by Max Hampshire & Cem F Dagdelen

...we live in "fragmented worlds", in a time of permanent shocks and conflicts, of dislikes and attractions, of secret agreements and opposites alike  briefly, in a "chaos world". If the reaction to this is not to be demarcation and violence, Glissant advises that the tensions should be withstand, and an awareness of the possibility and openness for the unpredictable should be developed. The new universal consciousness is thus expressed in a complex narrative of relations (Poétique de la relation, 1999)

A DAO is an island

Ironically islands have been, despite their isolated context, catalysts of trade, cultural exchange and hosts of parallel financial systems. Despite all their inter-activity, island communities are able to maintain cultural coherence. As we explore such structures of social formation in automated systems, mechanisms for their interrelation must also be thought out, in order to avoid insulation and promote ecologic expression.

DAO2DAO ("D2D") is a research collaboration between Curve Labs and Blockscience, commissioned by PrimeDAO. In this article we aim to share theoretical and technical insights on the design of decentralized negotiation protocols.

Over the last working cycle, the research group analysed the literature in negotiation protocols and surveyed the crypto ecosystem for suitable primitives in order to propose design patterns for potential deployments in the DAO space. The working group is also curating a living literature for situating the theoretical understanding around the design methodology, adapting multiple fields of research such as social choice in networks, compositional game theory, adaptive structuration, and complex contract negotiation.

Background

This research has been commissioned with the intent of establishing coordination mechanisms between different decentralized autonomous organizations. These interactions can range from joint ventures(i.e funding a common good) to token swaps or distributed monetary policy. In order to situate the theoretical understanding around the problem the research group examined the advancements in negotiation protocols.

What is a negotiation protocol?

Negotiation in general is a process in which a joint decision is made by two or more parties. The parties first verbalize contradictory demands and then move towards agreement by a process of concession-making or search for new alternatives. (Jin, Lu, 2004)

Negotiations are omnipresent. In order to reduce transaction costs, society tends to develop norms and protocols around these processes. It is possible to observe these patterns in international relations, social choice and network theory among others. Auctions, voting modules, curated lists are all games which can be considered as generative negotiation protocols.

Negotiation protocols are also the backbone of decentralized governance. Every DAO deploys their own set of parameters for consensus formation with its community, infrastructure and use-case in mind. Thanks to these formalizations, DAOs can evaluate proposals without having to re-define terms of agreement each time. By creating a generalized model of conditions and outcomes, proposals can be extended to serve a large variety of complex contracts.

With D2D implementation research, we want to bring aforementioned formalizations towards an interorganizational paradigm. Once DAOs can interface each other through these negotiation mechanisms, we expect the emergence of use-cases such as mergers, joint ventures, community swaps and polycentric policy.

Literature overview

Now, lets take a look at a few theoretical coordinates for situating our understanding around the problem of decentralized negotiation. The goal is to (a) develop an operational definition of decentralized autonomous organizations, (b) establish coordinates in game theory and social choice and (c) gather relevant research on negotiation protocols of simple and complex contracts.

When discussing negotiations between entities largely described as DAOs also beg for a taxonomical grounding in order to acquire an operational understanding about the agents taking part in the coordination game. The notion of family resemblances popularized by Wittgenstein allows us to take a non-monolithic perspective towards viewing these organizational entities. Looking at the taxonomical variation of games, he concludes:

And we can go through the many, many other groups of games in the same way; we can see how similarities crop up and disappear. And the result of this examination is: we see a complicated network of similarities overlapping and criss-crossing: sometimes overall similarities.

In recent years advancements were made into pinpointing these overlapping similarities in the organizational taxonomy. The archetypal similarities in DAOs as family resemblances have been explored by Kei Kreutler in Eight Qualities of Decentralized Autonomous Organizations. In order to accomodate such diverse ontology of actors, the research suggests an agent-agnostic design pattern, which will be discussed later.