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SingularityDAO Governance Whitepaper
Democratised Alpha Generation. DAO driven dynamic on-chain portfolios of token assets
28th of April 2021

Executive Summary

SingularityDAO is a decentralised, blockchain-based organisation with the main goal of governing DynaSets, diversified baskets of cryptocurrency assets dynamically managed by AI. Voting power in SingularityDAO is granted by the SingularityDAO token (SDAO). SingularityDAO brings the sophisticated risk-management strategies of AI-managed funds to DeFi, using SingularityNET’s superior AI technology.
The DAO allows users to vote on proposals using liquid democracy, also known as delegative democracy. In effect, this means users can vote directly on proposals, or take a more hands-off approach by delegating their tokens’ voting power to someone else to vote for them.
The DAO will control, in a democratic way, which DynaSets are on the platform. It will also have the power to make changes to the economic variables and protocols of the platform, or even amend governance protocols. Proposals can be tabled only by the SingularityDAO team at first, with this power being decentralized to the community of token holders progressively over 5 phases.
This whitepaper describes the mechanics of the SingularityDAO Governance Protocol. Please also read our SingularityDAO Platform Whitepaper, which can be found on singularitydao.ai.

DISCLAIMER

The Company is registered in St. Lucia and structured as an International Business Company in accordance with the St. Lucia International Business Companies Act (the “Act”), Chapter 12.14, fully established, compliant and capable of performing all proposed activities stated within this Whitepaper.
This Whitepaper contains information of an experimental proof-of-concept ecosystem through the use of the Company future token. The future token is not an investment product; it is not collateralized and has no intrinsic value; it is envisioned to be a future utility token for the Company speculative ecosystem. The Company is not a registered broker, analyst or investment advisor. Everything that the Company provides is purely for guidance, informational and educational purposes. None of the information contained in this Whitepaper constitutes an offer to sell, or a solicitation of an offer to buy or subscribe for, any future tokens or any form of offering to any legal entity within any jurisdiction, nor shall it, or the fact of its distribution, form the basis of, or be relied upon, in connection with or act as an inducement to enter into any contract or commitment therefore. The Company does not accept any liability for any loss or damage whatsoever caused in reliance upon information contained in the Whitepaper. Neither the Company nor any third party, provide any or guarantee as to the accuracy, completeness or suitability of the information and materials found outside the Whitepaper. In no event should the content of this Whitepaper be construed as an expressed or implied promise or guarantee. Content in the Whitepaper should not be considered to be or relied upon as advice or construed as providing recommendations of any kind.
The full functionality of the Company’s proposed ecosystem and future tokens is not yet complete, and no assurance can be provided of such completion. The functionality of the Company’s proposed ecosystem and future tokens is complex and may require enhancements and product support over time, and full functionality may take longer than expected. There may be a fatal flaw in the Company code, including a fatal flaw in the Company’s proposed ecosystem, future token, the platform and any other proposed Company operation. Expectations regarding the form and functionality of the future tokens may not be met upon release of the future tokens for any number of reasons, including a change in the design and implementation plans or delays or differences upon execution. The Company, the proposed ecosystem, and the future token may fundamentally change as the circumstances develop and as the Company adjusts.
The Company envisions launching a future token, commonly referred to as a cryptocurrency. The future token is envisioned to be based on the Ethereum blockchain. The Ethereum blockchain is still in a relatively early stage of development and is not entirely proven. Any malfunction, flaws, breakdown or abandonment of the Ethereum blockchain may have a material adverse effect on the Company’s plans contained in this Whitepaper. Advances in code cracking, or technical advances such as the development of quantum computing, may present risks to the Company. All forms of participation in cryptocurrencies involve risk. Cryptocurrencies are the subject of regulatory scrutiny by government authorities and other regulatory bodies around the world, and the Company could be adversely affected by one or more enquiries or actions. None of the content published in this Whitepaper constitutes a recommendation that any particular cryptocurrency, including the Company’s future token or related activity defined herein, is suitable for any specific person. None of the information provided is intended to advise you personally concerning the nature, potential, value or suitability of any particular cryptocurrency or any other matter.
There is also no guarantee that the Company will deliver on the contents contained in this Whitepaper. The Company and all functionality may need to undergo substantial development, as part of which they may become subject to significant conceptual, technical, financial or commercial changes. There is also no guarantee that the Company’s objectives will be achieved. Past results are no indication of the future. The development or deployment of the Company’s proposed ecosystem and future token may fail, be abandoned or be delayed for a number of reasons, including lack of funding, lack of commercial success or prospects, or for any internal or external cause.
Information contained in this Whitepaper may be outdated. The Company has no obligation to update the information contained in the Whitepaper. Information provided in this Whitepaper is intended solely for general purposes and is obtained from sources believed to be reliable. Information contained in this Whitepaper is in no way guaranteed. Any product and/or service mentioned in this Whitepaper are not, and should not be construed as offer to any person or entity in any jurisdiction or country where the engagement with such products and services are restricted or prohibited by law or regulation, or where the Company would be subject to any regulatory obligation, licensing requirement, restriction, or otherwise.
NOTHING IN THE WHITEPAPER SHOULD BE CONSTRUED AS ANY FORM OF ADVICE, INCLUDING, BUT NOT LIMITED TO FINANCIAL, LEGAL OR TAX ADVICE.

Acknowledgements

Dear AGI Token Holding Community,
We would like to express our sincere gratitude and appreciation to you for your continued support, enthusiasm, feedback, immense knowledge, valuable contributions, and volunteering. Thanks to your vote in the SingularityNET Phase 2 proposal, SingularityDAO will exist and will enrich the future of finance through a Decentralized Autonomous Organization enabling AI-powered DeFi portfolio’s. Thank you. We are changing the world together.
In the name of SingularityDAO and the team,
Sincerely,
Marcello Mari
CEO of SingularityDAO

Background & Motivation

It was always our aim for SingularityDAO to be governed by its users. But this requires careful design; democracy is an ideal which can and has been subverted. Representative democracy – the familiar kind where you elect a representative to speak for your interests – gets valid criticism for creating a specialised management class whose interests aren’t the same as those of the voters. The opposite is direct democracy: where everybody votes directly on the issues with no intermediary. This is a purer way of giving people a voice, but brings a new problem: the average voter doesn’t have time to read every proposal and consider both sides in detail.
Liquid democracy combines the strengths of representative and direct democracy. Users can vote directly on proposals if they have the time and interest in doing so, or they can delegate their vote to a representative to make decisions for them. Users can take a hands-on approach and make all decisions for themselves, or they can save their time and entrust those decisions to someone else.
This allows the DAO to make ongoing changes to its own functioning without a centralized controller or commander. Proposals to be voted on can be proposed by the SingularityDAO team in the first phase, with this power being given to the community further down the road.
Voting rights are granted by ownership of the SDAO token, giving an economic incentive to be part of the DAO, and making it expensive for whales to gain an outsized influence in the democracy.

The SingularityDAO Governance Token (Symbol: SDAO)

The SingularityDAO Governance Token, SDAO, is an ERC-20 utility token on the Ethereum blockchain that grants access to the SingularityDAO protocol.
SDAO has utility in granting rights to participate in DAO governance voting events on the SingularityDAO protocol. Through several utility functions the SDAO Governance Token can interact with the SingularityDAO Protocol smart contracts. Those particular utility functions are:
  • To vote either FOR or AGAINST or BLANCO a SingularityDAO Governance Proposal through its Voting Function.
  • To create a SingularityDAO Governance Proposal.
  • To delegate one’s voting function to another wallet on the ethereum blockchain
They can impact the protocol in various ways, such as:
  • Which DynaSets are accepted as options for members to choose from. Initially, users will be able to choose from the DynaSets created at launch, but later we will allow the DAO mechanism to propose and create new DynaSets
  • What formula to use for prioritizing Optimizers, in the case there is more demand for borrowing than there are tokens to be borrowed.
  • The operation of the liquidity pools needed for support of DynaSet tokens and Optimizer activity on the backend
  • Updates to the SingularityDAO Governance Protocol
  • and much more!

Participation and Representation

A user can participate in SingularityDAO governance either by:
  1. 1.
    Holding SDAO tokens
  2. 2.
    Having an SDAO token holder delegate voting power to them
Owners of SDAO tokens can participate in SingularityDAO governance votes at all times, either through your own interaction with the Governance Proposals’ smart contract, or indirectly by delegating your Voting Function to another wallet on the Ethereum blockchain.
When voting power is delegated to you, you do not own SDAO tokens, but temporarily have their voting power. If the SDAO token holder reverses this delegation, or if the tokens are transferred, the delegate loses their voting power.
SDAO token holders can either vote on proposals directly or delegate their Voting Power to a delegate, who then votes on the proposal.
The Voting Function can be delegated to any wallet on the Ethereum blockchain that may or may not own SDAO tokens.
This protocol allows you to have full control over your voting power, but also allows you to appoint an expert to make decisions on your behalf, perhaps a DeFi expert or a trusted
SingularityDAO community member. We hope to motivate the SingularityDAO community to find worthy representatives of their votes, no matter this representative’s current holdings, and we hope to motivate leaders in our community to be vocal and gather the community’s support and insights.

Weight of the Vote

The weight of the vote during a SingularityDAO Governance Event is represented by the total number of tokens a user owns plus the number of tokens delegated to this user.
weight of vote = (owned tokens - tokens delegated to others) + delegated tokens
By default, SDAO tokens count as being delegated to the holder of the SDAO tokens. One may choose to delegate their voting function to another wallet on the Ethereum blockchain. The weight of your vote is equal to the total number of tokens delegated to your address, plus the number of tokens you own, minus the number of your tokens you have delegated to others.

Progressive Decentralization of Creation of Proposals

The right to create SingularityDAO Governance Proposals, and submit these for voting to the SingularityDAO token holding community, will be rolled out in a phased manner, progressively decentralizing access to this function to the wider community.
In the first 12-month phase of the SingularityDAO protocol, the right of Creation of Proposals is reserved for the founders only. During this phase we welcome proposals in the community forum; a process will be defined for structuring and formalising these proposals. Also during this phase, we want the SingularityDAO community to prepare for Phase 2 of the process, namely the introduction of the Creation of Proposals for recipients of delegated votes. In this phase, the SingularityDAO team will also prepare the vote on definitions of voting events (outlined in more detail in the next section), which is required to pass before moving on to phase 2.
In phase 2 we want to introduce the Creation of Proposals for the recipients of delegated votes. We want to motivate the SingularityDAO community members to create great SingularityDAO Governance Proposals. In order to be eligible for creating a SingularityDAO Governance Proposal, recipients of delegated votes must receive at least n votes (to be announced later based on the most optimal governance distribution at that time, including all threshold milestones mentioned hereafter). This threshold, and therefore the ease to submit a proposal will be progressively decentralized in the Decentralization Periods to come. The way it works is as follows:
  • At the end of the first month of Phase Two of the Creation of Proposals, a voting event will occur to lower the threshold by a certain amount, or to keep it as is.
  • If the vote is to keep it as is, the same voting event will happen in the month thereafter, attempting once more to lower the threshold.
  • If this vote is accepted, the threshold to be able to create a proposal will be lowered from then on. The following month, another voting event will be held to lower the threshold by a certain amount, to keep it as is, or to increase the threshold by the same amount.
  • The threshold can be lowered up to a specified minimum threshold.
  • Once the minimum threshold is reached, phase 3 will be activated.
In phase 3, which will last for a fixed 12 months, we welcome SingularityDAO Governance Proposals by anyone who holds at least the same amount of votes as was needed at the end of phase 2. Now both individual token holders and recipients of the delegate voting function have access to the right of Creation of Proposals if they meet this threshold. During this period the threshold cannot be lowered any further, but can be corrected up if the community deems this necessary.
In the case the threshold is above this minimum threshold at the end of phase 3, phase 2 will reboot to lower the tokens again from the level it ended in phase 3 to the level it required in phase 3, after which phase 3 will restart.
If the threshold has been reached at the end of Phase 3, Phase 4 will commence.
In Phase 4 the minimum threshold will be lowered once more for the right of the Creation of Proposals. This right will last for 12 months.
In Phase 5 the minimum threshold will be lowered once more for the right of the Creation of Proposals. This can only be changed with a SingularityDAO constitutional voting event.
An example timeline of voting events can be found in Appendix C: Roadmap.

Types of Voting Events and Turnout Criteria

There are various types of voting events that may occur in the future of SingularityDAO. Some of these voting events may pertain to fairly standard protocol updates, whilst others could be considered a constitutional change to the SingularityDAO protocol. At the end of Phase 1, SingularityDAO will host a Voting Event to formalize the types of voting events and their acceptance rates, rejection rates, blanco vote disqualifications, and turnout criteria in the SingularityDAO Constitutional Code.
Here are some ideas of the types of voting events we are considering, albeit these may be further defined or redefined in Phase 1 with the input of the SingularityDAO community.

Constitutional Voting Events

Constitutional voting events pertain to critical SingularityDAO operational components, such as but not limited to:
  • The SDAO ERC-20 token.
  • Voting Function.
  • Voting Right.
  • The Right to Create Proposals.
  • The Right of Representation.
  • Blockchain infrastructure.
Constitutional voting events will require a higher turnout criteria relative to other voting events and an at least 51% majority vote and a SingularityDAO Veto Right vote if it exists at that time.

Veto Deactivation Voting Event

The Veto Deactivation Voting Event can occur after Phase 5, and its sole purpose and intent is to dismantle the SingularityDAO Veto Right functionality after the maturation of the decentralized governance network has been achieved.
If the Veto Deactivation Voting Event has been accepted by the community, the role of Guardian of the Singularity will be up for election 30 days after. More information on this can be found in the Guardian of the Singularity section.
This event will need a high turnout criteria relative to other voting events, a 75% majority vote, and does not require a SingularityDAO Veto Right Vote.

Major Functional Voting Events

Major Functional Voting Events pertain to adding functionality to the SingularityDAO Protocol.
Functional Voting Events will require a medium turnout criteria and a 51% majority vote.

Minor Functional Voting Events

Minor Functional Voting Events pertain to updating variables within existing features of the SingularityDAO Protocol.
These events will require a lower turnout criteria than Major Functional Voting Events, and need a 51% majority vote.

Proposing Voting Events

Proposing voting events are a special type of voting event that allow the community to request a proposal of a Constitutional or Functional Event from the team. The exact definitions and methods of execution for these events will be proposed to the community at the start of Phase 1.
It is not necessary to do a proposing voting event in order to submit a Constitutional or a Major/Minor Functional Governance Proposal, rather, it is a means for the wider community to collaboratively create a SingularityDAO Governance Proposal with the team. This is especially of importance in the first years of the DAO, as the DAO will need to mature in its governance processes and community participation.

Proposing Functional Voting Events

Proposing Functional Voting Events will need to achieve a lower turnout criteria relative to other events and a 51% majority vote. When a Proposing Voting Event has passed, the SingularityDAO team will have 60 days, to collaboratively with community input, create a SingularityDAO Governance Proposal of the Functional Voting Event type.

Proposing Constitutional Voting Events

Proposing Constitutional Voting Events will need to achieve a medium turnout criteria and a 51% majority vote. In the case of a Constitutional Voting Event the SingularityDAO team will also have 60 days to create a SingularityDAO Governance Proposal, or it can exercise its Veto Right. In the case a Veto Right is exercised, the SingularityDAO team is required to publish an explanation for why it has done so.
The community may resubmit an updated Proposing Constitutional Voting Event to organize a new vote at all times, however, vetoed proposals will remain vetoed until the start of Phase 5, after which vetoed proposals may be put up for a vote once more in their original state.

Governance Decentralization Voting Events

Governance Decentralization Voting Events are voting events organized in support of the decentralization efforts as outlined in the Progressive Decentralization of Creation of Proposals approach. These events are immune from SingularityDAO Veto Right votes and are pre-scheduled up to the end of phase 3. After that, they will follow a specific scheduling logic depending on the state of decentralization maturity at that time (e.g. the need of a reboot of phase 2, or the progression to phase 4).
These voting events are for:
  • Increasing the token threshold to create governance proposals in Phase 2 or 3.
  • Decreasing the token threshold to create governance proposals in Phase 2, or in phase 3 up to the minimum threshold specified.
  • To retain the current token threshold to create governance proposals in Phase 2.

Voting FOR, AGAINST, or BLANCO

When a user wishes to vote on a SingularityDAO Governance Proposal, they can choose to either vote:
  • FOR: which translates to fully supporting the terms outlined in the SingularityDAO Governance Proposal.
  • AGAINST: which translates to fully rejecting the terms outlined in the SingularityDAO Governance Proposal.
  • BLANCO: which translates to a rejection of the current SingularityDAO Governance Proposal, but also indicates that users may find the SingularityDAO Governance Proposal incomplete or in need of a specific amendment. It can also disqualify the Governance Proposal if the BLANCO vote exceeds a certain threshold. We would also like to consider this as an official expression of protest on the blockchain, a BLANCO vote may disqualify a proposal, and should motivate the creator to listen to the community and take in their feedback.
A blanco vote can disqualify all event types except for scheduled progressive decentralization events. After a voting event type has been disqualified, users may submit a new proposal.

The SingularityDAO Veto Right

The SingularityDAO Veto Right is a temporary and unique right reserved for the SingularityDAO team to protect the SingularityDAO Constitution in its first years.
The SingularityDAO Veto Right can be exercised on Constitutional Voting Events at all times until the dismantlement of the SingularityDAO Veto Right.
The SingularityDAO Veto Right can be exercised on Functional Voting Events up to Phase 5. The dismantlement of the SingularityDAO Veto Right can occur in two ways:
  1. 1.
    The SingularityDAO team may deem the decentralized governance network mature enough to prematurely dismantle its function. They will then organize a Supreme Veto Constitutional Voting Event to propose its dismantlement to the wider SDAO token holding community.
  2. 2.
    During a Supreme Veto Constitutional Voting Event it has been decided to dismantle the SingularityDAO Veto Right, which can occur 12 months after the start of Phase 5.
The SingularityDAO Veto right is in principle absolute: it will count until the start of Phase 5 for Functional Voting Events, and it will count until the dismantlement of the SingularityDAO Veto Right for Constitutional Voting Events. However, we realize that there may be a time in the future when the Veto Right may have been executed, but in hindsight it may seem that the contextual reasons for originally casting the Veto Right may have changed. Therefore, the SingularityDAO team will be granted the ability within the protocol to retract its Veto Right in order to allow a previously rejected Proposing Voting Events to be resubmitted to the community before the commencement of Phase 5 or the dismantlement of the SingularityDAO Veto Right.

Guardian of the Singularity

The Guardian of the Singularity is an elected Pause Guardian address capable of pausing the functionalities of the SingularityDAO protocol in the events of unforeseen circumstances and vulnerabilities. Currently the SingularityDAO team is the Guardian of the Singularity on the protocol. However, with the dismantling of the SingularityDAO Veto Right, the Guardian of the Singularity will be a position up for election, invoked 30 days after the dismantling of the veto right. In these 30 days, SingularityDAO will carry the interim Guardian of the Singularity role until the election. The wallet with the most votes for the Guardian of the Singularity, will continue honouring this role.