A Proposed Blueprint for Launching a Shutter DAO
Update: A Shutter DAO has been deployed following our blueprint! Discover more in our blog post. Meet Shutter DAO 0x36, a live instantiation of our proposed Shutter DAO model.
Shutter Network
This blog post presents a comprehensive blueprint and guide for initiating a DAO for the Shutter Network. It provides detailed instructions and code, which you can either customize or use as is to launch a Shutter DAO.
Each DAO created in this manner will be a genuine, on-chain entity, relying heavily on the active governance participation of you, the community.
It's time to unleash this birdy and see it soar! 📸
A True, On-Chain DAO to Govern Shutter Network and the Keyper Set
Here, we outline a blueprint and a guide for launching a DAO-powered implementation of Shutter Network. This template provides guidelines across various critical aspects, including creating a token, governance model, and roadmap for implementation.
Shutter is a project to address the challenge of malicious Maximal Extractable Value (MEV) on Ethereum as well as other information asymmetries in distributed systems. MEV refers to the value that searchers or validators can extract from users' transactions through practices like front-running. Shutter aims to protect users from such exploitation by employing a distributed key generation mechanism, ensuring fair and secure transactions on the Ethereum blockchain.
Shutter has attracted a strong community of contributors as an open-source software project.
This community, known as Shutter Network, includes all contributors, participants, and stakeholders involved in the Shutter project and the team developing the Shutter protocol thus far. The community is responsible for shaping the future direction of Shutter, testing and contributing to its development, fulfilling roles in Shutter implementations, and leveraging its technology for various applications within the blockchain and Ethereum ecosystems.
We invite the Shutter Network community to actively participate in shaping a DAO, ensuring that it represents the collective aspirations and needs. This approach fosters a strong sense of ownership and commitment among community members, which is vital for any DAO's success.
This blueprint is a proposal for the community, not a final execution. The community's input is vital in planning and shaping the future of a Shutter Network.
The goal is for the community to create initiatives that genuinely reflect the aspirations of the Shutter Network, fostering an environment of collaboration, innovation, and growth.
The smaller scope genesis allocation approach lends itself to a two-phase DAO launch strategy, with Phase 1 focused on establishing the DAO with the proposed genesis allocation and governance model, initially featuring non-transferable tokens, which could be followed by a Phase 2, a "token liquidity event" to enhance token utility and raise more awareness.
We have a deep commitment to community-driven governance and decentralization. There is a need for fair and transparent mechanisms in selecting and managing Keypers, which is crucial for maintaining the integrity of the Shutter Network. The proposed phased approach to launching a DAO and a detailed roadmap should show the community's careful coordination and consideration of immediate and long-term objectives.
Motivation
A DAO has always been at the core of the vision of Shutter's value proposition. It is an integral part of how the system is designed to function, especially concerning a transparent and trustworthy Keyper Set Selection Process and Keyper Set Management.
Shutter's Distributed Key Generation mechanism includes a threshold majority trust assumption for the Keyper set. The Keypers are entities that collaboratively generate encryption and decryption keys. For this reason, a somewhat subjective and Sybil-resistant selection mechanism is needed.
Previously, we successfully experimented with a Keyper Set Selection Process through a protoDAO. This experiment has produced two successful Keyper set additions, resulting in 22 Keypers. Our learnings from the protoDAO are reflected in this blueprint proposal.
Beyond its core functions, a DAO represents a major general step toward autonomy and decentralization. The Shutter protocol and community are ready and well-positioned for this significant step. The past few months have shown an extraordinary surge in activity, and the Shutter community is at an inflection point regarding interest and technological readiness.
Governance Goals
Shutter's mechanism for generating distributed keys relies on a trust assumption that a majority of the Keyper group is trustworthy. Keypers, entities working together to create encryption and decryption keys, require a subjective selection process resistant to Sybil attacks.
In addition, there are several parameters in the system, such as fee amounts, Keyper threshold, and others, which, especially initially, might need adjustment and a mechanism to set them effectively.
These are some of the goals for a potential Shutter DAO:
- Incentivization: Align incentives for all stakeholders to prevent system failure.
- Parameter Setting: Ensure accurate system parameter configurations, such as:
- Keyper threshold
- Prerequisites for the Keyper privileges like token allocations, stakes, etc.
- Possible fee mechanisms and distribution model
- Keyper Selection: Identify reliable Keypers and delegate responsibilities effectively, putting in place the Keyper set application and selection processes and Sybil-resistant mechanisms.
- Keyper Set Management: Add or evict Keypers continuously based on their performance, activity, and behavior.
- Decentralization: Uphold transparency, resilience, and accessibility in governance.
- Risk Mitigation: Reduce all Shutter Network participants' regulatory and operator liability risks.
Launch Phases
We're proposing to consider two distinct phases of a DAO launch.
In the initial phase of establishing a Shutter DAO, Phase 1, the primary focus is laying the foundational structure and ensuring robust governance.
Key steps include:
- Formalizing the DAO's legal structure.
- Deploying its smart contract(s).
- Actively engaging with the community to set the governance model collaboratively.
This phase is crucial for setting up the governance framework, correctly distributing the genesis allocation, and activating the initially non-transferable tokens. To ensure a comprehensive and well-rounded approach, we will organize community workshops to refine our governance model and finalize operational guidelines.
The essence of Phase 1 is to establish a Shutter DAO with sufficient autonomy and external governance in place, ensuring the community agrees upon the genesis allocation. Initially, the DAO will maintain control over token transferability, with the option for the DAO to later vote on making the token transferable and liquid, thus expanding its utility and governance dynamics.
Phase 2 of a Shutter DAO's development centers around a pivotal "token liquidity event," strategically scheduled to follow the initial launch. This phase amplifies the token's utility and market presence, which involves meticulous planning and executing the liquidity event.
Key activities include:
- Engaging in extensive community discussions.
- Formulating a comprehensive plan for token distribution.
- Forging alliances with exchanges and liquidity providers to facilitate a successful event.
- Airdrops and community incentive mechanisms.
Furthermore, this phase will see heightened community engagement efforts to boost awareness, alongside exploring potential partnerships to enhance token utility. A significant aspect of Phase 2 is conducting a community-wide vote to transition the token into a transferable asset, aiming to broaden its reach and impact within the market.
Roles
For instance, as a Keyper, your role would be to operate the Shutter Keyper client software, ensuring reliable and unbiased key generation. This role might involve participating in periodic key generation ceremonies and collaborating with other Keypers to maintain system integrity. As a Shutter Network member, you might propose and vote on crucial governance decisions, such as adjusting the Keyper threshold or electing new Keypers based on their performance and community feedback.
Post-launch, brainbot gmbh will continue to play a pivotal role in advancing the Shutter project. Focused on open-source infrastructure development, the team is eager to develop new features, provide technical support, and guide the integration of Shutter with other blockchain applications. The continuation of brainbot's contributions and expertise will ensure the ongoing innovation and robustness of the Shutter ecosystem.
Shutter DAO
- Incentivization: Aligning incentives for stakeholders and managing grants in Shutter tokens or other crypto-assets.
- Parameter Setting: Overseeing system parameters like Keyper threshold and fee distribution.
- Keyper Selection and Management: Streamlining processes for Keyper applications, selection, and ongoing management based on performance, activity, and behavior.
Keypers
- Operate the Shutter Keyper client software in an unbiased and reliable way.
- Update and maintain their nodes.
- Engage in discussion around fees and other system parameters.
Users
- Switch on or vote to switch on Shutter encryption (e.g., in their wallet, Dapp, or governance front-end such as Snapshot)
- Use and benefit from the protection that the encryption offers.
Integration Partners
- Integrate Shutter and maintain integrations.
Developers & Tech Contributors
- Code Development: Spearheading the development of code, smart contracts, and technical infrastructure.
- Open-source code contributions to the Shutter protocol codebase.
- Hosting of complementary dashboards and interfaces for less technically inclined actors to interact with various parts of the Shutter Network ecosystem.
- Providing integration support for anyone wishing to integrate Shutter Network.
Other Contributors
- Moderators & community managers
- Outreach and Marketing: Assisting in promoting Shutter, Shutter Network, and engaging with potential partners and the community.
Governance Architecture
A Shutter DAO would adopt the Fractal on-chain tool for its overall governance structure. Fractal transforms a multi-signature wallet into a versatile, automated, and governable on-chain entity. It is constructed upon the foundation of Safe (formerly known as Gnosis Safe). This approach ensures seamless and secure governance operations.
The new DAO will also have a separate governance setup and model from the previously used Shutter protoDAO. For example, the membership base will be much larger, inclusive, and accessible. In contrast, the protoDAO membership was granted based on non-transferrable NFTs.
Shutter Forum will host a place for discussions, posting proposals for the community to review, and announcements regarding actions around a Shutter DAO. Then, in addition, Fractal will be used to vote on the proposals, which can also have actions executed on-chain.
So far, the protoDAO has voted to select Keypers to secure the Shutter protocol. After the establishment of a Shutter DAO, the on-chain smart contract will be owned by that DAO, which then has the power to make changes to the active Keyper set, adding and removing Keypers via new selection processes. As part of the deployment procedure, a Keyper set smart contract, including the already existing Keyper set, as voted on by the protoDAO, is deployed.
We're proposing to set up the DAO with the following voting parameters:
- Voting strategy: simple majority (50% + 1 smallest unit of a token)
- Quorum: 3% of all tokens
- The minimum amount of tokens required to make a proposal: 1
- Voting period length: 72 hours
- Execution period: 72 hours
- Cooldown period: None
In order to simplify and standardize proposals, we created a section at the Shutter Forum for various proposals and actions a DAO could take.
Community members are welcome to add to these first templates, use and modify them, and propose actions to the DAO!
This governance framework is just the beginning, and the community should evaluate and put into action additional components, such as a Snapshot space or child DAOs on other networks relevant to Shutter and Keyper governance, as soon as possible.
A Token Proposal for the Shutter Network
The tokenomics of a Shutter DAO, encompassing the genesis allocation and a vesting schedule, are meticulously crafted to align with the interests of diverse stakeholders. This design aims to facilitate a balanced, incremental power distribution and influence within a DAO.
DAO Governance Utility Token
Primarily, a token will select and manage the Keyper set and organize and fund ongoing project development. Owning the token unlocks these essential utilities.
Future Utility Considerations
The token's primary role is governance. However, potential future utilities, subject to governance decisions, include:
- Payment Token: The possibility of using the token as a means of payment within the Shutter ecosystem could be explored.
- Staking Utility Token: There may be an opportunity for the token to be staked for inclusion in the "official" Keyper set. Initially, this would primarily signal commitment without a slashing function. The introduction of slashing could be considered later if it becomes technologically viable and is agreed upon by DAO governance.
These potential future utilities are not active at the outset. Still, they could be implemented based on the collective decisions of the community.
Token Transferability
A token would initially be non-transferable. The only exception to this would be a DAO, which could transfer the tokens. Later, the community could vote to unlock the transferability of the token, thus opening up the token for broader circulation.
Genesis Allocation Proposal
An essential component of our proposal is the genesis allocation of tokens. The philosophy guiding our approach to this allocation is one of sensibleness and foresight. We aim to set a foundation that supports a DAO's growth and stability while keeping the door open for future possibilities as decided by the community.
Strategic Approach to Genesis Allocation
The strategic approach to the genesis allocation is crafted to ensure a stable foundation for the network's future growth and activities. This allocation is divided among key stakeholders to achieve a balanced representation and active involvement from all community segments. It aligns with the long-term vision of Shutter Network, ensuring that every participant has a voice in its evolution and success.
These include:
- DAO Reserve: A significant portion, approximately 58%, is allocated to the DAO's reserve. This reserve is a strategic fund for future initiatives, airdrops, community incentives, and unforeseen contingencies.
- Future airdrops: 10% of the total token amount is proposed to be reserved for future airdrops towards the users of Shutter-related protocols and the community in general.
- SPT Holders: To recognize the early supporters, 22% of the tokens are allocated to existing SPT holders, acknowledging their early faith and contributions to the project. SPT is a non-liquid, privately sold currency token intended for users and integrators to pay Keypers.
- Early Community Members: Around 20% is earmarked for early community members, including protoDAO members, active contributors, partners, and users who have significantly engaged with Shutter's technology.
Future Flexibility: This initial allocation ensures that the DAO retains ample capacity for future distributions or reallocations, should the community decide to do so. This approach allows the DAO to adapt and evolve its token distribution strategies in response to future needs and opportunities.
Encouraging Participation: By allocating a substantial portion to the DAO reserve and early community members, we aim to incentivize continued participation, contribution, and innovation within the Shutter ecosystem.
Long-Term Vision: The genesis allocation is not just about immediate distribution but is also aligned with our long-term vision of a decentralized, robust, and active Shutter Network. It's structured to support the DAO's sustainability and effectiveness over the long haul.
In conclusion, our genesis allocation proposal is crafted to ensure a stable and promising future for the Shutter Network. It is designed to support the ecosystem's immediate needs while maintaining enough capacity for future maneuvers based on the collective will of the community members. We believe this approach strikes the right balance between immediate utility and long-term strategic flexibility.
The proposed complete list of addresses and allocations include in total around 11,000 addresses.
Guide on how to modify the genesis allocation:
shutter-networkWe're committed to making it as simple as possible for anyone to modify and create Shutter DAOs.
By doing so, the community could end up with more than one DAO deployed. We at brainbot believe that this would be a positive sign for the degree of governance decentralization and diversity of strategic direction present in the community.
Early Community Member Allocation
These early community members include those who are contributing to the technology and growth of Shutter at its core. They were selected primarily via on-chain sources based on their proximity to the Shutter Network community and projected likelihood of being valuable members of the Shutter Network community in the future.
Those on the individual contributor list were selected from the Genesis Launch Program. Everyone from this program was included in the allocation.
The following entities are included:
- Shutter protoDAO members
- Shutter Keypers
- Individual contributors
- Partner projects and entities:
- CoW DAO
- Cryptosat
- Espresso Systems
- Fractal
- Gnosis
- HOPR
- Kleros Cooperative
- Mode
- Nethermind
- roll-op
- Snapshot Labs Inc.
- Valory (core contributor to Autonolas/Olas)
- Most active:
- Users of shielded voting on Snapshot (~5000 users out of a list of over 43,000)
- Users of Gnosis Chain (~5000 users)
- DAOs using shielded voting on Snapshot (~30 DAOs)
- Gnosis Chain validators (~2300 node operators)
The current integrators, users, and contributors of the Shutter Network will likely be vital future contributors. Their demonstrated commitment to Shutter positions them as valuable assets for ongoing and future developments.
Here's a list of all early member addresses, allocations, and categories for their allocations. To preserve privacy, individual names or other identifying data per individual address are not included:
shutter-networkThe blueprint also contains an allocation of 100,000 tokens for the deployer of a Shutter DAO.
The vestings are claimable until Sunday, the 14th of July, 2024, 23:33:20 UTC.
Vesting
In the blueprint, we propose a vesting schedule where, per allocation, 10% (20% for some of the smaller allocations) of the tokens initially unlock starting the 18th of March, with some categories unlocking at later dates throughout March and early April.
The remaining 90/80% then continue to linearly, continuously unlock at an approximate average of two years of continuous, linear unlocking of the tokens per token allocation. Some vesting schedules have slightly differing lengths (differing by two months from the average at max).
The details of all vesting schedules can be accessed via the individual CSV files found in GitHub.
Blueprint Deployment Instructions
This is the official blueprint for a Shutter DAO. In the GitHub repository, you will find the instructions to deploy a Shutter DAO and how to modify the configuration parameters:
shutter-networkCommunity Feedback
To deepen community involvement, we plan to host regular Spaces on X (formerly Twitter) with AMAs where members can discuss DAO developments, create a dedicated platform for community suggestions, and implement a rewards system for active contributors. These initiatives encourage diverse perspectives and foster a more engaged and vibrant community.
We invite the Shutter Network members to contribute their thoughts on a DAO's structure, tokenomics, and Keyper management through platforms like the Shutter Forum, social media, and webinars.
This feedback process seeks diverse input to refine Shutter Network's governance model and token allocations, encouraging suggestions for entirely new settings and processes. The goal is to shape a DAO that aligns with the Shutter's aspirations while emphasizing collaboration and innovation.
Conclusion
The blueprint for a DAO marks a pivotal step in leveraging Shutter's capabilities. The proposal outlined above emphasizes the importance of community involvement, decentralization, and strategic planning in establishing a DAO that genuinely reflects Shutter's ethos.
The proposed two-phase approach, starting with the initial establishment of a DAO and culminating in a token liquidity event, provides a clear and structured path for achieving these goals.
Next Steps for the Shutter Network
We invite the community to actively engage with us by providing feedback on this proposal and discussing and evaluating the available options. We have created a new section at the Shutter Forum to discuss anything related to these topics.
Starting today, anyone is empowered to deploy the necessary smart contracts, initiating the launch of a DAO for the Shutter Network.
We will observe these developments, particularly the deployments after this announcement. Once deployments are made, we will document and support the validation and selection processes.
As a real decentralized autonomous organization, the Shutter DAO indeed relies on you, the community, to make proposals and vote on them! Shutter Tokens will be non-transferable initially. However, the token owner, in the proposed blueprint, the Shutter DAO, can transfer them, so a DAO could give out token grants prior to unpausing the token.
The Fractal governance framework and the genesis allocation claiming smart contract allow tokens to be delegated. If you're interested in becoming a DAO delegate for other people to delegate their tokens to, please come forward and let the community know!
Stay tuned for more updates, including a new blog post with essential links and addresses, and follow our announcements on X for the latest developments. We eagerly look forward to growing the Shutter Network alongside our committed community.
