DAO Structure

Guiding Principle

"I. Every man has a vote in affairs of moment; has equal title to the fresh provisions, or strong liquors, at any time seized, and may use them at pleasure, unless a scarcity makes it necessary, for the good of all, to vote a retrenchment." (Captain Bartholomew Roberts, 1721, Shipboard Articles)
Bartholomew Roberts' ran his crew with a governance structure we want for this project - a democratic system where every crewmate had a say in the direction of the ship and treasures. The purpose of our DAO is to enable a system where our members also help aid with the development of this pirate experiment. As pirates, our aim is to plunder the Seas of Ethereum and hoard treasure to share amongst all of us.

Smart Contract Architecture and Governance

We will be implementing a progressively decentralized architecture. This is to ensure the project's sustainability and growth.

Iteration 1: Off-chain Governance

The first iteration of the SPC DAO structure will have off-chain governance and an on-chain treasury. Initially, we will have the SPC NFT contract's owner be the SPC team's Gnosis multi-sig wallet. This means the funds raised from the wallet will arrive in that wallet. From there we will send 60% of all raised funds to the Treasury. The funds will be locked and can only be accessed by the SPC team's multi-sig wallet. We will use Snapshot to help aid with deciding which Metaverse purchases we make.
Security Risks and Considerations
Multi-sig Wallet: The multi-sig wallet exists to ensure the security of the DAO funds and treasury. Initially, there will be a total of 4 signers. We will require 3/4 signers to validate transactions.
  • This means that in the unlikely situation where one of the signers' accounts is compromised, the attacker will not be able to negatively impact the DAO funds. We run into trouble if they compromise 2 accounts. This problem will be eliminated in the future when we move to Iteration 2.
  • Ultimately, this is a trust-based system as holders are trusting that the team will use the funds correctly. We understand that this may be undesirable for some, and we as a team also agree that this is undesirable. In the future, this will be remedied in Iteration 2 as we move towards a trustless governance structure. For full transparency, as this is an experiment, we also want to maintain strong control over the entire architecture at the beginning to ensure our systems are working as intended as well as for implementing our roadmap. But have no fear, we will still be listening to the opinions and ideas of everyone and following through with our promises so please let us know in our discord any of your comments as we will read all of them.
Iteration 2: On-chain governance
In the second iteration, we will implement an on-chain governance structure where all SPC holders will be able to vote on the implementation of any proposals. This system will involve a voting and proposal mechanism.
In iteration 2, proposals will only be performed by the team. This means any changes to the smart contracts and how funds are used can only be proposed by us. However, there will be a voting phase in between any execution of functions of SPC smart contracts. Here, SPC holders will be able to vote yes, no, or abstain. The voting period is intended to be 1 week. Hence, even if the team were to implement abhorrent transactions that don't benefit SPC holders, you have the ability to veto these changes. We require 4% (400 SPC holders) at a minimum to vote. From there, the majority decision will determine whether a proposal is successful or not.
There will be a time-lock mechanism in place that means successful proposals will not be executed until after 2 days have elapsed from the end of the voting period. This gives holders the ability to exit the project if they are unhappy with the changes.

Security Risks and Considerations

Whale 50% attacks:
  • Whales require 50% of the votes to deadlock the system. If only 4% of SPC holders vote, then at the minimum the whale would require 200 SPCs to deadlock. Below is a basic chart of what a whale would require (the numbers are TotalVotes/2 to deadlock):
Total Votes
Whale votes required to deadlock
Security Risks and considerations
Whale 50% attacks:
  • Whales can still deadlock the system as mentioned in Iteration 2.
Whale 51% attacks:
  • Whales are now able to propose malicious proposals and pass them. The SPC fractional vault will still be safe and cannot be compromised. Even if the whale were to reduce the starting bid to well below the vault price, it will be obvious that many users and other DAOs will be interested in buying out the vault. This means a competitive price will be achieved and $SALT owners will be able to still exchange their $SALT for Ether.
  • The introduction of Guardians will be able to veto malicious proposals by whales. Of course, if the Guardians are also malicious members then it's not possible to veto these proposals. As a result, Guardians will be required to dox themselves.