By: @Jerry Chu

Introduction

Our existing governance mechanism has proven to be very robust and works well in situations where the seller is selling 100% of the ownership to the DAO. However, we often have sellers only wishing to sell a portion of their ownership at a given time (they may opt to sell more in the future). Our existing governance program is not robust enough to handle this specific case, which means a new one must be created. The changes will automatically be updated to all new DAOs that are launched, where the seller may own more than the original 15% ownership cap at the time of the property listing. The new governance program will be referred to as the “scaled governance mechanism”. Token purchases will still be capped at the 15% ownership ceiling by default. As the original seller continues to sell their tokens over time and reach 15% ownership or below, the governance mechanism will automatically revert back to the default, where one token equals one vote.

New Scaled Governance Mechanism

The new governance program will scale different owners’ voting rights based on what percentage of the DAO they own using a piece-wise function.

Here's the formal representation of the piecewise function using mathematical notation:

v(p) =

• p, for 0.1% ≤ p ≤ 15%
• 0.15 + 0.45 * log(p/0.15), for 15% < p ≤ 100%
• 0.001 for p < 0.1%

In this representation, p represents the percentage of tokens owned by an individual, and v(p) represents their corresponding voting power. A Python implementation is copied below for reference.

import math

def calculate_voting_percentage(percentage):
    if 0.15 <= percentage <= 1:
        return 0.15 + (0.45 * math.log(percentage/0.15))
    elif 0.001 <= percentage < 0.15:
        return percentage
    else:
        return 0.001

This approach ensures that large token ownership still retain large voting rights, but they don’t have enough voting rights to make unilateral decisions. However, if they convince even a small percentage of other owners with smaller ownership to vote alongside them, they can then push votes through. Additionally, even if a group of smaller token owners banded together to push a vote through, they wouldn’t have enough voting power to push the vote through against the majority owner in the DAO.

The new scaled approach will allow owners to still reach a 60% Supermajority easily for most instances, while keeping the vote democratic without the ability for any one party to do whatever they wanted.

In order to list only partial ownership of their property for sale on Lofty, sellers must commit to selling at least 10% of the ownership, at a minimum.

Once there are no longer any owners that have more than 15% of a DAO’s total supply of tokens outstanding, as the seller continues to sell their ownership over time, the scaled governance program automatically converts to the default governance program.

As with all governance-related items, these are simply the initial terms, and the members of a DAO can vote at any time in the future to alter or amend the DAO’s Operating Agreement or any existing processes for their respective DAOs.

Sample

Here is an excel sheet showing the token ownership and scaled voting rights in their respective columns for reference.