A "Decentralized Autonomous Organization" is a mechanism for coordinating behavior and allocating resources. It has been called "an internet community with a shared piggybank" or "a bookclub with a bank account" but, regardless of the metaphor, DAOs represent a visionary approach to working that we believe will revolutionize the future of work.

As of August 1st, 2021, Harmony is working to "seed" and "kickstart" several DAOs in order to decentralize the management and effort in operating the Harmony Network. Through several experiments and trial runs, several key principles have risen to the surface as vital components of a truly decentralized DAO. Please note that, while these components are necessary for a DAO to receive a seed grant from the Harmony Foundation, they are not sufficient. Meaning: if you are forming a DAO that you would like to see supported by the Foundation - you MUST follow these principles. However, just because you follow these principles does not automatically mean that you will receive Foundation support.

Principle #1: The Mandate

The Harmony Foundation has found that a three-fold mandate is ideal for organizing a community. For example, the ONECommunityDAO has the mandate "Growth, Engagement, Diversity" and the ONEValidatorDAO has the mandate "Decentralization, Security, Participation".

Each mandate has two descriptors or "sub-mandates". To illustrate, the ONECommunityDAO has "Onboard users on mission & culture, Pollinate values across communities" as the descriptors to "Growth". As a result, we understand that the DAO will focus not simply on "growth" but on growing the community to share in the same mission and culture and to make sure that the values of the project are shared across the community.

Principle #2: Formation

Sifting order from chaos is the mark of a true alchemist. Any DAO that gets formed has a root in a handful of dedicated individuals coming together to work towards a common purpose. We have found that there exists a critical mass of participants that will help establish a DAO for the best chance in sustainability.

9 governors tends to be the magic number of core members, initial members. They can come together to determine a Mandate and set up the basic tools of their DAO.

It is usually the case that 1 governor becomes a lead governor that focuses on bringing together like-minded people to serve as signatories on a multi-sig wallet.

Principle #3: Transparency / Non-private Information

Discussions and debates about the priorities and choices facing a DAO should all be open to the public. Even though seeing "how the sausage is made" can be off-putting, it is vital that there is no layer of privileged or insider information. All information must needs be shared with all members of the DAO.

Principle #4: Elections & Rotations

At times it is difficult to break from our historic mental models. In the case of a DAO - a "governor" has no more authority than any other member of the DAO. He/She does, however, have the responsibility to be a signatory for the DAO's multi-sig wallet. That is it. Governors will get compensated for their efforts on behalf of the DAO, but then, so will everyone else. When a vote comes to a close, it will be the responsibility of the governor to ensure that any funds associated with a vote are distributed promptly and effectively.

As a result, the concept of "terms" or "term limits" don't have corollaries in a DAO. Elections do not serve to put anyone in as an "official manager" of a DAO - only to select the member of the DAO that will serve as the signatory for the multi-sig. As a result - DAO elections shall happen every 3 months.

Principle #5: Fluidity

DAO participants are fluid. Most are open to join and leave at any given time with the only thing binding the community together being a joint interest in the Mandate of the DAO. Additionally, there is no hierarchical authority in a DAO. Everything -- everything -- is established through voting and protocol. As a result, concepts such as "conflict of interest" or "self-dealing" have limited effect. If the community believes a member of the DAO (who also happens to be a governor) is best suited for a contract or paid engagement of some sort, that governor is not excluded simply because of their role as being a signatory. This is why there are 9 governors.

In the end, we envision members of our Harmony Community participating in as many or as few DAOs as they have interest in. Any engagement in one DAO does not preclude them from engagement in another. We encourage all to participate and all to engage in one way or another.

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