Adversarial Proposal Design in Asset Futarchy
Asset futarchy is hardest to attack when conditional prices stay tightly coupled to a proposal's real causal effect on ASSET value. The proposal strategies below work by loosening that coupling.Asset futarchy here means a governance system where a proposal passes if conditional markets predict ASSET will be worth more if the proposal passes than if it fails. PASS-ASSET is ASSET in the world where the proposal passes. FAIL-ASSET is ASSET in the world where it fails. The important feature here is that relative conditional prices decide execution. +EV means a proposal increases expected ASSET value, and -EV means it decreases expected ASSET value. The examples below assume a 2% passage hurdle: PASS-ASSET must trade at least 2% above FAIL-ASSET for the proposal to pass.Resistance-Contingent DeliveryA proposer promises value-creating work, but treats delivery as the backup plan. Their first choice is to pass the proposal by defending the PASS/FAIL spread, collect the proposal payout, and skip the work.Example: a proposer asks the DAO to pay $300k for a wallet distribution partnership. The partnership is +EV to the DAO if they actually secure the wallet partner and complete the integration work, but delivery costs the proposer $180k. Instead of doing the work by default, the proposer runs a buy wall that keeps PASS-ASSET at 1.02 while FAIL-ASSET trades at 1.00. Under non-delivery, the manipulation cost is the gap between the defended price and fair PASS-ASSET under non-delivery, not the premium over FAIL-ASSET. If non-delivery makes fair PASS-ASSET 0.99, defending 1.02 costs $0.03 per PASS-ASSET bought.If bearish traders sell 4m PASS-ASSET into the wall, manipulation costs 4m * $0.03 = $120k. Because the $300k payout is the same under delivery and non-delivery, the proposer compares the $120k manipulation cost with the $180k delivery cost. Manipulation is cheaper, so the proposer absorbs the flow, the proposal passes, and the proposer can skip the work but gets paid anywa