Nouns DAO Debates Funding a Custom Governance Platform

TLDR: Nouns DAO is debating whether to extend funding for a custom governance client that enables context and discussion building for its ever popular decision-making process. The team behind the platform have withdrawn the proposal to incorporate changes and further align with the community.

Nouns DAO has been successful in deploying thousands of ETH towards various projects and builders in an effort to proliferate the “Noggles meme”. Over the course of Nouns DAO’s history, more than 180 on-chain proposals have been submitted, with an additional 100+ Prop House proposals considered. (Prop House, supported by Nouns DAO, creates funding rounds to “auction off fixed amounts of capital to builders with the best ideas.”) The DAO has frequently turned to its community to build bespoke solutions to improve its decision-making process. This has led to the development of a robust ecosystem of builders and believers who are committed to strengthening the DAO.

In the case of governance solutions, teams such as House of Nouns (HoN), Nouns Agora, and Federation (all Prop House alumni) have all stepped up to improve the Nouns DAO governance experience in different ways. In August, House of Nouns participated in a Prop House funding round focused on sourcing teams and ideas that could build custom governance solutions for the DAO and its ecosystem. The HON team was awarded a 20 ETH grant (along with other projects) to build a “supercharged client for governance” with a focus on discussion and context building. Fast forward to today and the team has shipped the initial phase of the client, built a user base, and next looks to the future of the platform with their recent submission for a budget extension from Nouns DAO.

The Proposal: House of Nouns

On December 5th, the HoN team submitted a proposal to the Nouns forum requesting additional funding to continue building their governance platform. In their proposal, the team highlights the progress they have made and the user adoption they have garnered in the months following their initial grant win. The proposal also provides community metrics, user activity metrics, and community testimonials to illustrate the project's early success with users.

The HoN team has highlighted a handful of key areas within the product that they aim to improve over the next six months. These areas include the context layer, forum communications, and deeper integrations with existing Nounish communities.

A total of 340 ETH is being requested by the four-person team. The team claims the budget is based on comparable funding requests from teams that are working on similar projects such as Nouns Agora (an increasingly common trend among DAO service providers). Payment of the grant budget will be structured so that half is paid upfront with the remainder being streamed over the course of six months. Deliverables outlined in the proposal include the proposed improvements and enhancements to the House of Nouns client along with a House of Nouns Framework. This framework includes a GraphQL API, an open-source SDK, and a component library that all helps builders “create custom governance and discussion experiences”. In addition, the HON team defines key success metrics as having 30% or more of the Nounish ecosystem using the House of Nouns every week and 10 or more clients integrated into the House of Nouns framework and SDK by July 2023.

House of Nouns
House of Nouns

Nouns DAO governance is a fork of the widely adopted Compound Governor Bravo contract. This contract affords DAOs who use it on-chain governance with review and voting periods as well as a timelock. But Nouns DAO has taken a unique approach by giving holders of the Nouns NFT governance rights within the protocol (as opposed to, say, COMP governance token holders in Compound). In addition, the daily auction model at Nouns DAO means its governance base grows daily.

Proposals at Nouns DAO follow a process that is prevalent across DAOs. The lifecycle of a proposal begins in the idea stage as a forum post before it can be upgraded to a formal proposal. A minimum of two Nouns must be held to submit a proposal on-chain. Once a proposal goes live it enters what is called a ‘Voting Timeline’ that lasts seven days. In this timeline, a proposal kicks off a two-day window which is followed by an on-chain vote that lasts 3 days. This concludes with a two-day timelock before it can be executed.

Voter sentiment surrounding this proposal was somewhat apprehensive, which is in part attributable to the proposal’s large price tag. After 57 votes were cast “against” and only 7 “for” and noting the supportive but reluctant responses in the forums, Discord, and on their own interface, House of Nouns decided to cancel their proposal, a decision which they explain in a tweet-thread:

Big Picture

Governance can vary radically from one web3 organization to the next, not just because of different systems (i.e. on-chain versus off-chain) but because the tooling is still evolving. Most active participants in the governance space track proposal activity (and their associated discussions) across multiple DAOs and often need to negotiate very different communities, processes, and governance interfaces. (This is a problem we at Boardroom are attempting to solve.) House of Nouns hopes to continue developing a governance interface that is integrative and highly engaging — which, as they argue, can only improve governance participation rates and attract more users to the space. This isn’t just about Nouns DAO, but about models that can be successfully adopted in other, similar organizations.

More than this, while we have seen protocol governance succeed through direct resource allocation, this has been most prevalent in DeFi — when a protocol hires a treasury manager, for example. The type of initiative under consideration here has usually been funded by foundations or core protocol teams — but Nouns DAO is outsourcing that process. With Nouns DAO weighing the funding of governance tooling, we can see the possibility of such funding expanding to any web3 vertical across many different types of organizations. That the House of Nouns proposal has been cancelled in order to be revised — to “lower the budget, clarify the roadmap and open source plans,” among other things — is not a sign of failure but rather of a healthy governance process.

We’ll be tracking this proposal activity closely at Boardroom, follow our newsletter to stay up to date.  *If you’re a voter in a protocol, make sure to check out Boardroom Portal.

Metadata: {{Brief14//nounsdao;cHJvcG9zYWw6bm91bnNkYW86b25jaGFpbjoxODY=}}

Subscribe to Boardroom
Receive the latest updates directly to your inbox.
Mint this entry as an NFT to add it to your collection.
This entry has been permanently stored onchain and signed by its creator.