WTFutarchy?

Governance is dead

With a lot of repetition and not much engagement, governance today is extremely boring. Futarchy is a new form of governance that lets you bet on proposals. This has the possibility to upend the structure of governance in crypto entirely. Instead of betting on the governance token, you can bet on the governance itself.

Think about that for a second. It’s betting…on governance proposals…in crypto…

I think that’s worth learning a little more about, don’t you? Let’s dive in!

Ok, how does it work?

Futarchy has been implemented by @MetaDAOProject. Their objective is “number go up”.

Someone makes a proposal to MetaDAO, for example to allocate tokens to a pool for better liquidity. If people believe that this proposal will make the token number go up, then they will bet: This proposal will pass! If the proposal passes, anyone who bet, YES gets an option to purchase the MetaDAO’s token at a discount to the market.

And if you made a bet that it would not pass, then you get a refund! Thats pretty mind blowing.

But wait hold on. That’s just pumponomics!

Actually, it’s grounded in a great theory by an acclaimed economist called Robin Hanson. As a polymath, Robin has a lot of great ideas.

Robins concept is simple, betting markets predict outcomes very well, because generally, people don’t like loosing money. To quote Robin:

"Betting markets are our best known institution for aggregating information"

Does the world really need Futarchy?

I read Vitalik’s blog post on Futarchy in 2016 and it was the reason I started to take crypto seriously. I read about this concept of futarchy in the wake of Brexit. Witnessing a large amount of people vote in their own disinterest first hand was harrowing. The British token (£GBP) tanked on the news of Brexit. Costs of imports, most noticeably food, spiked. What if a futarchy was in place instead? How could the conversation about the referendum been different?

The DAO’s objective is simple: to make the number of their token go up. And they might keep doing that (not financial advice). But what about the longevity community in VitaDAO? If their objective is to increase lifespan, you could easily foresee a research organisation set up with betting on how research could increase longevity.

Futarchy is innovation in governance grounded in economics theory. It will very likely be adopted by a DAO near you soon.