much magic internet moneyz … :mage::woman_mage::money_with_wings:

Well … that does not sound like a sustainable, let alone scalable, plan for long term survival of any DAO.

Absent monstrosities like T-word (taxes!!!) and I-word (Inflation!!!) :shushing_face: blockchain projects and their symbiotic DAOs are always going to suffer from the lack of funding in one way or another. Heck, even ZCash is now begging their community for more money despite their initial “founder rewards” scheme. More money, if it doesn’t come with loss of mission, is a good thing and if some of that extra money (which would not have even been there absent for-profit motives) has to be returned, so be it!

In sum, the TL;DR of this proposal is a mechanism (or a collection of mechanisms) for incentivizing for-profit investors to get involved with funding-DAOs like Moloch and Metacartel WITH the expectation of a capped (whether absolute or in %) ROI.

A few concrete proposals! :unicorn:

The DAO/DApp brotherhood/sisterhood model: :star_struck:
Right now there is absolutely zero expectation of returns (whether token or $) from grantees. So, my first proposal is centered around a novel idea that even some venture capital firms are considering (Seth from FiftyYearsVC)…

The idea is that every DAO or DApp or individual grant recipient pledges a certain % of their potential income or revenue (or token supply) to the DAO and collectively all other DAO members and grantees.

Imagine if every YC company owned some X% (let’s say 7% of the entire batch) of every other YC company in that batch or fund (due to legal separation of VC funds). Now, apply that to grant recipients of Metacartel DAO. There are two options:

1- the individual or project does something valuable and freely available to all DAO members and the broader community. All good, no claim on that since it’s already open source and freely available!

2- the project or company expects to generate future cash flow or income as a result of the investment/grant/services(1) provided by the DAO. In this case they owe X% (negotiable) to the reserve pool of the DAO and potentially passive investors who joined that specific funding round(2).

This way everyone is incentivized to help everyone else in the DAO (El Cartel!) succeed, because their success is everyone’s success, though indirectly!

Up until here we are not even talking about giving returns to evil greedy investors! Just a brother helping another brother(s). Now comes the cool stuff …

The 10/10 funding-DAO structure (vs. 2/20 in VC)::smiling_face_with_three_hearts:

This part can get very complicated and despite my love-hate relationship with VCs, I am not a VC! So, apologies for any mistakes or oversimplifications of VC legalese.

Currently there is a contribution cap for individuals and companies joining MetaCartel which severely limits the potential of the DAO (at least in terms of access to capital). At the same time, if we just open it up to Crypto funds the mission is most likely lost and overtaken by pure for-profit motives.

So, what’s the solution? :money_mouth_face:

What if we kept the active membership (governing/voting rights) as is, but allowed passive external investors to join individual funding rounds via the DAO. Sort of a funding-DAO sidecar with reasonable terms and fees. All permissionlessly (managed by smart contracts) and without giving the VCs/investors any outsized governing rights. Of course, they can get all their firm partners and employees to join with the cap, but that would be easily noticed as a soft sybil attack by that entity.

Why 10/10 vs. 2/20 (i.e. 10% of each funding round and 10% of any eventual returns)? :nerd_face:

Here, the idea is that you as an investor will have to “donate” 10% of the initial investment amount (like a one time scouting and services fee) and 10% of the potential exit or revenue share (carry) to the DAO. The DAO will likely have supported this project directly or indirectly before they became mature enough for investment. And since most of the services and resources of the DAO are open to everyone, the 10% initial fee will ensure the DAO can continue to provide these resources for future projects! I do see the potential for the investors to circumvent the DAO entirely (because deals are not done secretly and behind the scenes), but I am confident in our ability to (token) engineer some kind of FOMO and artificial scarcity/monopoly to fend off such demonic anti-community efforts :slight_smile:

Also, quite likely the first sidecar investors will not be actual VCs, but other cash/token rich crypto projects like Ethereum, Aragon, …, the 2017 class of ICO mania! These guys already fund all sorts of open source efforts. 10% for a clearly useful and beneficial DAO is nothing crazy. I hope folks like Stefano Bernardi (managing Aragon’s $$$) who are involved in both VC and Crypto will chime in and give feedback on this issue.

My best guess/proposal for the legal framework of this model::thinking:

The DAO, and indirectly the sidecar passive investors, will have a claim on X% of the potential revenue or equity/token supply of the grant/funding recipients. Instead of paying regular dividends, one option could be that the grantees can decide to periodically unburden themselves of the debt to the DAO and external co-investors. We could look at this either as a equity/token buy back or the company paying back their debt in increments that makes sense for their business. Again, there is a lot to be figured out here and I will make sure to consult existing revenue-share investors like my friends at IndyVC, FairMint and Clearbanc about their opinion and feedback … once we have internal traction and momentum around this proposal.

That’s it for now. This was not meant to be a formal proposal, rather me sitting on my sofa on a lazy Sunday evening summarizing my thoughts :thought_balloon: before formally applying to join MetaCartel :slight_smile: … please feel free to roast/criticize me and/or the proposal(s)!
I plan to publish an edited version of this on Medium (Hackernoon!?) and potentially talk about it with Ameen and Peter on our upcoming soon-to-be-launched podcast @PretopiaFM :studio_microphone:

You can also email me for private feedback or on Telegram/Twitter @insideNiMA

  • NiMA

(1) services model like pioneered by A16Z. Could include code audit, marketing, email list, recruiting help, etc. …

(2) Like a (passive) sidecar fund for a VC fund or angel group (had to remove the link bc I am a new user!!!)


Great stuff!

I’ve recently been outlining a DAO / subDAO VC model which has some similarities to the model you’re laying out … In the concept below, the investors remain in full control of their funds, and “allow” a group of managers (ie MetaCartel) to invest as they please. The DAO/subDAO structure is live on DAOstack as an experiment.

I’ve also thought of the same concept: what if every company the DAO invested in held ownership in every other company. The way I’ve been thinking about it is more like founder insurance: any grantee can donate a portion of future dividends to a pool, in return for fractional ownership of that pool. In this way, the risk of participating in a startup is minimized. Startup risk is extremely high, this is a way to share that risk.

I really love the 10/10 funding-DAO structure :star_struck:

In the start of this article you mention “bridge for-profit and non-profit models into a hybrid for-impact model”. I love the vision, but I don’t think this setup actually achieves this. I see a high likelihood that MetaCartel members will drift to funding endeavors that are profit maximizing. One approach which would help is to limit the returns on investment (more like a debt instrument). Another would be to outline what % of the fund is expected to generate returns, and what % is not, make it very clear, and having some mechanism to prevent changing that breakdown. Deserves more thought…


Vinay Gupta discussed something similar to this in his ‘Dog Atheism’ essay in the section Dotcom Mutual Union.

It’s a model I’m very much fond of!


Such a cool post! There’s actually a founder in SF right now that I know who is working on a sort of index fund of early stage startups that founders can swap some percentage of their equity for. Totally similar idea! It kind of makes MetaCartel a venture studio which is a great way for MetaCartel to increase the adoption of DAOs.


Wow that sounds really interesting! Can you DM me on Telegram or Twitter to tell me more about that founder/project!? @insideNiMA everywhere :slight_smile:

This is super cool!

Full disclosure I’m much more familiar with how Aragon works, so please forgive (and correct me!) if I’m misunderstanding how things might work with MolochDAO here. Really just excited to jam on ideas and learn :slight_smile:

This would be amazing. We’ve been thinking about how this might work within Aragon community for a while now. While there’s a few VCs that use a shared equity pool, how it would work in a grants or non-profit space is TBD. Currently Aragon ecosystem teams support each other out of altruism, but this is hard to maintain consistently without a direct economic incentive. Furthermore, when teams don’t have a direct business model or token model there’s no hope for future returns. This makes teams dependent on grants. Grants are fine, but people should be able to capture a portion of the value they create beyond just being paid for their time (a non-renewable resource!). Without being able to offer future investors or contributors anything other than a sense of belonging and purpose it’s hard to maintain a project because hard things are hard and hard things take time and there’s only so much time and developers need to pay rent too. As a result, things tend to break down when real world consequences set in.

All this being said, collaboration is the killer human app. It’s what has allowed us to achieve impossible things: Ethereum, Aragon, and MetaCartel being just a few. To get to the next level we’d like to explore concrete incentive models for collaboration among Nest, CFDAO, and other potential community programs. This way it would feel more like a big team than individuals working to fulfill tasks. This is easier said than done, but I’m super excited about anything that can help us move in this direction (MetaGame and this post as recent examples of super cool projects working on this).

One idea that (I think) 1Hive was working on is having a “parent DAO” and “child DAOs.” The parent DAO can help projects working on awesome stuff and then create a DAO for each project (child DAO). The parent DAO supports the ChildDAO, but in doing so gets a portion of it’s tokens. Assuming the ChildDAO has some sort of business model and/or the token has utility, then the tokens could appreciate to reward the ParentDAO. Regardless of token prices/utility, the ParentDAO would also have some weight in governance decisions of the ChildDAO (kind of like having a “board seat,” but way less official. With Aragon you could actually configure various classes of voting tokens to create a board or whatever, but even just using a single multi-purpose token this would work. (I think) this would work with MolochDAOs as well if you gave funds to projects, but required them to create a MolochDAO in order to manage the funds. This way you could give the team funding, but also retain some ability to control funds (could be 20%, could be 80%, you decide!). Could be useful to hold projects accountable, or maybe to create a shared sense of community where teams weigh in on each other’s governance and/or share in upside value creation.

Another idea is that if you did this in cohorts then you could do a thing where all projects in a cohort create a DAO and 20% of the shares of those DAOs go to a ParentDAO. In exchange each project would get a share of the ParentDAO that has a pool of tokens from all the DAOs in that cohort. Then, after a certain time, teams could redeem their shares to get a portion of the shared upside of the cohort.

I dunno, just thinking out loud here. I’m sure you guys have considered all this and more when designing MCV. If you’ll humor me though, would be really curious to hear how you guys are thinking about this stuff. (Btw sorry if there’s already other threads on this forum where this stuff is already discussed. If so, please just point me in the right direction.)

Really into this idea! Not sure how you would enforce the cash out fee though. If you used the parent/child DAO idea, would you maybe be able to capture this value automatically? For example, if a parent supports a child and then the parent gets 20% of the child’s tokens (0 ETH in vault). Then the child sells more tokens to investors later on and this puts more funds in the child’s vault (many ETH in vault). Then the parent could cash out their shares in the childDAO in order to realize a gain (20% of many ETH).

  • This might also work if the parent DAO gives the child funds in exchange for 20% of the shares, then the child votes to give funds to it’s developers to build stuff. Then the childDAO team has 80% of shares and the parent has 20%, but there’s no funds in the vault. Then an investor comes in and gets some shares in exchange for adding funds to the vault and the parentDAO can ragequit to realize a gain of 20% of the new assets.

Awesome! Was this ever published and/or discussed publicly?


The above post was limited to 2 links since I’m new, but also just want to highlight a few things for good measure:


First of all really excited to see you here :slight_smile: … think we should have more of these metaDAO discussions between Aragon<>Molochs/etc…

Re your point below, I think this is a huge problem with current Ecosystem Funding mechanisms. We are basically replicating the same broken funding structure as European Union with their Horizon2020 and the ones before that! This approach disincentivizes SMEs & startups from reaching scale let alone profitability/sustainability long term.

The result is projects do the minimum crappy acceptable work and move on to the next grant application cycle. Horizon2020 is a giant graveyard of deserted one-off projects with close to zero long term output. Jobs are created and destroyed with public funding!

I know that you guys at Aragon are waking up to this reality too and going through a restructuring of your funding programs. I had a chat with Aaron last week and talked about these issues and how we (Ocean, Aragon, Web3, …) could do better. I think your ParentDAO structure could be a good start but in real life startups have many parents (investors, IP holders, …) so have to figure out how to reconcile that with Parent/ChildDAO model.

Oh! :stuck_out_tongue: I think I left the Medium post in draft mode and never published. It was exactly when I joined Ocean and life suddenly got very complicated with relocating etc … Podcast with Peter & co. should happen soon ^^ @pet3rpan

I’ll monitor this thread for further developments. For now I think MCV is going with a leaner approach. @lexnode/Gabriel is a better person to ask!


Yes! :slight_smile:

The struggle is real. It’s so hard to get people to act like founders without skin in the game. I think the key is funding people who are spiritually aligned and in it for the long haul vs just brilliant devs who hop from one project to the next. Nothing wrong with building awesome stuff, but changing the world requires more than just code.

Speaking of skin in the game, have you heard about ShareBear? It’s for DAOs, by DAOs. DAOs all the way down! :bear:

Please share when it’s ready!


Just randomly remembered I had promised to post the podcast link here … :slight_smile:



I really like the idea, but many problems could occur: like a malicious actor simply fake progress and once others grew big, dump its stack damaging the whole brotherhood

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