Governance is critical for Scroll's success. Good governance drives growth and resource allocation, while poor governance leads to ecosystem collapse despite large treasuries. Currently, DAO governance suffers from two critical challenges:
Dr. Philip Brown is a recognised leader in mechanism design, having received extensive funding from NSF, NASA, and the Air Force and multiple accolades in this field. The Network Goods Institute, in collaboration with him and RnDAO, we have identified “Carroll Mechanisms” — an evolution of Futarchy and Prediction Markets — as a potential solution for governance systems where participants are incentivised to:
The Scroll Foundation also recognises this direction as promising.
Scroll has an opportunity to implement this cutting edge governance mechanism to improve its performance as a DAO, reward delegates fairly, and build the L2 chain where DAOs go to thrive.
This proposal takes Scroll to the forefront of governance innovation by fast-tracking R&D in Carroll Mechanisms from theory into implementation. Via a 6-month research and implementation program from August 2025 through July 2026. The outcome will be better decision-making in Scroll and fair rewards for delegates.
The program is divided into three milestones. M2 and M3 are conditional on successful M1:
Rather than a traditional grant, we propose an investment structure with shared upside: a $145,000 USD-equivalent SAFE+Token Warrant investment at $10M cap that aligns Scroll's interests with the project's success through potential ROI and ecosystem growth.
Problem:
In Web3, we've seen our share of governance failures. Multiple ecosystems have collapsed despite starting with massive treasuries. Too many died not because of competition but through grifting and self-sabotage.
Good governance leads to good decisions and growth. Bad governance leads to an ecosystem of misallocated resources.
Current DAO governance models suffer from multiple challenges to sustain participation, align incentives, reward governance work, and otherwise make good decisions. For DAOs to survive, improving upon the current delegates' models is an existential necessity. Challenges include:
Designing incentives for good governance is hard. Finding a better model could unlock massive value for all humans.
The current practice in DAOs is to appoint delegates who then vote on behalf of token holders. However, DAO delegate models suffer from their own set of issues and multiple problems of traditional board governance:
Current approaches:
Manual approaches to incentivise governance work (i.e. reward delegates) are prone to biases and conflicts of interest as those who determine the incentives are beholden to the delegates they evaluate. Manual allocation of rewards is also prone to conflict due to the inherent subjectivity in the approach.
Voting systems are incredibly popular governance models, whether taking the form of one-person-one-vote, token/share voting, or representative democratic models. However, voting systems have well-known shortcomings, both theoretically (cf. Arrow’s impossibility theoremˇ) as well as practically. Among the most salient shortcomings in the context of delegate-based DAO governance are the problems of:
incentive misaligned factions (including all forms of bribery and corruption),
whales (large power holders that strangle promising investments),
and problems of low voter participation, capacity, and knowledge.
There are alternatives to voting-based governance systems, among them is futarchy. Futarchy is a governance approach that uses prediction markets—such as those found on Polymarket and Metaculus—to guide DAO decision-making based on forecasted metric outcomes. This has been implemented in straightforward cases like Uniswap, where token price provides a clear and mutually accepted success metric. Futarchy offers a more robust and credibly neutral solution, as it incentivises those with valuable information to engage in governance, while aligning incentives towards identifying the correct answer and long-term accrual of value. However, futarchy has severe limitations:
What if we could rethink the use of voting mechanisms altogether? Could we move away from simply voting on predefined options and invent a game that allows participants to deliberate and co-create new solutions?
Solution:
A promising solution is a set of mechanisms we call “Carroll Mechanisms”. Carroll Mechanisms improve upon the limitations of futarchy by helping define the resolution criteria for a market — not just determining what the outcome of a question is, but also how we determine that outcome.
For example:
Carroll Mechanisms work by building on prediction markets, which already let people bet on whether statements are true or false (like "Who will become president in 2026?"). But Carroll Mechanisms add something new: they let participants challenge whether a piece of information is actually relevant to answering the original question.
The key innovation is that these mechanisms can automatically figure out what information should count as relevant. Instead of just asking "Is this true?" Carroll Mechanisms also ask "Does this even matter?" — and automatically figure out the answer.
Carroll Mechanisms do this through a built-in system that identifies which participants are genuinely neutral and unbiased, as demonstrated by a history of changing their minds, then uses their input to determine what's actually useful for resolving the question. For more about Carroll Mechanisms, read this post.
This approach could enable governance participants to engage more collaboratively and productively, and be rewarded accordingly. Carroll Mechanism could hold the missing key to solving incentive alignment for DAO governance.
The Scroll Foundation and RnDAO believe this approach is promising to transform DAO governance, scientific funding allocation ($1.2 trillion market), and even has implications for city and nation state governance and the emergence of network states. However, before proceeding with an implementation in Scroll or elsewhere, it’s necessary to gain confidence about the design of the systems and the best parameters for it. The necessary first step is mathematical modelling and computer simulation, then moving to implementation.
We thus propose an initiative to fund the necessary research (over a period of 6 months) and deliver a working product for Scroll to adopt this new governance system.
We have divided the proposal into 3 phases (milestones) so that the full capital is used only if the initial research validates Carroll Mechanisms.
This proposal will enable Scroll to make high-quality decisions and reward delegates fairly, thus positioning Scroll as an industry leader in governance and addressing one of the biggest limitations of DAOs.
Incentive Alignment with Scroll
Governance represents both a fundamental requirement for Scroll's success and a strategic opportunity to establish credibility by addressing a critical need across the DAO ecosystem. We sweeten this proposition by aligning our incentives more closely: turning the funding for governance also into an ecosystem growth activity.
We achieve this by making the funding not a grant but an investment. This approach thus aligns Scrolls' needs for better governance and potential ROI from capital deployments.
Lead Researcher: Dr Philip N. Brown is an expert in incentive, mechanism, and utility design for network games and will bring this experience to bear on the problem [Singh et al., Collins et al., Brown et al.]. Using concepts from algebraic graph theory and mechanism design, we will specify the relevant incentive constraints (modeling CAP and RE) which govern the feasibility of Carroll mechanisms.
He has been awarded external research funding from t he National Science Foundation, NASA, the Air Force Office of Scientific Research, and the NSA. Philip is interested in the fundamental mathematics of strategic decision-making and applies this to mechanism design for infrastructure systems, decentralized algorithm design for multi-machine systems, and networked societal/autonomous systems. He’s an Associate Professor in the Department of Computer Science at the University of Colorado Colorado Springs. Dr. Brown received the 2018 CCDC Best PhD Thesis Award from UCSB, the Best Paper Award from GameNets 2021, a 2023 AFOSR Young Investigator Program award, and a 2025 NSF CAREER award. He is also a longtime observer of the world of blockchains and DAOs.
Second researcher: Connor McCormick is the founder of the Network Goods Institute. Prior founder of a machine learning computer vision hardware startup, founding team member at Digital Gaia, a climate intelligence company where he contributed to novel economic primitives and Bayesian machine learning systems for climate impacts, and contributor to the development of collective intelligence protocols at Metaculus. You can find Connor’s writing here and here.
Engineering Lead: Kaden Bilyeu is the engineering lead for the Negation Game, the product suite into which a successful design of Carroll Mechanisms will be integrated. Kaden is the creator of EasyTL an AI based translation tool, he has made over 3.2k commits on GitHub in 2025 so far, examples of his work can be found here.
Project advisor: Daniel Ospina is an instigator at RnDAO. Organisation designer and 3x founder (1 exit), ex-Head of Governance at Aragon and ex-supervisory council SingularityNET. Daniel trained BCG consultants on system design and innovation methodology, was a visiting lecturer at Oxford University on innovation and systems design, and a Harvard Business Review author.
Project advisor: Andrea Gallagher is the research lead at RnDAO. Drea has been building and supporting startups since Web 1. Strategic researcher for products such as Google Workspace ($16bn revenue) and Asana ($183mn revenue), and in Web3 at Aragon. Drea honed her skills in the Innovation Catalyst unit at Intuit (TurboTax and Quickbooks, $14bn revenue).
The work is divided into two milestones.
The timeline of this project is driven by Dr. Brown’s availability from mid-August 2025 through mid-May 2026, with the greatest availability from August through December. Accordingly, we anticipate that the bulk of the Milestone 1 work will occur between mid-August and mid-December of 2025, and we will prepare a Milestone-1-focused publication in January/February 2026. We propose the following milestone dates for Milestone 1 (base period M1):
The Milestone 2 work (option period) will occur over Spring and Summer 2026, with a lower intensity of activity due to Dr. Brown’s existing obligations:
Research progress will be summarized on a monthly basis in a public Coda doc found here: https://coda.io/@connor/scroll-carroll-mechanisms
The team is committed to delivering this research and product for $145,000 USD equivalent.
Costs are divided as per our two milestones $45k (M1: Base) to prove feasibility + $45k (M2: Option) to find the best design + $55k (M3: Option) to integrate it into the Negation Game product and deploy it to the DAO.
Andrea and Daniel will not receive a fee for their engagement on the project.
M2 will only happen if M1 is positive. If not, the remaining funds will be returned to the DAO’s budget. The Governance Iteration Council (or equivalent council if the name changes) will evaluate the results from M1 and vote (majority) to approve to execute the investment for M2 and M3 — if the Council is not available, the Foundation will evaluate the M1 results.
We break the research budget into a $45,000 base period plus a $45,000 option period, with a $55,000 implementation budget for integrating the resulting mechanism set into the existing Negation Game product and deploy and roll out to Scroll DAO. The base period will center on Research Thrust 1, and the option period will center on Research Thrust 2 plus additional prototype development. If the project is funded at only the base level, we anticipate one significant academic publication; the option period would result in at least one additional publication, with potential for more as resources allow.
Dr. Philip Brown: Total $28,500 for research time, averaging 6 hours/week for 26 weeks from January 2026 through July 2026. Dr. Brown will conduct research as described in Thrust 2 on determining the set of Pareto-optimal Carroll mechanisms, reviewing relevant literature, formulating formal conjectures, conducting numerical experiments to verify conjectures, developing mathematical proofs of relevant propositions, preparing results for publication, and presenting results at scientific conferences.
Network Goods Institute: total $16,500. The Network Goods Institute team will collaborate on research progress with Dr. Brown as in the base period, as well as contributing to numerical evaluation of mechanisms with cadCAD, and prototyping the resultant mechanisms for the purposes of testing their real world usability and dynamics to add richness to the resultant research findings.
Milestone 3 (implementation, running in parallel to M2): total $55,000
Implementation timeline and effort allocation:
| Period | Duration | Total Cost | Dr. Philip Brown | Network Goods Institute |
|---|---|---|---|---|
| Base research (M1) | Aug 18, 2025 - Dec 15, 2025 | $45,000 | $36,500 | $8,500 |
| Applied research (M2) | Jan 2026 - Jul 2026 | $45,000 | $28,500 | $16,500 |
| Implementation (M3) | Jan 2026 - Jul 2026 | $55,000 | $0 | $55,000 |
| TOTAL | $145,000 | $65,000 | $80,000 |
| Activity | Duration | Cost |
|---|---|---|
| Literature Review & Foundation | 4 weeks | $8,588 |
| Property Definition & Research Framework | 4 weeks | $8,588 |
| Mathematical Modeling & Compositional Development | 5 weeks | $10,735 |
| Iterative Numerical & Theo retical Experimentation | 13 weeks (overlapping) | $8,589 |
| M1 Total | 17 weeks | $36,500 |
| Activity | Duration | Cost |
|---|---|---|
| Advanced Mechanism Design | 8 weeks | $8,769 |
| Mechanism Refinement and Numerical Optimizations | 8 weeks | $8,769 |
| Prototype Development | 6 weeks | $6,577 |
| Research Synthesis & Documentation | 4 weeks | $4,385 |
| M2 Total | 26 weeks | $28,500 |
| Activity | Duration | Cost |
|---|---|---|
| Bi-weekly Research Collaboration Calls | 17 weeks | $5,100 |
| Research Progress Evaluation & Feedback | 17 weeks | $2,550 |
| Market & UX Insights Integration | 17 weeks | $850 |
| M1 Total | 17 weeks | $8,500 |
| Activity | Duration | Cost |
|---|---|---|
| Bi-weekly Research Collaboration Calls | 26 weeks | $7,800 |
| Research Progress Evaluation & Feedback | 26 weeks | $3,900 |
| Mechanism Prototyping & Testing | 26 weeks | $4,800 |
| M2 Total | 26 weeks | $16,500 |
| Activity | Duration | Cost |
|---|---|---|
| Initial Integration (M1 findings) | 3 months (6-8 hrs/week) | $16,500 |
| Iterative Updates (M2 progress) | 2 months (8-10 hrs/week) | $13,750 |
| Incentives for mechanism beta testers | 2 month (5-7 hours / week) | $5,000 |
| Final Integration & Deployment | 2 months (12-15 hrs/week) | $24,750 |
| M3 Total | 26 weeks | $55,000 |
Key Deliverables:
A note on valuation: we were offered a $24mn valuation by a VC (BlueYard) with a $1.2mn investment.
BlueYard found the project promising due to the extremely large market opportunity that Carroll Mechanisms present if successful — namely that they address a class of capital allocation whose TAM (total addressable market) includes both venture funding ($500b annual market size) and scientific funding ($1.2t annual market size), coupled with the plausibility of adoption of this mechanism set due to its user story similarity to successful crypto properties like MetaDAO, Polymarket, and pump.fun.
BlueYard also found an investment in the Network Goods Institute attractive due to Index Wallets, a payment mechanism with public goods funding properties, which are beyond the scope of this proposal but also an asset held by the company funded by this proposal.
We’re offering a very attractive $10mn valuation to Scroll because we believe Scroll to be a more aligned funder with our dual goals of delivering a financially viable product while also transforming governance for the better. You can read about our decision to decline (at least for now) the BlueYard funding here. TLDR: we want the alignment to do this right, even if that means taking a slightly longer route.
We request that the Scroll Governance team evaluate the successful completion of the deliverables of this proposal. Below are further details for accountability.
We want to create governance systems where participants are incentivized to contribute valuable information and evaluate proposals based on merit rather than politics, leading to better collective decisions in DAOs, scientific funding, and other institutional contexts.
Milestone 1: Mathematical proofs demonstrate that Carroll Mechanisms achieve incentive compatibility and information efficiency under realistic conditions, with formal analysis showing theoretical advantages (and potential vulnerabilities) over current voting and futarchy systems.
Milestone 2: Complete theoretical framework with optimal design parameters and proven mathematical properties that provide clear specifications for practical implementation.
Milestone 3: Implementation into the Negation Game with user-friendly UI, user test and positive evaluation from users. Desire to use the Negation Game in Scroll for proposal evaluation and rewarding delegates.
Mathematical Properties:
Academic Validation Test:
Practical Readiness:
Marketing and Community Impact:
This proposal enables Scroll DAO to pioneer the next generation of governance systems while generating potential returns on investment. The implementation addresses fundamental challenges of DAO governance that also limit Scroll’s DAO — from delegate accountability and incentive misalignment to the limitations of voting-based systems and futarchy.
The current delegate model suffers from apathy, conflicts of interest, and subjective reward allocation. Manual approaches to governance incentives are inherently biased, while AI-based alternatives face critical limitations in data availability and learning capabilities. Carroll Mechanisms offer a third path - enabling human-AI collaboration in governance, and aligning incentives without replacing human judgment.
By funding this research, Scroll gains: better governance, positioning as a governance innovation leader, potential ROI through the investment structure, and transaction fees from resulting governance tooling. The research addresses a greater than $1.2 trillion market opportunity spanning DAO governance, scientific funding allocation, and broader institutional decision-making.
The team combines world-class academic expertise (Dr. Brown's recognized leadership in mechanism design with NSF CAREER and AFOSR awards) with practical implementation experience (Connor McCormick's work on collective intelligence protocols, Kaden Bilyeu's engineering leadership). The phased approach allows for early validation before full adoption, with rigorous academic publication standards ensuring quality.
Success will create a governance system where participants are incentivized to contribute valuable information and evaluate proposals based on merit rather than politics. Delegates get fair rewards and Scroll DAO gets thorough decisions.
Threshold 51%
EXECUTED