My original thought was that a Phase 1 mvp would see governance move on-chain. u/aminok makes a strong case for a simpler mvp path. This post is intended to outline what that simpler mvp could accomplish and open discussion around it. Please make suggestions, modifications, rewrites in the comments!

Goal

• simplest mvp to demo Reddit-Ethereum interaction - reading and submitting tx from Reddit
• meaningful improvement in source of truth for donuts
• eliminates need for centralised Reddit-ERC20 bridge

Outline:

• users attach Ethereum address to Reddit profile
• Reddit-signed merkle submitted for distributions, merkle data (distribution report) is at least public
• contract controls karma and token
• user submits tx with merkle proof and contract mints karma & token
• method to upgrade controller contract (can become dao, can transfer karma/token control) - multi-sig of pre-selected community members?
• not need on-chain identity registry for this phase 1 plan?
• Reddit reads vote weight from smart contract to tally poll results.
• users can submit tip tx with metadata (comment/post id), Reddit/bot reads tx and makes confirmation comment

References:

from u/aminok here:

Why not have Reddit itself construct the merkle tree, and sign its hash root, and have the smart contract simply validate that the signature is valid, using the signing key's corresponding public key?

A DAO would be great in the long run for multiple reasons, but my personal opinion is that for the first version of DAONUT, simplicity is the key, because it means less likelihood that something goes wrong (e.g. DAO users don't vote in sufficient numbers resulting in governance failure), and faster implementation and roll-out.

Once something is up and running, a more flexible and decentralized DAONUT smart contract can be worked on. In the meantime, data can be gathered on real-world use of the live implementation.

and also from u/aminok here:

We can trade it, and make it available to the DeFi infrastructure. Reddit can read the Ethereum blockchain and initiate on-site actions based on transactions involving the token. For example, once a user has linked their Ethereum account with their Reddit account, then the donut tip action can create a blockchain transaction with meta-data embedded in it, that indicates which comment the tip is being made for.

The Reddit server can read the Ethereum blockchain and when it sees that transaction, and after it has validated that the author of the comment referenced by the embedded URL is the same as the account associated with the receiving Ethereum address, have the /u/CommunityPoints bot post a tip confirmation comment, e.g. "/u/aminok tipped 500 Donuts for this post!". That would enable people to directly tip Reddit comments without even logging on to Reddit. It would also non-Reddit users to tip, with the bot posting something like "an anonymous user has tipped 500 Donuts for this post!"

Likewise, the purchase of the banner can be done on-chain, with the Reddit server simply reading the on-chain activity, and executing on-site actions based on them.