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Futarchy Adoption Levels

Futarchy can be adopted step by step. DAOs don’t need to jump straight to full autonomy — each level adds more integration and confidence.
We recommend DAOs start with Advisory Futarchy (proposal evaluation) as the default entry point.
Milestone markets can run in parallel as an optional complement.

What it is:
Every major proposal runs through futarchy evaluation (YES vs NO).
The outcome provides a market-based recommendation that guides tokenholder voting.

DAO role:
- Seed liquidity in YES/NO markets.
- Display futarchy recommendations in Snapshot or on-chain UI.

Benefits:
- Increases tokenholder confidence.
- Prevents harmful proposals from moving forward without evidence.
- Minimal disruption to existing governance process.

Risks:
- Delegates may initially ignore futarchy advice (cultural adjustment needed).

Milestone Futarchy (Optional Complement)

What it is:
Markets estimate the impact of specific roadmap milestones (e.g. “Launch Feature X by Q3”) on token price.
Milestones provide extra signals to validate execution, but are not required to adopt futarchy.

DAO role:
- Provide liquidity for milestone markets.
- Use results as additional advisory signals.

Benefits:
- Supplements proposal futarchy with roadmap accountability.
- Helps track whether execution is adding value.

Level 2 — Sponsored Proposals (Sponsored Futarchy)

What it is:
Outside sponsors (activist investors) propose changes and bond capital.
If futarchy approves, sponsors can buy DAO tokens at a discount (vested).

DAO role:
- Define rules for sponsorship (bond, discount %, vesting).
- Commit to honoring futarchy-approved sponsored proposals.

Benefits:
- Brings new capital and new ideas into the DAO.
- Aligns incentives between sponsors and tokenholders.

Risks:
- Needs safeguards against “self-dealing” proposals.

See Sponsored Proposals for full details.

Level 3 — FAO (Futarchy Autonomous Optimizer)

What it is:
A special on-chain governor (FAO) directly controls treasury or parameters.
It executes futarchy-approved proposals automatically.

DAO role:
- Deploy the FAO contract with defined scope.
- Gradually expand its authority as confidence grows.

Benefits:
- Full autonomy, credibly neutral governance.
- Scales decision-making beyond human bottlenecks.

Risks:
- Cultural resistance to ceding authority to code.
- Must choose metrics carefully to avoid Goodhart effects.

Which path should your DAO choose?

  • Default entry point: Advisory futarchy for proposals.
  • Optional supplement: Milestone futarchy for roadmap accountability.
  • Expand later: Sponsored futarchy to attract capital and ideas.
  • Long-term vision: FAO for fully autonomous governance.