The Futarchy System & The MetaDAO on Solana
Summary
TLDRThe 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
- ๐ The MetaD is an exciting new DAO focused on using futarchy, a governance model based on prediction markets, to make better decisions
- ๐ The native token for MetaD, META, has seen huge price appreciation from $1 to over $1000 per token recently
- ๐ค MetaD was founded by Profit and others to demonstrate real-world applications of futarchy
- ๐ด Futarchy uses trading incentives and markets to decide if proposals should pass or fail
- ๐ฅ Allowing traders and markets to govern can prevent bad decisions caused by corrupt politics
- ๐ฎ An upcoming MetaD proposal is offering Futarchy-as-a-Service for other DAOs to use for governance
- ๐ The speaker believes MetaD has major potential to expand to other chains and one day even to countries' governance
- ๐ The IBM case study demonstrates how poor leadership and governance can destroy shareholder value
- โ Futarchy prevented a whale manipulating markets in a recent MetaD proposal attempt
- ๐ 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
๐ 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.
๐ฎ 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.
๐ 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.
๐ 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.
Mindmap
Keywords
๐กmetad
๐กfutarchy
๐กprediction markets
๐กgovernance
๐กPass Meta
๐กtwap
๐กliquidity
๐กdutch auction
๐กtreasury
๐กproposal
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
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