Signaling proposal to allow Hub governance to execute clawbacks with ease

Description

Full forum discussion could be found here.

Summary

This proposal aims to introduce a ‘Claw Back’ tooling that would allow the Cosmos Hub community to recall all funding provided to DAOs, like the Atom Accelerator DAO (AADAO), back to the Community Pool through an onchain governance vote.

Please note that this proposal is NOT calling for the immediate dissolution of AADAO. Recent events have prompted conversations in the community and the DAO about restructuring the organization, but this proposal is unrelated to those issues. This proposal is to modify DAODAO tooling such that any ATOM Community Pool funded DAOs’ assets can easily be clawed-back by governance, if and when needed.

Background

The Hub’s community is the true owner of AADAO’s assets and is the sovereign voice enabling it. Meaning that, at any moment, the community could choose to halt the DAO’s activities, claw back funding and dissolve Atom Accelerator.

Motivation

The community’s supreme authority, via onchain governance, over all of AADAO’s activities isn’t new and has been part of the DAO’s Internal Protocols since inception.

That being said, if a community member wanted to introduce a proposal to claw back funds and disband AADAO, the process would be suboptimal right now:

• Lengthy process: it requires a signaling proposal, after which the AADAO Multi-Signature signers must coordinate to transfer the funds back to the Community Pool.
• Technically challenging: Multi-Signature coordination failures could lead to frozen funds. For example: Clawing back vested funds in Proposal 860 required a Software Upgrade.
• Trust assumptions: In an ideal scenario, the Hub’s community shouldn’t be beholden to any additional trust assumption when it comes to governance-approved claw backs.

In order to eliminate unnecessary trust assumptions, account for technical failures and improve the process, AADAO has asked the DAODAO team to develop a clawback tooling… This tooling will allow any community member to initiate the process of recovering all funds custodied by DAO’s like AADAO, simply by creating a governance proposal on the Cosmos Hub. Upon passing, the clawbacks will be executed automatically.

It’s worth adding that while the main purpose of this development is to be leveraged directly by Atom Accelerator to strengthen the DAO’s accountability to the Cosmos Hub, the tooling will be made available for all to use.

AADAO will be the first to adopt this but it is our hope that it will become a standard practice amongst all DAOs mandated by the Hub in the future.

Implementation

If passed, AADAO will proceed to put in place the clawback tooling as proposed below.

Technical Implementation:

In order to maximize transparency, accountability and efficiency, AADAO leverages DAODAO for all its operations. DAODAO enables the existence of a hierarchical organizational structure via subDAOs, a feature that AADAO leverages.

Thanks to this, AADAO will be able to grant the Hub’s Community Pool address control over funds in the custody of AADAO.

A clawback control will be given to the governance account, allowing governance to execute messages on behalf of AADAO and its subDAOs

Once in place, any community member will have the ability to post an onchain proposal that, if approved, will execute the transfer of all assets custodied by AADAO back to the Community Pool.

Best Practices guidelines

While nothing prevents any community member from abruptly pushing a ‘clawback’ proposal onchain without prior notice, we would like to point out a few suggestions to follow when introducing a clawback proposal:

• Before taking the proposal onchain, initiate a discussion on the Hub’s forum.
• Include the reasoning and rationale behind the proposal.
• Give AADAO (or other DAOs) the chance to reply and address the concerns motivating the proposal.
• Any clawback proposal should account for grants and expenses in progress. In the event that a clawback is initiated, some funds should be excluded from the clawback to allow for the program to be closed out responsibly - covering the funding already committed to grants in progress, and some operational funding to allow for a skeleton team to close out the program.

Note:

• The goal of the suggested best practices isn’t to give AADAO the chance to defend itself. Instead the goal is to provide ATOM stakers the full picture and more context, in order to make informed decisions.
• Regardless of whether the proposed guidelines were followed or not, AADAO contributors commit to abiding by the outcome on any onchain vote that concerns AADAO.

Final Thoughts

Navigating recent events has been challenging for AADAO’s contributors. That being said, we’d like to pause for a moment and consider the upside to the future of decentralized governance on the Cosmos Hub:

While what the DAO experienced should have never happened in the first place, it was the way Atom Accelerator was structured that allowed for it to be detected and swiftly addressed.

Atom Accelerator relies on a group of contributors entrusted by the Cosmos Hub to steward its interests. Meaning that at any moment, if the community wills it, they can put an end to AADAO and retrieve all funding.

To complement Atom Accelerator’s decentralized ethos, the DAO established a trust in Guernsey, leveraging the jurisdiction’s tax neutrality for optimal asset management. Combined, these efforts guarantee the long-term financial health of the Hub’s assets by placing compliance directly on the shoulders of the DAO’s contributors. An approach that has proven efficient amid recent events.

Critical changes need to be made in order for AADAO to find a way forward. We’re currently working on the best way to do this and soon we will share our plans with the community.

But until then, we wanted to remind the community that AADAO contributors do and will always acknowledge the Hub’s governance as the overruling authority on all matters and we hope that this initiative will reinforce that commitment.