The Futarchy System & The MetaDAO on Solana

Summary

The video introduces 'Metad', a groundbreaking Decentralized Autonomous Organization (DAO) in the crypto world, enhancing excitement with its use of 'Futarchy' for governance. This system leverages prediction markets, allowing traders, rather than politics, to determine the success of proposals, aiming to make more rational and corruption-free decisions. The creator details their journey of discovery and research into Metad, highlighting its innovative approach to decision-making and its potential to transform crypto's future. With examples like IBM's leadership and stock performance, the video illustrates how Futarchy could offer a more effective governance model, emphasizing Metad's role in pioneering this change.

Takeaways

• 😀 The MetaD is an exciting new DAO focused on using futarchy, a governance model based on prediction markets, to make better decisions
• 📈 The native token for MetaD, META, has seen huge price appreciation from $1 to over $1000 per token recently
• 🤝 MetaD was founded by Profit and others to demonstrate real-world applications of futarchy
• 🎴 Futarchy uses trading incentives and markets to decide if proposals should pass or fail
• 👥 Allowing traders and markets to govern can prevent bad decisions caused by corrupt politics
• 🔮 An upcoming MetaD proposal is offering Futarchy-as-a-Service for other DAOs to use for governance
• 🚀 The speaker believes MetaD has major potential to expand to other chains and one day even to countries' governance
• 📉 The IBM case study demonstrates how poor leadership and governance can destroy shareholder value
• ✅ Futarchy prevented a whale manipulating markets in a recent MetaD proposal attempt
• 🎓 The speaker aims to educate more people on MetaD and futarchy through ongoing content

Q & A

What is Futagi and why is it needed?

Futagi is a system of creating a better future by using prediction markets for governance. It is needed because people do not make the best decisions when there's politics involved, which is often corrupt and inefficient.

How does the trading system in Futagi markets work?

In Futagi markets, there are two markets for each proposal - a 'pass' market and a 'fail' market. Traders have to actively trade in these markets, pushing the price up or down. At the end, whichever market has the highest time-weighted average price (TWAP) over a threshold wins, and the proposal passes or fails accordingly.

Why can't whales easily manipulate Futagi markets?

Because traders have to put up economic risk in Futagi markets. Even if a whale tries to swing the vote, other traders are incentivized through potential profits and losses to counteract the whale's actions.

What was Proposal 6 in Metad?

Proposal 6 was a request by Ben Hawkins to mint 1500 Metad tokens at a 40% discount in exchange for $250,000 in USDC. Despite Ben actively trading to push the 'pass' price up, the proposal ultimately failed.

How much is one Metad token currently worth?

As of March 2023, one Metad token is worth over $1000.

What does the speaker hope Metad does in the future?

The speaker hopes Metad provides Futagi-as-a-service for other DAOs, allowing them to experiment with prediction market governance on smaller proposals first. He also hopes web2 companies and even countries adopt these practices.

Why does the speaker criticize former IBM CEO Ginni Rometty?

The speaker criticizes Ginni Rometty for IBM's poor stock performance and failure to capitalize on emerging tech trends like AI during her tenure as CEO from 2012-2020.

What does TWAP stand for and why is it important?

TWAP stands for Time-Weighted Average Price. It is the metric used in Futagi markets to determine which proposal market - 'pass' or 'fail' - is the winner.

How can projects integrate with Metad's Futagi system?

Projects can potentially lock up their governance tokens into a smart contract, bridge them over to Metad, and allow holders to trade futures representing votes on proposals. Metad would facilitate the markets.

What does the speaker see as the limitations of snapshot.org?

The speaker argues that snapshot.org, used for voting in the EVM world, still allows whales to easily manipulate outcomes at the last minute with no economic risk, compared to Futagi markets.

Outlines

00:00

😃 Introducing METAD and Futagi

The first paragraph introduces METAD, describing it as an exciting project doing something many people will want in the future related to crypto and governance. It explains that METAD uses a system called Futagi, which uses prediction markets instead of traditional politics to make better governance decisions.

05:01

😮 Explaining the METAD Proposal Markets

The second paragraph dives into the details of how METAD's proposal markets work. It shows a current live proposal, explaining how conditional tokens allow participants to trade in 'pass' and 'fail' markets for each proposal to incentivize proper research and participation.

10:02

📈 METAD Token Price Movement

The third paragraph analyses significant events that impacted METAD's token price, like proposal 6 where a whale tried but failed to manipulate the prediction markets. It emphasizes that Futagi helps prevent governance manipulation compared to traditional voting systems.

15:04

🌟 Future Possibilities for METAD Governance

The fourth paragraph envisions the future possibilities for METAD's Futagi system to be used by other crypto projects for governance votes. It imagines secure, low-fee voting using prediction markets as an alternative to snapshot voting.

Keywords

💡metad

The metad is the decentralized autonomous organization (DAO) that is the main focus of the video. It implements futarchy, a new system for making decisions and governing an organization using prediction markets. The video explains why the metad DAO is exciting and has huge potential to improve governance.

💡futarchy

Futarchy is a system created by Robin Hanson for collective decision-making and governance using prediction markets. It allows traders to bet on whether proposals will be good or bad for an organization. The proposal with the most positive bets wins. The metad implements futarchy for its governance.

💡prediction markets

Prediction markets are markets where people trade contracts that pay out according to unknown future events, such as whether a proposal will pass or fail. Futarchy uses prediction markets to govern which proposals an organization should adopt.

💡governance

Governance refers to the mechanisms and processes by which an organization makes decisions. The video argues that traditional governance via voting in DAOs can be gamed. Futarchy is presented as a better system for DAO governance.

💡Pass Meta

Pass Meta and Fail Meta are the two prediction market tokens traded in the metad DAO to bet on whether proposals will pass or fail. You buy and sell these tokens to push the market prices up or down.

💡twap

TWAP stands for "time-weighted average price". The prediction market with the highest TWAP wins, meaning its proposal outcome is adopted. There must also be >5% price difference between the two markets.

💡liquidity

Liquidity refers to the availability of tokens and cash in a market to enable trading. Proposal 10 in the video aims to increase meta liquidity through a dutch auction.

💡dutch auction

A dutch auction is a auction mechanism where prices start high and decline over time. Metad is proposing using a dutch auction to sell Meta tokens from the DAO's treasury in order to increase market liquidity.

💡treasury

The treasury refers to the pool of assets held by a DAO. Metad's treasury contains Meta tokens, Bitcoin, and cash. The DAO governance process decides how treasury assets are used and allocated.

💡proposal

Proposals are suggested changes or actions that are put to a vote in a DAOs governance process. Metad uses futarchy markets for members to trade on whether proposals will pass or fail.

Highlights

The Metad is doing something in crypto that a lot of people will want in the near future, making crypto more exciting

Futarchy is a system of creating a better future using prediction markets for governance instead of corrupt politics

Metad was founded to be the first real-world application of futarchy to test and refine the system

Futarchy incentivizes active participation, research and makes it hard for whales to manipulate

The Metad token price exploded from $30 to over $1600 after increased attention and believers

A whale tried to get a 40% discount on Metad tokens but still failed to manipulate the futarchy markets

Snapshot voting on EVM has failure points compared to futarchy - whales can easily manipulate

Upcoming proposal for Futarchy-as-a-Service to allow other DAOs to use futarchy for testing

Would like to see projects use futarchy for voting instead of just snapshot to leverage Solana speeds

Goal is for web2 companies and even countries to someday use futarchy for better governance

Metad charges a fee to spin up prediction markets for other DAOs wanting to test futarchy

Need to educate people on how futarchy works and expand from testing on small proposals first

Following Metad is the most exciting DAO opportunity, the first real-world use and testing of futarchy

Metad tokens currently have a spot price of over $1000 per token

You have to actively trade in the markets to push prices up or down to win the proposal

Transcripts

what is the metad a quick little summary

the metad is the most exciting Dow in

the entirety of crypto literally just

talking about it just researching it I

get butterflies in my stomach so I'm

telling you right now this is pure Alpha

the metad is doing something that a lot

of people are going to want in the very

near future and it makes crypto so much

more exciting now it's a little bit

complex because of one word futagi I've

done a very simple explainer video on

futagi you can watch that it's link

below

very very simply futagi is a system of

creating a better future by using

prediction markets for governance we'll

illustrate this later on but we're

basically letting Traders decide if a

proposal should pass or fail as opposed

to relying on politics which is often

just corrupt and rubbish but back to

metad so this is Metal's Twitter make

sure you're following them at metad

project with notifications on now I

first found out about metad from zerx TD

so only just recently I've spent a lot

of time Rec researching it to understand

it so I can explain it to everyone

sitting in the mid curve having said

this mid curve which is my favorite

Sanaa podcast literally just recorded

with Trudy from the metad project all

about the metad so my resources and his

podcast should be a good fit metad was

founded last year in November by profit

this here is profits Twitter there are a

couple of others that are very active

such as deran Dean the machine and

others and you can find them in Discord

fagi was created by Robin Hansen and

this is Robin Hansen here he's an

associate professor of Economics at

George Mason University now why is

futagi needed this is very very simple

but basically people do not make the

best decisions when there's politics

involved and there's politics involved

with everything here's an example gennie

Redi was the former IBM CEO from 2012 to

2020 during her 8 years or 24

consecutive quarters the performance was

terrible let's have a look at the stock

price we know she came in in 2012 when

the stock price was about $180 from here

until here she was a CEO what do you see

just rubbish performance also this was

not a bad time for markets this was

basically up only the only bad time was

a very small correction in March 2020

with Co I'll give you some sort of an

example from a competitor MSI stock

price in 2012 like $13 2018 stock price

$124 stock price in 2020 about $84

recent stock price around about $200 so

from 2012 until now maybe that's like a

16x or something maybe that wasn't a

very fair example because the market

caps were not similar so let's go with a

company that has a bigger market cap

Apple 2012 to 2020 growth 2020 to now

insane growth Also let's have a look at

Nvidia the reason I'm pulling this up is

because Jenny redti was trying to get

into AI as well as other things 2012

maybe $4 per stock 2020 like $60 or $70

a big crash in 2022 to $120 and now

soaring at all-time highs now I'm no

artist but hopefully I can illustrate it

for you with creativity so let's take

jeie Redi so we know that she was the

CEO of IBM and during this wonderful

period stocks basically went like that

so if you're an investor clearly you're

annoyed if you have a look at the

competition their stock was something

like this during the same period And

then after that period because in the

right kind of game it was something like

that so if you held stocks but you

didn't have a say over who was actually

in charge of the ship and steering the

ship then what was the point in holding

the stocks so down here let's take an

investor so this is an investor and he

has these IBM stocks very very easy to

understand now if IBM had a Fu tagi

system they could basically vote on

whether to retain her as a CEO or fire

her so there'd be two different trading

systems fire and retain now this would

not be a voting system where you

basically own a stock or a token and you

basically say yes I agree with this one

or I agree with this one because that

system literally does not work more on

that later what people actually have to

do is they have to trade the price so

they have to trade in this market

putting in different bids and asks to

try and get the price up in this market

so maybe the price goes from 50 to $60

and then in this market maybe the price

goes from 50 to just $55 because this

has a higher price this would be the

winning Market that's a very crude

example of how it works and one day I

will be able to draw better than that

just not today so that's how it work in

IBM that's very much theoretical first

these need to be practice in real life

with real organization hence the metad

let's have a look at these proposals

these proposals have all been traded on

some have been passed and then some have

not such as proposal 6 which I'll talk

about shortly this failed but created

quite a bit of Interest so let's have a

look at proposal 10 this is currently

live for another 2 days and 13 hours

what's it all about let's click on see

more this information is available in

Discord as well but what we can

basically see is increase the meta

liquidity via a Dutch auction there's a

big overview of information here also

requiring compensation and more meta to

come from the Dow for the markets so we

can see very very cleanly we've got two

markets the past market and the fail

Market as I mentioned every proposal

will have two markets now I don't have

any meta at the moment but if I did I

could go and I could mint some P meta or

F meta put in the amount of meta that I

have connect my wallet and mint this

will give me pass meta and fail meta

there's also USD markets this is minting

conditional tokens so maybe I've got

10,000 usdc this would be real usdc in

my wallet and that's going to give me

10,000 p usdc and 10,000 000 F usdc also

by the way the spot price for one meta

token is over $1,000 but I'll touch on

that shortly so in a futagi markets are

incentivized to make money in fact the

entire goal of an organization is to be

profitable and to make money with metad

that's their same goal if you want to

work for free you cannot convince others

to do so they have bills the entire

world runs on money so currently if we

have a look at proposal 10 we can see

these two markets these are all TKS and

these are all bids same with here to

make it very very simple someone is

willing to sell one meta token for

$1,099 it's actually not the meta token

itself it is the P meta someone is

willing to buy at $1,000 now if I had

some usdc I could put in a price maybe I

want to buy this one and this one maybe

even this one as well so I could put in

a price like that and I could decide I

want to buy four meta tokens that would

cost me $4,400 $44 I would buy this one

and this one and this one and then I

would have the top bid right here that's

of course pushing up the price at the

same time someone could push down the

price here they could go to sell and

maybe they had 10 tokens they could sell

into this order and then this one take

care of these ones these ones and these

ones and maybe they have a sell order

$700 for one matter meaning this price

has now dropped in this market and the

same could be done on this side the

reason why you have to push the price up

or down is because whatever Market has

the highest twap this stands for time

weighted average price this metric will

secure the win for the passing market so

right now this is higher if this

proposal was to end now this Market

would pass because this is quite a bit

lower now there's still 2 days and 13

hours remaining in theory these should

be a lot closer to one another but for

the actual Market to actually secure the

win there has to be at least 5%

difference between the winning Market

market and the failing Market just to

make it clear it doesn't matter if this

suddenly reverses and maybe it goes down

to 600 and at the end this is suddenly

700 that's completely fine and we know

there's more than 5% difference between

the two markets therefore this would win

and the actual proposal would fail now

once all the trading has completed and

this timeline is down to zero then

whichever Market has actually won that

is a market that will allow you to claim

back your usdc and your meta so at

present let's say this is actually going

to pass and let's say we went and sold

everything we Tred to make this fail so

maybe we took 100 meta which would be

worth $100,000 and maybe we only got

back about 70,000 usdc that would mean

if this actually won we would have zero

meta cuz we sold it all and we would

only have

70,000 P usdc meaning we would have lost

so these markets incentivize active

participation research and even if a

whale comes in it's hard for them to

just manipulate the markets and make

them win by a landslide let me expand on

that a little bit more we do some

trading in this market we do some

trading in this market at the end of the

day of course we want one to either pass

or fail but we also don't want to lose

on our 100 meta and we don't want to

lose on our usdc so we're encouraged to

try and make a profit as well as have

the one actually pass also at present

you can only trade one meta token

meaning if we want to jump and

participate in governance one token is

worth about $11,000 and in general this

price here the mid price will Trend

towards the spot price also as mentioned

before the price between this and this

should be fairly similar it will become

more similar as there are more

participants in the market now with this

twap here the only way that this number

goes up or down is if the spread is

within 20% so this spread is fine but if

all of a sudden this order was gone and

there was an ask at 1100 and then a bid

at 681 then that would be far more than

20% between these and the twap would no

longer go up or down until of course

another bid came and this range was

within 20% hopefully I can show you a

proposal with tokens in the future but

let's quickly touch on the price so this

is as I said very very cool now

initially the price was $1 but we can't

see that on the chart then it bounced

around $30 and then it crept up to 70 to

50 and then over here 100 and then back

around here proposal 6 came in which

will cover in a second this also

coincided with mountain in the US so

there are a lot more eyes on it and a

lot more True Believers in understanding

how valuable this technology is the

price in literally exploded all the way

up to like $1600 and at present as we

know it's about $11,000 so what was

proposal 6 well Ben Hawkins a futagi

maxi and a high performance blockchain

Maxi also the head of staking for the

ecosystem for the salana foundation he

got involved and we can actually see the

proposal here click see more and you can

see Ben Hawkins is requesting to Mint

1500 meta in exchange Ben will send

50,000 usdc and will be buying at a

price of

$33.33 Cs per meta token at the time

this was a 40% discount on the spot

price and you can see ultimately this

failed and Ben put in

$250,000 worth of bids to try and push

this price up and it still failed now

this is cool because it shows you how a

whale canot just manipulate the market

but in a traditional voting system they

easily can like as an example there's a

lot of projects out there that have such

a massive supply of the token that they

could literally vote no at the last

minute and it would be a no vote and the

entire Community could be voting yes and

it wouldn't pass because the project has

more governance tokens this isn't the

most perfect example but it's a good

idea of how things can go wrong this was

in 201 21 and the lobbying group

basically got a massive uni Grant they

sold half of the $20 million Grant in

the uni tokens from the Unis swap Dow

within days but they promised to

allocate the funds over the next four to

5 years and then just 8 days after

receiving the funds the group sold

500,000 uni tokens for just over $10

million but what I'm really referring to

is the fact that even on Snapshot which

is on EVMS someone could come in at the

last minute and they could just go and

put in a massive no there would be no

economic risk to them they're not losing

the tokens they're not staking the

tokens they're not doing anything they

just have the tokens at the same time

they could do a proposal and vote for a

lot of the tokens to go to them this

example is probably going to upset some

people and it's more of an illustration

as you may know deg Gods bridged to eth

when the FTX crash on salana happened

this was a team decision and the

community had to wear it but what if

back then each dust's token which is

their token what if they could vote on

either staying on salana or moving to

ethereum and what if Utes could have

done the same and not have moved to

polygon and then to ethereum please keep

in mind I know it a difficult time and

I'm not attacking anybody I'm just

trying to illustrate what if we actually

used dust to vote on this do we go to E

if it passes we go if it fails we stay

now that's a big example and probably

something that most teams would not be

comfortable with and I understand so now

an upcoming proposal is futagi as a

service and this is where I start to get

really excited being able to onboard

other Dows through their own valtion and

willingness to test along metad down and

maybe that happens for a few months and

then maybe some teams with an upcoming

token such as drift parcel Camino

Meteora maybe even Juke maybe they allow

futagi as an experiment on certain

proposals only as in probably not yet do

I fire or retain the CEO and founder

more like can we put $50,000 towards a

Content creation fund or in the middle

of the Bull Run can we take a percentage

of profits and donate it to a worthy

cause EG save the whales or support

microloans for people in Africa or

something like that now if we go to

coingecko.com we'll probably recognize

quite a few of these tokens are actually

governance tokens or if they're not pure

governance tokens they may have some

sort of governance aspect but a better

place to see quite a few of them would

be at snapshot. org so this is what is

used in the ethereum virtual machine

world for voting on proposals and this

is a lot better than what it initially

was back in 2020 however it still has

failure points now if we scroll through

them quite a few of them have had a very

high pass so I'm going to find something

that was a little bit more aggressive

like this one so this one looks like it

passed with the highest budget but no

budget at all still had 10% of the votes

whether or not it's a good idea is

something the markets can decide you

could potentially have two different

proposals one one yes approve a budget

and two no do not approve a budget in

approving a budget it could have a range

this amount or this amount and maybe a

second proposal would select that if it

actually was chosen and passed the first

round or if it failed then nothing

happens but the markets would decide and

not just some whales so what's the

future for metad what I would like to

see a projects such as these ones

actually go and do some voting some

futchi on salana because it's a

blockchain that can actually handle the

voting with tremendously low feeds so

maybe you go and take your Stargate Dow

tokens and you lock it in a smart

contract and you come over to the metad

and they've been bridged across in a

secure way and then you can go and trade

with them and if you want to you can

Bridge them back but that's something

more of a dream to happen as opposed to

an immediate goal as more of an

immediate goal hopefully some of these

Dows on salana are happy to participate

in the futagi and then metad would

charge a fee and spin up a market for

them and then we educate people on how

to use it and start the test off small

and expand to other chains and

eventually from there maybe web 2

companies and in the future maybe even

countries so I hope you understood that

a little bit I'm going to cover it a lot

more because as I said it literally

gives me butterflies in my stomach so

just follow me read my blog post and

stay up to date with the metad down this

is the most exciting Dow opportunity

I've ever seen ever stay curious catch

you in the next video