Creating Sub-DAOs

Sub-DAOs (child nodes) allow parent organizations to delegate specific functions while maintaining oversight. This guide covers creating and configuring child nodes.

Prerequisites

Before creating a sub-DAO:

Admin role on parent DAO
Clear mandate and scope defined
Initial funding approved
Admin address ready

Creation Methods

Method 1: Via UI

Step 1: Navigate to Hierarchy

Go to your DAO dashboard
Click "Organization" in the sidebar
Click "Create Sub-DAO"

Step 2: Configure Basic Info

┌─────────────────────────────────────────────────────────────┐
│ Create Sub-DAO                                               │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  Name:         [Research Committee                  ]        │
│                                                              │
│  Description:  [Funds and coordinates research      ]        │
│                [initiatives across the ecosystem    ]        │
│                                                              │
│  Admin:        [0x1234...5678                       ]        │
│                                                              │
│  Type:         ( ) Committee                                │
│                (•) Working Group                            │
│                ( ) Regional Chapter                         │
│                                                              │
└─────────────────────────────────────────────────────────────┘

Step 3: Set Governance Parameters

┌─────────────────────────────────────────────────────────────┐
│ Governance Settings                                          │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  Voting Period:    [7      ] days                           │
│                                                              │
│  Quorum:           [1,000,000] tokens (10% of supply)       │
│                                                              │
│  Approval:         [50     ] %                              │
│                                                              │
│  Proposal Threshold: [10,000] tokens to create              │
│                                                              │
│  ┌─────────────────────────────────────────────────────┐   │
│  │ ℹ️ Lower thresholds = more proposals                 │   │
│  │    Higher quorum = stronger mandate                  │   │
│  └─────────────────────────────────────────────────────┘   │
│                                                              │
└─────────────────────────────────────────────────────────────┘

Step 4: Configure Permissions

┌─────────────────────────────────────────────────────────────┐
│ Permissions                                                  │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  [✓] Can create child nodes                                 │
│      └── Allow this sub-DAO to create its own children      │
│                                                              │
│  [✓] Can transfer externally                                │
│      └── Send funds outside the hierarchy                   │
│                                                              │
│  Spending Limit:  [$50,000] per transaction                 │
│      └── 0 = unlimited                                      │
│                                                              │
│  ──────────────────────────────────────────────────────     │
│  Parent Controls                                             │
│  ──────────────────────────────────────────────────────     │
│                                                              │
│  [✓] Parent can freeze                                      │
│      └── Allow parent to halt operations                    │
│                                                              │
│  [✓] Parent can clawback                                    │
│      └── Allow parent to recall funds                       │
│                                                              │
│  Clawback Delay:  [3     ] days                             │
│      └── Notice period before funds recalled                │
│                                                              │
└─────────────────────────────────────────────────────────────┘

Step 5: Initial Funding (Optional)

┌─────────────────────────────────────────────────────────────┐
│ Initial Funding                                              │
├─────────────────────────────────────────────────────────────┤
│                                                              │
│  [✓] Fund on creation                                       │
│                                                              │
│  Token:   [USDC ▼]                                          │
│  Amount:  [100,000                    ]                     │
│                                                              │
│  Available in parent treasury: 500,000 USDC                 │
│                                                              │
│  ┌─────────────────────────────────────────────────────┐   │
│  │ + Add another token                                  │   │
│  └─────────────────────────────────────────────────────┘   │
│                                                              │
└─────────────────────────────────────────────────────────────┘

Step 6: Review and Submit

Click "Preview" to review configuration
Verify all settings are correct
Click "Create Sub-DAO"
Sign the transaction

Method 2: Via Proposal

For larger organizations, creation should go through governance:

Proposal: "Create Research Committee Sub-DAO"

Description: |
  This proposal creates a Research Committee to coordinate
  and fund research initiatives.

  ## Mandate
  - Evaluate research proposals
  - Fund approved projects up to $50K
  - Track research outcomes
  - Report quarterly to parent

  ## Budget
  Initial funding: $100,000 USDC
  Quarterly allocation: $25,000 USDC

  ## Leadership
  Initial Admin: research-lead.eth (0x1234...)

Actions:
  - type: create_child
    name: "Research Committee"
    admin: "0x1234..."
    config:
      votingPeriod: 604800
      quorum: 1000000
      threshold: 5000
      canCreateChildren: false
      canTransferExternal: true
      spendingLimit: 50000000000
      parentCanFreeze: true
      parentCanClawback: true
      clawbackDelay: 259200

  - type: transfer
    to: ${newChild}
    amount: 100000
    token: USDC

Method 3: Via SDK

import { HierarchyClient, NodeConfig } from '@lux/dao-sdk';

const hierarchy = new HierarchyClient(signer);

// Configure the child node
const config: NodeConfig = {
  votingPeriod: 7 * 24 * 60 * 60,  // 7 days
  quorum: ethers.parseUnits('1000000', 18),
  threshold: 5000,  // 50% in basis points
  canCreateChildren: false,
  canTransferExternal: true,
  spendingLimit: ethers.parseUnits('50000', 6),  // 50K USDC
  parentCanFreeze: true,
  parentCanClawback: true,
  clawbackDelay: 3 * 24 * 60 * 60,  // 3 days
};

// Create the child
const tx = await hierarchy.createChild(
  'Research Committee',
  '0x1234...admin',
  config
);

const receipt = await tx.wait();
const childId = receipt.events[0].args.childId;

console.log(`Created child node: ${childId}`);

Configuration Reference

Governance Parameters

Parameter	Description	Recommended
`votingPeriod`	Duration of voting	3-14 days
`quorum`	Minimum participation	5-20% of supply
`threshold`	Approval percentage	50-67%
`proposalThreshold`	Tokens to propose	0.1-1% of supply

Permission Flags

Flag	Default	Description
`canCreateChildren`	false	Create nested sub-DAOs
`canTransferExternal`	true	Send funds outside hierarchy
`spendingLimit`	0	Max per-transaction (0 = unlimited)

Parent Controls

Control	Default	Description
`parentCanFreeze`	true	Parent can halt operations
`parentCanClawback`	true	Parent can recall funds
`clawbackDelay`	3 days	Notice before clawback

Post-Creation Setup

After creating a sub-DAO:

1. Configure Roles

Roles to create:
  - Admin: Full management (multi-sig recommended)
  - Lead: Create proposals, manage budget
  - Member: Vote, participate
  - Observer: Read-only access

2. Set Up Committees

If the sub-DAO will have its own working groups:

Working Groups:
  - Review Panel
    - Evaluates incoming proposals
    - 3-5 members
  - Operations
    - Handles day-to-day
    - 2-3 members

3. Document Mandate

Create a charter document:

# Research Committee Charter

## Purpose
Fund and coordinate ecosystem research.

## Scope
- Academic research partnerships
- Technical research grants
- Industry analysis

## Out of Scope
- Product development
- Marketing research
- Operational expenses

## Budget
- Quarterly allocation: $25,000
- Single grant limit: $50,000
- Emergency reserve: $10,000

## Governance
- Voting period: 7 days
- Quorum: 10%
- Approval: 50%

## Reporting
- Monthly activity report
- Quarterly budget review
- Annual impact assessment

4. Fund the Treasury

Transfer initial operating funds:

// From parent DAO
await treasury.transfer(
  childAddress,
  usdc.address,
  ethers.parseUnits('100000', 6),
  'Initial Research Committee funding'
);

Common Configurations

Autonomous Committee

High autonomy, minimal parent control:

const autonomousConfig: NodeConfig = {
  votingPeriod: 604800,
  quorum: ethers.parseUnits('500000', 18),
  threshold: 5000,
  canCreateChildren: true,
  canTransferExternal: true,
  spendingLimit: 0,  // Unlimited
  parentCanFreeze: false,  // Cannot freeze
  parentCanClawback: false,  // Cannot clawback
  clawbackDelay: 0,
};

Controlled Working Group

Limited autonomy, strong oversight:

const controlledConfig: NodeConfig = {
  votingPeriod: 259200,  // 3 days
  quorum: ethers.parseUnits('100000', 18),
  threshold: 5000,
  canCreateChildren: false,
  canTransferExternal: false,  // Internal only
  spendingLimit: ethers.parseUnits('10000', 6),
  parentCanFreeze: true,
  parentCanClawback: true,
  clawbackDelay: 86400,  // 1 day
};

Regional Chapter

Balanced autonomy with coordination:

const chapterConfig: NodeConfig = {
  votingPeriod: 604800,
  quorum: ethers.parseUnits('200000', 18),
  threshold: 5000,
  canCreateChildren: true,  // Can create local groups
  canTransferExternal: true,
  spendingLimit: ethers.parseUnits('25000', 6),
  parentCanFreeze: true,
  parentCanClawback: true,
  clawbackDelay: 604800,  // 7 days notice
};

Troubleshooting

Creation Failed

Error	Cause	Solution
`Unauthorized`	Missing admin role	Get admin permission
`InvalidConfig`	Bad parameters	Check config values
`InsufficientFunds`	Not enough for initial funding	Reduce or skip funding
`MaxDepthExceeded`	Too many hierarchy levels	Create at higher level

Common Issues

Child not visible in UI:

Wait for transaction confirmation
Refresh the page
Check the transaction succeeded

Cannot transfer funds:

Verify child has treasury address
Check spending limits
Confirm transfer is within scope

Governance not working:

Verify token distribution
Check quorum settings
Ensure voting period started

Creating Sub-DAOs

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