Decentralised Science

On funding science outside of traditional pathways involving government agencies.

Decentralised, autonomous organisations (DAOs)

As funding for science through traditional government agencies (e.g. the NIH) become increasingly problematic, the implementation of networked funding through blockchain organisations (decentralised, autonomous organisations, DAOs) is gaining traction:

  1. MoleculeDAO - biopharmaceutical IP

  2. VitaDAO - longevity interventions

DAOs are community-operated and automated through smart contracts (once signed, these contracts are self-enforcing and autonomously execute all transactional logic in digital space).

They are designed to be a bridge between basic science and commercialisation. Using the blockchain, the overarching aim is to create a circular economy built on IP, to help science fund itself with its own outputs:

graph LR
  A(science)--->|IP|B(commerce)
  B--->|returns|A

Building on the VitaDAO

VitaDAO is an archetypal example of a DAO focussing on funding longevity research:

To radically extend human health-span and life-span by developing cutting-edge research while empowering democratic ownership of intellectual property through Intellectual Property Tokens.

VitaDAO’s mission statement, from their official project white-paper.

In their white-paper, the process of funding a project is driven by two types of tokens, which represent units of participation within the economy of the DAO:

  1. a VITA token (for voting on which projects get funded)

  2. an intellectual property token, or IPT (for influencing decisions on research direction)

Between the two tokens, the economic value of the VITA token is globally determined on the general crypto-currency exchange by the success and reputation of the VitaDAO as an incubator of longevity research, whereas the value of the IPT is locally determined within the VitaDAO by the value of IP for a specific project.

The whole process from applying to funding a project occurs on a seasonal basis (4 months per season, with each season involving up to 4 projects).

During a season, a match-making process occurs in which the most promising ideas are chosen by the community and members elected as VitaLabs Fellows to lead research projects around each idea:

flowchart TD
  A[ideation] -->|fellows| B[team]
  B --> C[proposal]
  C --> D{selection}
  D -->|top 4 projects| E(initial experiments)
  E -->|minimal viable results| F[crowdfunding]
  F -->|commercial potential| G[spin-out]

Ideation

In the ideation stage, fellowship applicants introduce themselves to the community and share their ideas around a potential project. Promising ideas and the right fellows to pursue them are judged as a function of communication and the ability to attract support from the community around each idea.

Team

Up to 2 fellows are nominated to create a leadership team for pursuing an idea, based on converging interests and complementary skills. If zero fellows are nominated, the project is classified as “fully community-driven”.

Proposal

A project proposal around the idea is drafted by the team of fellows, focussing on the below details:

  1. Problem statement and proposed solution

  2. Budget

  3. Team expertise

  4. Experimental plans

  5. Commercialisation potential

Selection

The top 4 projects are selected through VITA tokens from community members, which is boosted by a matched amount M from a central VitaDAO fund (capped at $200,000 in ETH or USDC) and allocated according to the following quadratic relationship:

M \propto \left( \sum_{i=1}^n \sqrt{c_i} \right)^2

where c is the token contribution from donor i.

This quadratic funding model has two effects:

  1. Diminishes individual contributions (takes the square root)

  2. Amplifies unique contributions (takes the square of the sum of terms)

In effect, the number of votes for a project is weighted more than the amount contributed by any individual vote. This model is especially useful when funding public goods (non-excludable, non-rivalrous goods) where the allocation of funds needs to be as democratic as possible and resistant to bias from a single large contributor.

Any projects which secure less than the budget in their proposal will revise their proposal to fit the funding received or opt-out of the selection process.

Selected projects are minted or published as a non-fungible token (IP-NFT) to the Ethereum blockchain.

Initial Experiments

Selected projects must utilise their initial funding to come up with a minimum viable proof of concept (MVP) according to the experimental plan outlined in the project proposal. Initial experiments should ideally leverage the following low-resource tools:

  1. Computation and simulation

  2. Outsourced work to CROs

Results from these initial investigations are released to the community as part of a Snapshot entry which determines whether or not it will be crowd-funded.

Crowdfunding

If the hypotheses of the proposal are validated and promising data is generated, then the community can decide whether or not to approve the project.

Upon approval, the on-chain IP-NFT for the project is broken up or fractionalized into fungible tokens (IPTs) which are sold to the public as shares in the IP of the study. 

pie title Fractionalisation of IP-NFT (IPTs)
  "Team" : 30
  "VitaDAO" : 20
  "Liquidity" : 30
  "Crowdsale" : 20

A standard fraction of 20% of the IPTs from the fractionalisation of a given IP-NFT is sold to the public at a fixed per-token valuation to enable participation in key decision-making processes regarding the research direction of the project.

From the remaining amount, 30% of the IPTs are distributed among the project team:

  1. 10% per nominated VitaLabs Fellow

  2. 4% for an entrepreneur-in-residence (EIR), who can be recruited from the community to drive the project towards commercialisation

  3. 6% to community contributors

Community contributions which can be reimbursed include:

  • successful referral of a fellow who proposes a project idea (500 VITA tokens)

  • successful initial quadratic funding of the referred fellow (0.1% of the IPTs)

The rest is allocated to the VitaDAO itself (20-45%) or put into a liquidity pool (5-30%).

The liquidity pool is a way to trade IPTs, allowing price discovery (dynamic valuation of the underlying IP based on buy/sell patterns) and as an exit mechanism for community members involved in the project.

Spin-out

As projects yield commercial products, the VitaDAO provides the networks with the technology industry to guide the creation of ventures around the IP.

During this phase, IPTs are commonly used to distribute equity based on the ledger of contribution written on the blockchain. Importantly, the team responsible for the project (fellows, EIR and community contributors) are properly attributed based on this ledger.

Since the VitaDAO will own a portion of this equity with its IPT allocation, it will be able to re-invest returns from the venture into other projects earlier in the DAO pipeline, closing the loop on the funding ecosystem.