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Holacracy-DAO Integration

The ƒxyz Network implements a hybrid governance model that combines the operational efficiency of holacracy with the democratic legitimacy of DAO token voting. This integration creates a unique governance system that leverages the strengths of both approaches.

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Governance Model Overview

Our governance operates on two complementary layers:

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Layer 1: Holacracy (Operational Governance)

• Role-based authority: Distributed decision-making through defined roles and circles
• Rapid iteration: Fast operational decisions without token voting overhead
• Clear accountability: Specific roles with defined purposes, domains, and accountabilities
• Tension-driven evolution: Organizational structure evolves based on operational feedback

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Layer 2: DAO (Constitutional Governance)

• Token-based voting: Major decisions require community consensus through ƒ(xyz) tokens
• Treasury management: Community controls network resources and funding
• Constitutional changes: Fundamental governance modifications require supermajority
• Network-wide decisions: Changes affecting all network participants

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Integration Mechanisms

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1. Role Enhancement Through Token Staking

Roles can be enhanced with token staking to increase authority for specific accountabilities:

Base Role Authority + Token Stake = Enhanced Role Authority

Example: Market Operations

• Base Role: DeFi Product Manager can approve product features
• Enhanced Role: With 10,000 ƒ(xyz) tokens staked, can also approve treasury expenditures up to $50,000

Staking Benefits:

• Increased decision-making authority within role domains
• Higher weight in circle-level coordination decisions
• Access to enhanced role-specific tools and resources
• Increased rewards for role performance

Staking Requirements:

• Tokens remain staked while holding the enhanced role
• Slashing mechanisms for role violations or poor performance
• Automatic unstaking when role assignment ends

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2. Governance Escalation Pathways

Decisions escalate between layers based on scope and impact:

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Holacracy → DAO Escalation

Automatic Escalation Triggers:

• Decisions affecting network-wide policies or constitution
• Treasury expenditures above role-defined thresholds
• Changes to fundamental network protocols or economics
• Disputes that cannot be resolved within holacracy processes

Manual Escalation Process:

1. Any role holder can propose escalating a decision to DAO voting
2. Circle objection integration must be attempted first
3. Rep Link carries escalation to super-circle or DAO level
4. Community voting determines final resolution

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DAO → Holacracy Implementation

Implementation Framework:

• DAO decisions create new tensions for holacracy governance
• Affected circles must integrate DAO decisions into role structures
• New roles may be created to fulfill DAO mandates
• Regular reporting back to DAO on implementation progress

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3. Treasury and Resource Management

Hybrid control mechanisms ensure both efficiency and democratic oversight:

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Multi-Signature Treasury

Structure:

• 5-of-9 multi-signature wallet for major treasury operations
• 3 signatures from DAO token vote authorizations
• 3 signatures from holacracy role holders (Finance Manager, Operations Lead, Network Steward)
• 3 signatures from rotating community guardians

Authorization Levels:

• < $10,000: Single role holder authorization (Finance Manager)
• $10,000 -$100,000: Circle consensus + Finance Manager signature
• > $100,000: DAO token vote + multi-signature execution

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Role-Based Budgets

• Each circle receives quarterly budget allocation through DAO voting
• Circle Leads have discretionary authority within approved budgets
• Monthly transparency reports published to community
• Unused funds return to treasury for redistribution

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4. Proposal and Objection Integration

Combining holacracy’s objection integration with DAO voting creates robust decision-making:

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Integrated Decision Process

1. Tension Identification: Operational challenges identified in holacracy circles
2. Proposal Formation: Solutions developed using holacracy governance process
3. Circle Integration: Objections resolved within affected circles
4. Impact Assessment: Evaluate if DAO voting is required based on scope
5. Community Vote: If required, proposal goes to token-based voting
6. Implementation: Approved changes integrated back into role structures

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Objection Validation

Holacracy Objections (operational focus):

• “This change would harm my role’s ability to fulfill its purpose”
• “This creates unclear accountability between roles”
• “This violates our established governance processes”

DAO Objections (strategic focus):

• “This change misaligns with network vision or values”
• “This creates excessive risk to network resources”
• “This lacks sufficient community consensus”

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5. Token Distribution and Governance Rights

Governance tokens are distributed through both performance and participation:

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Token Earning Mechanisms

Role Performance Rewards:

• Monthly token distribution based on role accountability fulfillment
• Bonus distributions for exceptional contribution to circle objectives
• Long-term token grants for sustained role excellence

Governance Participation Rewards:

• Tokens earned for meeting facilitation and governance participation
• Rewards for constructive objection integration and proposal development
• Community education and onboarding contributions

Network Growth Rewards:

• Token distribution for successful network expansion activities
• Rewards for bringing new participants and increasing network value
• Innovation bonuses for significant technical or governance improvements

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Voting Weight Calculations

Voting Weight = Base Token Holdings + Staked Role Tokens + Participation Multiplier

Participation Multiplier:

• Regular governance meeting attendance: +5%
• Successful proposal integration: +10%
• Cross-circle coordination efforts: +15%
• Constitutional education and training: +10%

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6. Conflict Resolution Integration

Multi-layered conflict resolution ensures robust dispute handling:

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Level 1: Role-Level Resolution

• Direct communication between affected role holders
• Circle facilitation if roles are within same circle
• Clear role domain boundaries help prevent conflicts

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Level 2: Circle Integration

• Governance meeting to integrate objections and resolve tensions
• Rep Link escalation to super-circle if needed
• Circle Lead coordination for resource or priority conflicts

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Level 3: Cross-Circle Coordination

• Network Steward facilitation for conflicts spanning multiple circles
• Constitutional Guardian involvement for governance process disputes
• Structured tension processing following holacracy frameworks

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Level 4: Community Resolution

• DAO voting for conflicts that cannot be resolved through holacracy
• Community arbitration panels for complex disputes
• Constitutional amendment processes for fundamental disagreements

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Implementation Timeline

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Phase 1: Foundation (Months 1-3)

• Deploy basic holacracy structure with core roles
• Launch DAO governance smart contracts
• Implement basic token distribution mechanisms
• Establish multi-signature treasury controls

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Phase 2: Integration (Months 4-6)

• Implement role enhancement through token staking
• Deploy escalation pathways between governance layers
• Launch integrated proposal and objection processes
• Begin role-based budget allocations

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Phase 3: Optimization (Months 7-12)

• Refine integration mechanisms based on operational experience
• Optimize token distribution for governance effectiveness
• Enhance conflict resolution processes
• Scale governance structure with network growth

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Phase 4: Evolution (Year 2+)

• Continuous improvement based on community feedback
• Integration with external governance systems
• Cross-chain governance coordination
• Innovation in hybrid governance mechanisms

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Success Metrics

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Operational Efficiency

• Average time from tension identification to resolution
• Number of decisions handled at appropriate governance level
• Resource allocation efficiency and transparency
• Role holder satisfaction and retention

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Democratic Legitimacy

• Token holder participation rates in governance votes
• Community satisfaction with governance decisions
• Representation quality across diverse stakeholder groups
• Transparency and accessibility of governance processes

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Network Health

• Growth in network participation and value creation
• Successful resolution of conflicts and tensions
• Innovation in governance processes and mechanisms
• Alignment between operational decisions and community values

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Technical Implementation

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Smart Contract Architecture

GovernanceHub
├── HolacracyRoles
├── DAOVoting
├── TokenStaking
├── TreasuryManagement
└── ConflictResolution

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Integration APIs

• Role authorization checking for enhanced permissions
• Automatic escalation triggers for scope-based decisions
• Token distribution calculations based on governance participation
• Multi-signature coordination for treasury operations

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Monitoring and Analytics

• Real-time governance process tracking
• Participation analytics and engagement metrics
• Decision flow analysis between governance layers
• Community sentiment monitoring and feedback integration

Live Experience: See the integration in action at app.fxyz.network/holacracy

Related Documentation:

• Holacracy Overview
• ƒxyz Network Constitution
• Roles & Circles
• DAO Framework