Over the last weekend, I wanted to get into the bottom of DAOs. So I decided to build my first rudimentary DAO with the help of some fine illustrations and tutorials from Buildspace. If you haven’t checked it out, I encourage you all the give this a shot. Plus, you get to earn a cool NFT at the end of the project.
Perhaps, we should start this post by asking, what on earth is a DAO?
Ryan Selkis, one of the leading advocates of Web3 and the founder of Messari Resarch, describes it quite simply as “a governance structure that manages a community treasury”.
More technically, DAOs are fluid online communities whose assets are managed by the community’s contributors, not a central governing body of privileged office bearers. Here’s an excerpt from the Messari Crypto Theses for 2022.
DAOs are 1) open-source & blockchain-based, 2) open membership, 3) groups of independent parties, that 4) use a token to govern a protocol and 5) allocate internal capital, with the goals of 6) automating a marketplace or function, 7) preventing collusion, and 8) incentivizing bottoms up community participation
If you are new to the whole idea of DAO, this presentation can be a good starting point. Also, the aforementioned Messari report is a must read.
Now, back to building our Indian Cinema DAO. Before we get our hands on the keyboard, let’s unpack what we’re trying to build here.
Problem The Indian Cinema Industry has unfortunately adopted a model of majorly working with already established & successful franchises/artists which has led to a lot of great stories untold. While the newer distribution mechanisms have been a game-changer for the film industry, the production value chain is still to be controlled by a handful of elite artists representing the so-called “Bollywoods & Kollywoods” of the world.
Scripts are often written more to showcase a star than to tell a story - Largely explains why so many of our pictures leave international critics cold
Stars/Established players/Big ticket movies eat the margins of the smaller ones - In no other major film industry do the leading stars command a larger slice of movie budgets, leaving producers short on money for scripts, editing, and the rest of the arts that make great film
India is not making world class movies - India has never even won the best foreign film award – Let alone come close to winning the best picture of the year award. And it’s not for lack of trying. It has submitted more than 50 entrees since that award was created in 1957
So what are we proposing? As this Homegrown article eruditely puts it, Indian movies grow out of deep pockets of fat cat producers. Movies un-influenced by mainstream production houses offer directors a true sense of creative control to pursue storylines that don’t need to be glittered or bedazzled at every plot twist. Can we have the first-ever decentralized, independent Indian Cinema industry?
What’s our mission here? Producing entertaining movies outside of the “X-ollywood” studio machine. (X-ollywood = Bollywood, Kollywood, Tollywood etc.).
Any precedents? In the past, we have had our own set of crowd-funded movies. However, most of them faced the heat of getting marginalized by the well-funded cousins in the blockbuster leagues. Here’s a list of some of our past crowd-funded movies.
Let’s imagine a DAO - The Indian Cinema DAO because that’s how unimaginative I am.
What is Indian Cinema DAO? India’s first decentralized movie studio that produces feature films for wide release across a myriad of distribution platforms.
What can it do?
Investors could put money into ICDAO and get back ₹ICDAO token. The money could live in a “treasury” on-chain that anyone would be able to see. The treasury is just the shared bank account. For e.g, if I put in ₹5 into ICDAO, I may get back 5 $ICDAO token. I put in ₹10,000, I may get back ₹ICDAO token. It’s how we come together to set up the rules.
Now, we have some ₹ ICDAO. ICDAO members with the token can now vote on proposals for different directors applying to make their movies and decide whether or not to invest in them. Members get a chance to vote on all aspects of a movie’s production including Script selection Main cast and crew Distribution plans etc..
NFTs can be one source of funding the treasury along with sales & box office of the film and merchandising. The NFTs need not be just graphical assets. They will have utility and benefits including Your name in the credits as producers Movie premier release invitation/access HD/UHD copies of the movie Access to visit shooting spots/set Suggest/Recommend names of characters, dialogues etc.
Voting power would depend on how it’s initially set up. For e.g. ₹ICDAO token could equal one vote. Perhaps, this is not fair because it means only the ultra-rich people would rule the DAO with their votes. So we can say “Everyone gets one vote, regardless of how many tokens they own”. It’s really upto our DAO creators to think through what’s best for members. This is to just highlight that “voting power formulas can be custom”. This is the beauty of DAO.
Let’s take an example to drive this point home. Say, there’s a new director has registered a proposal for a new movie called “The Bollywood Mafia”. She wants to release this movie on a decentralized OTT platform which is governed by say, an OTT DAO.
Let’s say 90% of the ICDAO members have voted “Yes” to invest in the movie “The Bollywood Mafia”. This proposal would automatically be executed on-chain. ICDAO will automatically release funds in ₹ ICDAO to the “The Bollywood Mafia” team’s wallet. Since the members believe in this movie, they also decide to vote “yes” to investing in the OTT DAO which is responsible for releasing the movie. So, ICDAO will also automatically release funds to the OTT DAO and buy OTT DAO tokens.
Let’s say movie is released on a decentralized OTT platform where users earn to watch content. The movie is declared a blockbuster hit. This means that the value of ₹OTTDAO token would go up in value because OTT DAO’s treasury has increased in value due to the D2C selling of this movie on their platform.
The value ₹ICDAO token itself would also go up in value because ICDAO’s treasury has increased in value. Thanks to a fantastic investment in OTTDAO and the percentage cut from the production team’s profit. ICDAO would make more profit by selling the $OTT DAO token if we wanted to.
The magic here is you don’t need to trust a central entity to make sure the investment goes through. Everything is automatic and revolves around rules that the DAO sets when it’s created. Now, let’s design a basic skeleton of our DAO.
ICDAO membership via NFTs
In order to join our DAO, the user will need a membership NFT. If they don’t have a NFT, we’ll prompt them to mint a membership NFT and join our DAO
We can either use an ERC-721 (where every NFT is unique) or an ERC-1155 collection (multiple people can be holders of the same NFT). We will choose the latter for prototyping purpose + ERC-1155 is also gas efficient
All authenticated users (with valid NFTs) will be allowed to the ICDAO membership DAO page where they can check DAO stats and voting proposals
ICDAO Governance Tokens, Token Supply and Airdrop
What is a governance token? A governance token allows users to vote on proposals. For e.g., a proposal may something like “I want ICDAO to send 1000 seat to wallet address “0x6968bb286A37be72A581fBCC8CF4D83Cf32F0Ea3” for helping with community development efforts. Then, members would vote on it
We need to create a supply of governance tokens to airdrop to our members. Let’s call our tokens “seat”. Here, we will use ERC-20 tokens and we will set the max supply of token (seat) as 1000000 and mint them
Usually, tokens are awarded to members of the community who have brought the most value. For example, for the ENS airdrop, the people who were awarded the most token was the core dev team and active users in their Discord. But, you would have also received ENS DAO token based on how long you had held your ENS domain (ex. mydomain.eth). BTW, if you didn’t know, an ENS Name is an NFT. This is mainly to encourage early supporters of the network to be rewarded
ENS DAO’s airdrop formula was 0.27 (# days the account owned at least one ENS name) + 0.067 * (# days until the expiration of the last name on the account). The total was then multiplied by 2 if the account also has a primary ENS name set. Note, this is a custom formula. We can create our formula for ICDAO based on community voting ICDAO Treasury setup
- Once we have our NFT membership & governance contract with a UI to let members vote on proposals, we need the DAO to have the ability to move our tokens around.
- We need to create a treasury contract to which we will send 90% of all our token to this treasury contract. Otherwise, the member who created this governance contract will be owning all the token, which we don’t want. We don’t want one person with too much control. What’s the point of decentralization then? This community treasury will have the following distribution
- For this example purpose, we decided to allocate 50% of the supply to our community treasury and airdrop 20% of our overall supply of 100000 seat.
So there you go. We’ve designed our basic skeleton of the Indian Cinema DAO. Of course, there’s more to it. Things like tokenomics, running an actual community, planning our DAOs roadmap etc. If there’s enough interest, some day we can kick start this idea to decentralize one of the biggest entertainment industries in the world.
If there’s enough interest in this post, I’ll be happy to walk you through the process of building this basic design from scratch in my next one with code walkthrough for the following:
Deploy our own ERC-1155 NFT people can mint to join our DAO
Deploy our own custom ERC-20 token for governance contract + treasury
Build a dapp that lets people connect their wallet, get an NFT, see our ICDAO Dashboard where they can see other members + actually vote on proposals that are executed directly by your governance contract. For the impatient, I’ve already built a basic outline covering the NFT membership, token governance & voting proposals. You can find the github code here.
References
Buildspace - Building stuff on Web3
Messari Crypto Theses 2022 - A web3/crypto treasure trove of resources
Times Of India - Parasite should embarrass Bollywood: The truth is that India is not making world class movies, and has not for some time
HomeGrown - 5 Indian Films That Found Their Voice Through Crowdfunding
Media Monkeys - A similar decentralized Movie studio reddit thread I bumped into while researching on this idea. Pretty much aligns with what we are trying to build here