Christopher

Executive Summary​

This report presents an innovative paradigm to solve the fundamental governance problems faced by DAO: low participation, decision-making inefficiency, and a lack of accountability. The core thesis is the fusion of Futarchy principles, AI agents, and financial derivatives concepts to transform governance itself into a dynamic financial market. This model goes beyond simple binary prediction markets to build an ecosystem where sophisticated synthetic options, linked to governance proposals and KPI, are issued and traded.

Key findings are as follows. First, a governance-linked options market transforms a DAO's native token from a simple voting right into an essential collateral and medium of exchange for market participation: a 'casino chip.' This exponentially increases the token's trading volume and liquidity, driving an economic flywheel that creates genuine transactional demand beyond speculative interest.

Second, AI agents are a critical element for the expansion and popularization of these complex governance markets. AI performs roles such as information gathering, strategy automation, liquidity provision, and providing a customized UX, lowering the entry barrier for non-expert participants while optimizing micro-decisions at a scale beyond human capacity, all based on market principles.

Third, a reward structure that is scalar and option-like, where compensation varies continuously with the degree of KPI achievement rather than being 'winner-take-all,' allows for the design of more nuanced and performance-oriented incentives. This imposes real 'skin-in-the-game' for both proposers and participants, holding them financially accountable for poor decisions and clearly rewarding success, thereby preventing governance corruption and fostering a culture of responsibility.

Finally, this model offers practical solutions to new problems that are difficult to solve with existing governance systems, such as imbuing memecoins with purpose or managing the orderly process of a CTO(Community Takeover). By providing an in-depth analysis of this architecture's specific design, technical foundations, economic effects, and potential risks and mitigation strategies, this report offers a blueprint for DAO to evolve into information-based organizations that allocate capital and influence based on verifiable performance.

Executive Summary​

Despite the exponential growth of data, building high-quality, tailored datasets essential for training AI models remains a challenge, demanding significant cost and effort. While first-generation AI copilot tools represented an initial step towards addressing these issues, they have demonstrated limitations in accuracy, transparency, and cost-efficiency, leading to what is now recognized as 'copilot fatigue' among users. This report addresses these data paradoxes and the shortcomings of existing copilots, proposing a transformative paradigm where AI can autonomously generate meaningful datasets directly from data lakes. 'Probe', currently under Pre-MVP implementation, is designed to actualize this vision, leveraging the proven efficiencies of hierarchical data structuring to revolutionize data preparation and analysis, thereby opening new horizons for AI development.

1. Introduction​

AI development today faces a dual challenge: models are growing ever more complex, yet aligning them with human needs requires extensive oversight and feedback. Fission’s DeSAi framework (Decentralized Science + AI) addresses this by combining advanced model optimization techniques with large-scale human feedback loops (e.g., Reinforcement Learning from Human Feedback, RLHF) and community-driven governance. The central question, however, is how to incentivize and coordinate these decentralized feedback processes effectively.

Fission’s answer is Futarchy—a governance model in which communities do not simply vote on proposals, but instead bet on which proposals will best fulfill a shared success metric. By rewarding accurate predictions and penalizing mistaken ones, Futarchy taps into collective expertise to guide strategic decisions. This research report explores how Futarchy can be applied to optimize AI development and deployment within the DeSAi paradigm. Specifically, it will:

1. Define Futarchy and its Core Mechanics Explain how prediction markets function in an on-chain governance context.
2. Apply Futarchy to AI Optimization Examine how conditional markets can shape AI model improvements through community feedback and economic incentives.
3. Discuss Technical Implementation Detail the use of decentralized oracles, time-weighted average price (TWAP) mechanisms, and other features needed for reliable performance tracking.
4. Outline a Hybrid Rollout Strategy Propose steps for transitioning from off-chain or advisory market trials to fully on-chain Futarchy, ensuring stakeholder trust and participation.
5. Review Key Case Studies Highlight real-world experiments—such as Augur, GnosisDAO, and more recent initiatives—that demonstrate both the potential and challenges of futarchic governance.
6. Identify Risks and Mitigations Analyze common pitfalls—market manipulation, low liquidity, poorly chosen metrics—and discuss safeguard techniques.
7. Present an End-to-End Futarchy Flow Illustrate how proposals move from initial community submission to on-chain market assessment, model implementation, and verified outcomes.
8. Conclude with a Vision for AI Governance Summarize how Futarchy can become a transformative model for AI governance and offer insights on practical adoption.

Throughout, we maintain a focus on aligning AI development with community values—“vote on values, but bet on beliefs,” in the spirit of Futarchy’s guiding principle. By leveraging prediction markets and decentralized participation, Fission’s approach seeks to ground each model update and research decision in real data and collective expertise, rather than top-down judgment or speculation. This synergy can lead to a more transparent, accountable, and ultimately more effective path forward for AI.

1. Introduction​

Managing unstructured data (text, images, audio, video) for machine learning is labor-intensive, especially when labeling large datasets. A proposed solution is to use hierarchical structuring of labels – for example, having a broad category like “human” with sub-labels like “race”, “gender”, “age group”. The hypothesis is that a taxonomy of labels (categories and subcategories) can streamline annotation workflows and reduce labeling and preprocessing costs. In this report, we investigate existing research and industry practices to see if this hypothesis holds true. We examine how hierarchical taxonomies and multi-level schemas have been applied in data labeling pipelines, whether they improved efficiency or reduced resource use, and how this approach relates to modern data-centric AI techniques (like weak supervision or active learning). We also discuss how hierarchical labeling could integrate with emerging architectures such as the MCP(Model Context Protocol) for agent-based AI, and consider potential benefits for AI safety and fairness (through more consistent, transparent labeling).

2. Background​

Taxonomies and Hierarchical Labels​

A taxonomy in data labeling is a structured classification scheme: it defines categories and (optionally) subcategories in a tree-like hierarchy. In practice, a well-designed taxonomy can enhance labeling efficiency and consistency. By providing clear category definitions and relationships, taxonomy-based labeling gives annotators a structured guideline, reducing ambiguity. According to industry guides, a good taxonomy enhances efficiency and accuracy in data labeling, reduces training time, and improves data comprehension.

1. Introduction​

1-1. What Fission Does​

Fission is an AI research and development team that specializes in model optimization—making advanced AI models more efficient, scalable, and accessible to a broader range of users. Rather than pouring endless resources into ever-larger models, we focus on streamlining computing requirements and enhancing model performance through smarter, more targeted approaches. Our guiding principle is simple yet profound: the best AI emerges when technical innovation is combined with high-quality, iterative human feedback.

To achieve this, we design workflows and tools that invite user participation throughout the AI lifecycle. From initial data refinement to ongoing feedback loops, we’ve learned that human insight—especially when harnessed at scale—often trumps brute-force computation. By refining AI models through collective user input, we aim to craft systems that are both robust and grounded in real-world needs.

1-2. The Core Narrative​

As we delved deeper into model optimization, we discovered a critical tipping point: no matter how elegant or efficient our algorithms became, they still depended on authentic human feedback to truly excel. While data labeling had been the traditional approach, we realized that continuous, context-rich evaluation—from domain experts, enthusiasts, and everyday users—was the key to fine-tuning AI in a more dynamic, impactful way.

However, gathering and managing this feedback via centralized methods proved costly and time-consuming. It was also difficult to maintain transparency and fairness at scale. That challenge led us to explore more decentralized structures—platforms where users could offer feedback and be rewarded in ways that felt natural, equitable, and community-driven.

That’s where DeSci (Decentralized Science) entered the conversation. DeSci promised an open, collaborative environment for knowledge-sharing and verification, yet it quickly became clear that advanced AI was needed to handle large data streams and real-time inputs. Combining DeSci’s ethos with AI-driven workflows gave rise to DeSAi—a synergy merging decentralized collaboration with iterative optimization.