Colony (CLNY). A project research

1. Project Overview: COLONY

Launched by CEO Jack Du Rose in 2015, the Colony Network is an Ethereum-based protocol for creating and operating Internet Organizations. Colony Network aims to build economic incentives and decision-making mechanisms for platforms whose content or value proposition is created by users without top-down decision-making of any kind.

  • Via Colony Network, projects have the power to start a DAO, give it structure, incentivize contributors, award reputation, and manage funds, without any coding knowledge required and with the added benefit of powerful on-chain governance features and smart, social decision-making mechanisms to help any organization to get “its stuff ” done, while efficiently avoiding voting where possible.
  • Colony boasts an open-source and modular design, empowering organizations to be composably, flexibly & easily be run by any organization, by being able to structure individuals teams, circles, or project units in any way they see fit.
  • Authority and privileges inside the Colony (the organization) can be tailored and distributed to individuals, groups, bots, or smart contracts, in accordance to what makes sense for the Colony’s development and mission, by defining Domains – that is the core parts of the organization (e.g. sales, accounting, marketing, PR, development, etc).
  • The Colony’s budget (or budgets) can be allocated to each Domain (via a highly customizable set of rules), which can then manage the funds allocated to them in an overseen, transparent yet fully autonomous system – at the same time enhancing coordinated work, by defining incentives and empowering Colonies via the fine-tuning of all the core, individual & collective aspects necessary to guarantee the successful delivery of each Colony’s product and value proposition.
  • The work of groups and individuals is identified, kept accountable, and valued, thanks to an advanced reputation system (Reputation Mining) that pinpoints who did what work, which skills were used, how much value is generated, and how well it was brought to fruition. Thanks to this “tracking” system, revenues can be shared between the Colony’s users – fairly and proportionally to their share of contribution – in ETH, DAI (initial whitelisted currencies), or any other ERC-20 compatible token.
  • Disputes inside the colony are proactively dealt with to bring up objections and disagreements, and to resolve them effectively, therefore promoting the Colony’s self-regulation and continuous development.
  • Colony’s blockchain integration allows for the implementation of external smart contract calls and executions, thanks to plug-and-play governance modules which can be seamlessly integrated with the Ethereum blockchain.

2. Revenue Model

The Colony Network is able to sustain its development and maintenance via two main
revenue streams: the Network Fee and the Token Auction.

  • Colony’s Network Fee: there is a 3% fee which is either sent to the Colony Network contract or the MetaColony (that is, the “special” colony at the apex, which controls the Colony Network) on any payout or rewards claimed on the Colony Network.
  • Colony’s Token Auction: Colony’s 3% network fee may be denominated in any ERC20 – even non-whitelisted – tokens. These various tokens are collected by the Colony Network’s Contract and can become cumbersome to manage, even in the short term. These tokens are therefore denominated in CLNY and are then auctioned off on a monthly basis, for each token, via the Colony’s Network Contract. The auction revenues are then burned, potentially increasing the value of the circulating Colony Network Tokens for the holders and the MetaColony, thanks to this deflationary mechanism.

3. The Colony Network Token (CLNY)

CLNY is the native utility token of the Colony Network and will provide two main use cases
to holders, as well as assigning them two roles inside the Colony Network:

  • The right to participate inside the Reputation Mining process of the network (by staking CLNY with the Colony Network Contract).
  • The right to join in the Management process of the Colony Network.
  • The right (together with reputation) to claim a share of Colony Network’s revenues.

These three key functions will be accomplished via several permissioned features on the Network’s Contract, allowing several network core parameters to be set via the Metacolony, which in turn will call upon all CLNY token holders and reputation holders for their vote on governance topics and on Colony contracts updates (that way ensuring due diligence is performed).

4. Recent News and Upcoming Events

February 2021: Registrations opened for Colony v2 Early Access Program.
February 2021: Colony v2 Launch.
March 2021: Colony’s 2021 Product Roadmap Publication.
Coming April/May 2021: Motion & Disputes (Reputation-based) Governance Module scheduled to launch. Gnosis Safe Support & Gasless Implementation to Colony Mainnet. Coin Machine (Colony Network’s Token Sale Mechanism) + KYC + Address Whitelisting
goes live.
Coming June/July 2021: Arbitrary Transactions feature. Motion & Disputes (CLNY holders & hybrid-based) Governance Module set to launch. Expenditure Builders, Governance Policy, Batch/Split/Staged Payments features.
Coming August/September 2021: Full-fledged Finances Dashboard. Transaction Filters, Treasury, Rewards, Bounties, and Team Features.
Coming Q4 2021: Cross-Chain Execution, Personal Dashboard, Scalar/Approval Voting, Notifications (via $EPNS), Fee Auctions, Budget Box functionalities & more launching.

5. Product Dive

How does Colony work?

“Colony” is the name utilized to refer to a decentralized organization, one that doesn’t necessarily need managers/executives for decision-making. Essentially, it is possible to “destructure” colonies into:

  • Domains
  • Tasks
  • Users
Within each Domain (e.g. Marketing) there will be Users competent in that
particular field/domain, who will work on Tasks that are relevant to their

Users Tasks have three general roles associated with them:

  • Manager — responsible for defining and coordinating the delivery of the task.
  • Worker — responsible for executing the task.
  • Evaluator — responsible for assessing whether the work has been completed satisfactorily.

Tasks are assigned by Managers, who also

  • pick the worker and evaluator (with their consent) for a task.
  • can cancel tasks.

Colonies VS Traditional Organizations’ Schemas

The main difference compared to traditional organizations is that the individual Users aren’t necessarily physical, real-life acquaintances/colleagues, but can still join in and bring value to the Colony by bringing Tasks to completion.
Completing Tasks will reward Users with either Reputation, CLNY tokens, or other cryptocurrencies. In turn, Reputation also empowers a User, giving him/ her more voting power and influence inside the the colony. Reputation does also gradually diminish over time as a measure to contrast initially “overdue” influence of “elder” Users that have finally stopped executing tasks and contributing to the colony, thus fostering the onboarding of new, committed users.
This structure also implies that there will be no formally appointed CEO in the Colony, but instead, leaders will emerge and there will possibly be leadership turnovers in time. The main aim is to develop a meritocratic system among all colonists.

The MetaColony

Above all the colonies stands the MetaColony, which – as stated previously –
controls the Colony Network and, thus, all Colonies.
The MetaColony’s very purpose is to support the maintenance, development, and evolution of the Colony Network as well as the Reputation Mining infrastructure throughout its life, via community consensus.
The MetaColony’s governance will initially be permissioned/centralized with the Colony team funders having control (via multi-sig) over the MetaColony.
Eventually, as roadmap features are rolled out and strategic milestones are hit, all governance rights will be handed off to the Metacolony, thus marking its passage to an unprecedented and unique 100% decentralized organization governance model, with no privileged control available to the Colony team. Governance will then be exclusively determined by CLNY and reputation weights held by the colonists.

Reputation Mining

The reputation system is the foundational component of a Colony. Reputation will only be “earnable”and cannot be transferred between Users, thus laying Colony Network’s basis for a meritocratic form of decision-making that will be hybrid between token-weighted voting and reputation-based voting.

ColonyNetwork Commits (as of May 10th, 2021 – source: )

Reputation decays gradually, allowing the continuous update of the Reputation “balances” among old and new users in the Colony, preventing the risk of oligarchic governance.
Reputation calculations are calculated and stored off-chain (due to complex
calculations involved) and are then finally reported to the blockchain by active CLNY token holders – in a fashion that in some aspects resembles POS
mechanism. That is the Reputation Mining process.

6. Technologies Utilised

Blockchain: xDai/Ethereum.
Main Coding Languages: Solidity (Smart Contracts), Javascript (Web App).

The xDai chain is a stable payments blockchain designed for fast and inexpensive transactions. The chain uses a unique dual-token model; xDai is a stable token used for transactions, payments, and fees, and STAKE is a governance token used to support the underlying POSDAO Proof-of-Stake consensus.
Any contract that works on the Ethereum mainnet can be redeployed to the xDai chain. On the xDai chain, transaction costs are minimized, and all fees
and transactions are paid with a single token, xDai. Many tools supporting
Ethereum development are compatible with xDai, including TheGraph,
Tenderly, Remix, OpenZeppelin, Gnosis MultiSig, Dune Analytics, and many more.

7. Community and Social Media Channels

Colony Network’s Website
For everything you need to know about Colony, visit the official

Colony Network’s Telegram
Join the conversation on Telegram to stay in the know about Colony Network.
Colony Network’s Twitter
To keep up with the latest updates from Colony Network, follow them on Twitter
Colony Network’s Discord
Get in touch and social with other members of Colony’s community. Join the community in Discord.

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