Governance and Non-Intervention in Decentralized Data Exchange with TIKI DAO

An initial breakdown of the proposed TIKI DAO

Editor’s Note: The official elements and are still TBD and will be released in more detail in the upcoming TIKI DAO whitepaper.

TIKI is creating a decentralized data exchange (data DEX) which allows users to safely transact user data with businesses in exchange for perks and benefits. The back-and-forth negotiation that occurs between users and businesses (i.e. “I would trade my data for this, but I wouldn’t trade my data for that”) extrapolated out across millions of instances provides a framework for the creation of a FMV (fair market value) for data.

However, in order for this to truly yield the creation of FMV for data, a free market (an economic system in which sellers and buyers determine the prices of goods and services without the intervention of governments or external authorities) is required.

DAOs (decentralized autonomous organizations) operate on the blockchain and are governed by the execution of smart contracts proposed, vetted, and voted upon by individuals with varying degrees of governance power (members of the DAO). This may seem rhetorically confusing, but essentially, a DAO, as it pertains to TIKI, is a community of participants using the TIKI data exchange who propose and vote on the standards and rules of the data exchange itself.

In this model, the actual participants of the data exchange have the power to collectively make decisions in the best interest of all involved, rather than decisions coming from a centralized entity (i.e. TIKI making all of the standards and rules of the data exchange unilaterally).

To picture this even more clearly, imagine the Apple App Store. This is an example of a centralized organization, not a DAO. This is because Apple unilaterally determines the Review Guidelines that all developers must abide by in order to have their application published to the marketplace. This model would not work for TIKI, because if a decentralized marketplace has its rules and guidelines dictated by a central authority, is it really decentralized? We think not. If the TIKI DAO model were to replace Apple’s current centralized model, the developers themselves would collectively decide the guidelines required to publish.  

Governing power is directly tethered to participation in the data exchange itself, be it participation by users or companies. Token issuance incentivizes and measures participation, creating reputation. As a user, connecting accounts (such as Gmail or Outlook), pooling data with other users, referring friends and companies, voting, promoting TIKI, and reporting bugs all yield varying amounts of time-bound tokens that create a user’s reputation score.

In order to prevent concentration of power that skews governance, tokens are based on participation and are, as mentioned, time-bound. Tokens earned today hold more power than tokens created in the past: each token depreciates in value over time, incentivizing continued participation and awareness of the current state of the exchange.

Proper governance of the marketplace via the TIKI DAO relies on the creation of proposals, called TIPs (TIKI Improvement Proposals). Proposals should either define or alter the governance protocol. Protocols are hosted on the TIKI GitHub and must meet certain criteria in terms of author and content. After community discourse regarding the proposal (which will [likely] happen on the TIKI Discord server) proposals are then voted upon by DAO participants. The reputation of each user determines their voting power, where a simple quadratic formula is utilized to determine number of votes (1 reputation token equals 1 vote, 4 credits equal 2 votes, 9 credits equal 3 votes, and so on). This again incentivizes active participation in the market ecosystem itself.

With TIKI’s DAO, advancements in Web3 and the push toward more decentralized and equitable technology is leveraged to create a true transparent and internally accepted system for the valuation and transaction of user data, where users are compensated directly from companies in the form of improved services, monetary compensation, or other perks and benefits decided upon by each individual and business.